Opinion of Mr Advocate General Fennelly delivered on 18 December 1997. - Lease Plan Luxembourg SA v Belgian State. - Reference for a preliminary ruling: Rechtbank van eerste aanleg Brussel - Belgium. - Sixth VAT Directive - Car-leasing services - Fixed establishment - Rules governing reimbursement of VAT to taxable persons not established in the territory of the State - Principle of non-discrimination. - Case C-390/96.



European Court reports 1998 Page I-02553



Opinion of the Advocate-General

I - Introduction

1 There are two aspects to this preliminary reference from a Belgian court. The first two questions concerning the place of supply for VAT purposes of the provision of car-leasing services have, as is accepted by all parties, been effectively answered by the Court in its judgment in ARO Lease. (1) The remaining live issue, raised by the third question, concerns the compatibility with the Treaty of the application of differentiation in the rules regarding the amount and timing of the payment of interest on sums of VAT which must be refunded. (2) It is claimed that these rules are discriminatory as being dependent on whether the taxable person, to whom the sums are owed, is resident or non-resident in Belgium for VAT purposes.

II - The legal context

A - Community legislation

2 Title XI, comprising Articles 17 to 20, of the Sixth Council VAT Directive concerns `deductions'. (3) Under Article 17, which concerns the `origin and scope of the right to deduct', taxable persons resident in Member States are granted the right to a deduction or refund of the VAT which they pay on their inputs. The essential principles governing this right are contained in Article 17(3). Article 18, on the other hand, sets out the `rules governing the exercise of the right'. Article 18(4) is of particular significance in the present case. It provides that:

`Where for a given tax period the amount of authorised deductions exceeds the amount of tax due, the Member State may either make a refund or carry the excess forward to the following period according to conditions which they shall determine.'

3 Furthermore, under Article 17(4) of the Sixth Directive, the Community legislature had set itself the objective of adopting, by 31 December 1977, `Community rules laying down the arrangements under which refunds are to be made ... to [non-resident] taxable persons'. On 6 December 1979, the relevant rules were adopted in the form of the Eighth Council VAT Directive governing the reimbursement of VAT to non-resident taxable persons. (4) The personal scope of the Eighth Directive is set out in Article 1: it covers a taxable person who, in the Member State from which the reimbursement is sought during the period covered by the claim, `has had ... neither the seat of his economic activity, nor a fixed establishment from which business transactions are effected ... and who ... has supplied no goods or services deemed to be supplied in that country ...'. Under Article 2, it is clear that the refund relates to the VAT `charged in respect of services or movable property charged to [the taxable person]' in respect of economic transactions which, if they had been carried out in his place of establishment, would have rendered the tax concerned eligible for deduction.

4 Article 7 of the Eighth Directive concerns refunds and, at paragraph (4), provides as follows:

`Decisions concerning applications for refund shall be announced within six months of the date when the applications, accompanied by all the necessary documents required under this Directive for examination of the application, are submitted to the competent authority referred to in paragraph 3. Refunds shall be made before the end of the abovementioned period, at the applicant's request, in either the Member State of refund or the State in which he is established. In the latter case, the bank charges for the transfer shall be payable by the applicant.

The grounds for refusal of an application shall be stated. Appeals against such refusals may be made to the competent authorities in the Member State concerned, subject to the same conditions as to form and time limits as those governing claims for refunds made by taxable persons established in the same State.'

B - The relevant national rules

5 Articles 47 and 76 of the BTW-Wetboek (VAT Code, hereinafter `the Code') implement Article 18(4) of the Sixth Directive in Belgium. Article 47 of the Code provides that the excess of authorised deductions over VAT due for a particular tax period shall be carried forward to the following tax period, whereas Article 76 thereof deals with refunds. Article 76(1) provides for a refund, where it is requested, by a taxable person who is established in Belgium within three months of any excesses which are outstanding at the end of the calendar year. (5) The right of taxable persons who are not established in Belgium to recover VAT paid as part of the price of goods and services provided to them in Belgium by taxable persons resident there is recognised by Article 76(2) of the Code. The rules concerning such applications for refunds are prescribed by Article 9(2), as amended, of Royal Decree No 4. (6)

6 If VAT due is not reimbursed within the three-month period specified by Article 76(1) of the Code in respect of claims made by taxable persons resident in Belgium, Article 91(3) provides for payment of interest at a rate of 0.8% per month (7) from the expiry of the specified three-month period. (8)

7 In contrast, regarding claims for reimbursement made by non-resident taxable persons pursuant to Article 76(2) of the Code, Article 91(4) provides for the payment of interest on arrears at the rate fixed for civil matters and according to the rules governing such matters. It emerges from the observations submitted to the Court that, first, until 31 August 1996, an interest rate of 8% per annum applied to such claims and, secondly, such interest becomes payable only following the service by the creditor of formal notice to pay on the Belgian State. (9) Moreover, since Article 7(4) of the Eighth Directive allows the Member States a six-month delay to decide on claims made pursuant to that provision, such default proceeding could only effectively be brought after the expiry of that period.

III - The facts and procedure before the national court

8 According to the order for reference, by an action initiated by a summons served on 20 July 1995, (10) the plaintiff in the main proceedings, Lease Plan Luxembourg SA (hereinafter `LPL' or `the plaintiff'), sought an order requiring the Belgian State to refund to it the sum of BFR 7 669 095, in addition to further sums (11) whose repayment became due during the proceedings, plus statutory interest thereon at the rate of 0.8% per month from the respective dates on which the various requests for repayment of VAT comprising the aforesaid sum, and any relevant future sums, were made. (12)

9 LPL is a company established in Luxembourg where it carries on the business of leasing motor vehicles mostly to Luxembourg-based customers. During the refund period, the great majority of its fleet of vehicles was leased on long-term contracts to Luxembourg customers who leased several vehicles simultaneously. All of these vehicles were purchased in Luxembourg, their insurance policies were concluded with Luxembourg insurance companies and they were leased pursuant to so-called `comprehensive contracts': which means that the Luxembourg-based clients paid rental fees to cover, inter alia, both financing and insurance as well as the costs of maintenance and repair services (hereinafter `garage services'). Under such comprehensive contracts, the invoices in respect of the provision of garage services could be sent directly, by the garages, to LPL.

10 During the refund period, Luxembourg-based clients of LPL sometimes made the vehicles available to their own employees, some of whom lived in Belgium. When the latter used the services of garage operators established in Belgium, invoices, including, of course, sums in respect of Belgian VAT, were sent directly to LPL, which paid them.

11 The plaintiff also concluded, during the refund period, a limited number of non-comprehensive contracts with lessees established in Belgium. (13) The cars involved were purchased by LPL in Belgium from Belgian car dealers. These purchases gave rise to a second type of VAT payment by LPL to the Belgian State, namely the VAT included in the prices of the cars.

12 In its action before the Rechtbank van Eerste Aanleg (Court of First Instance), Brussels (hereinafter `the national court'), the plaintiff is seeking a refund, with interest, of the VAT paid in each of the situations described, namely: VAT paid on garage services in respect of its contracts with Luxembourg-based lessees and that paid on the purchase price of those cars both acquired and leased in Belgium.

13 In justification of its original refusal to refund any of the amounts claimed, the Belgian State originally contended that, as regards repairs effected in Belgium in respect of cars leased to Luxembourg clients but not forming part of normal maintenance, the applicant ought to have registered as a taxable person in Belgium. For the period after 1 January 1993, the Belgian State maintained that, under an amendment to the Code, the carrying-on of an economic activity through the presence of a supposed `fleet of vehicles' in Belgium sufficed to establish that the applicant had a fixed establishment in Belgium.

14 Since this claim was disputed by LPL, and having regard also to the concomitant dispute regarding the payment of interest on the postponed refunds, the national court decided to refer the following questions to the Court:

`1. Must the term "fixed establishment" in Article 9(1) of the Sixth VAT Directive be interpreted as meaning that an undertaking from one Member State which hires or leases out a number of cars to customers established in another Member State has ipso facto, by virtue of that hiring, a fixed establishment in that other Member State?

2. If the answer to the preceding question is in the affirmative: must Article 9(1) of the Sixth VAT Directive be interpreted as meaning that services consisting in the leasing out of vehicles can be regarded as being supplied from a fixed establishment in Belgium in the case where the supplier of the services has its established place of business in Luxembourg and where almost all contracts are negotiated and concluded from this place of establishment in Luxembourg with customers established in Luxembourg and only a limited number of vehicles (approximately ten cars out of a fleet of almost 1 000 vehicles) are purchased in Belgium and maintained or repaired within Belgium?

3. Must Articles 6 and 59 of the EC Treaty be interpreted as meaning that foreign taxable persons, who receive goods or services in Belgium and subsequently request VAT refunds in respect of such goods or services pursuant to the Eighth VAT Directive, cannot, in the event of late reimbursement, be granted a lower rate of interest, which, moreover, begins to accrue only from the moment at which such foreign taxable persons serve formal notice on the Belgian State, whereas in the event of late reimbursement to Belgian taxable persons, the latter are granted a higher rate of interest which, automatically and without serving formal notice, begins to accrue as soon as the statutory time-limit for reimbursement has expired?'

IV - Observations submitted to the Court

15 Written and oral observations have been submitted by Lease Plan Luxembourg SA, the Kingdom of Belgium and the Commission, while the Grand Duchy of Luxembourg presented only written observations.

V - The first two questions

16 By its first two questions, the national court wishes to know whether the Belgian VAT administration is justified in maintaining that the mere presence in Belgium of a small number of leased vehicles by a company, whose established place of business is in Luxembourg, means that the lessor has a fixed establishment in Belgium. In the light of the decision of the Court in ARO Lease, all of the parties submitting observations to the Court, including Belgium, now agree that the first two questions can be simply answered to the effect that LPL did not have a fixed place of establishment in Belgium from which it supplied services during the refund period. It follows that it is no longer disputed that LPL is entitled to the VAT refunds that it claims. There is no agreement, however, regarding the third question, concerning LPL's claim for interest. This raises an apparently simple, but in reality quite difficult, question of discrimination. At the time the order for reference was proposed, it was a minor incidental issue, insufficiently illuminated by explanations of the relevant national law. I shall, nevertheless, attempt to provide an answer in the light of the details furnished by LPL and Belgium.

VI - Analysis of the third question

A - The nature and effect of Article 7(4) of the Eighth Directive

17 There can, in my opinion, be no doubt that an undertaking such as LPL being a `taxable person' in Luxembourg falls within the personal scope of the Eighth Directive, as set out in Article 1. (14) During the refund period, LPL had no fixed establishment and could not be deemed to have supplied, for VAT purposes, any services in Belgium. Dealing precisely with Article 7(4) of the Eighth Directive, the Court has said in Commission v Spain that `it is established case-law that Member States are obliged to ensure that the provisions of a directive are applied exactly and in full'. (15) That case concerned systematic delays in making payments of refunds. In my opinion, the obligation imposed by Article 7(4) is precise and unconditional so as to create direct effect which may be relied upon by taxable persons such as LPL. (16)

18 The objective of Article 7(4) of the Eighth Directive, as appears from the second recital in its preamble, is `to ensure that a taxable person can claim for tax which has been invoiced to him in respect of supplies of goods or services in another Member State'. The establishment of Community rules was necessary, according to the third recital, because the `discrepancies between the arrangements' previously applied by Member States `gave rise in some cases to deflection of trade and distortion of competition'. That non-discrimination between taxable persons constitutes an overriding objective of the Directive itself emerges from the fifth recital's statement that the rules applied `must not lead to the treatment of taxable persons differing according to the Member State in the territory of which they are established'. Hence the preemptory statement that decisions regarding applications `shall be announced within six months', while the `grounds for refusal of an application shall be stated'. (17)

B - Observations submitted in respect of the third question

19 LPL does not object to the fact that, in Belgium, under Article 76(1) of the Code and Article 8(1)(3)(1) of Royal Decree No 4, a three-month delay applies generally regarding the repayment of refunds to resident taxable persons whereas a six-month period is applied in all cases to the non-residents' refund claims made under the Eighth Directive. In this respect, the plaintiff accepts that the delays inherent in the administrative verification procedures necessitated by refund applications made by non-residents justify the difference in treatment. However, in its view, there is no justification for the further delay either in the payment of interest until the service of formal notice or, thereafter, in the payment of interest at a lower rate. LPL contends that this double difference in treatment constitutes indirect discrimination on grounds of nationality contrary to the Treaty, since more non-resident than resident taxable persons are nationals of other Member States.

20 LPL relies primarily on Article 59 of the Treaty, and, in the alternative, on Article 6. Although the services provided to its Belgian-based clients are deemed for VAT purposes to be provided in Luxembourg, LPL submits that Article 59 still applies since its services were materially provided in Belgium. The applicant also claims that it may, for the purposes of the application of Article 59, be regarded as a recipient of services provided in Belgium, by both car dealers and garages. In respect of both types of claim, it relies, in particular, upon The Queen v IRC, ex parte Commerzbank (18) to justify its demand to be paid interest at the same rate as resident taxpayers from the expiry of the six-month delay allowed under the Eighth Directive, and that however small the differences may be in some cases, there is no de minimis rule in respect of unjustified discrimination under Article 59 of the Treaty. (19)

21 Belgium denies the existence of any discrimination in its interest-payment rules. It contends that, if LPL had registered for VAT in Belgium, it would have been entitled, in the event of a delay in making a refund, to interest at the rate and under the conditions prescribed by Articles 76(1) and 91(3) of the Code. Conversely, Belgium submits that refund claims made by non-resident taxable persons such as LPL are treated no less favourably than those introduced from time to time by non-taxable persons established in Belgium. (20) Belgium also claims that the rules governing claims made by non-resident taxable persons are occasionally more favourable than those affecting residents. (21)

22 The Commission shares the plaintiff's view that the difference in interest rates paid to resident and non-resident taxable persons constitutes discrimination based upon the place of establishment. Although the Eighth Directive does not require Member States to pay any interest on overdue claims, where such interest is paid in respect of comparable claims by domestic taxable persons, it must be paid on the same basis to non-resident taxpayers. The Commission also refers to the possible application of Article 6 of the Treaty, which, it claims, applies generally to forms of discrimination affecting legal persons based on their place of establishment. (22)

C - Analysis of the third question

(i) Introduction

23 Article 6 of the Treaty (formerly Article 7 of the EEC Treaty) is concerned with discrimination on grounds of nationality within the field of application of the Treaty. (23) However, Article 6 does not apply where the activity in question falls within the scope of another more specific provision of the Treaty. Thus, the Treaty provisions giving effect to the free movement of persons, such as Articles 59 to 66 concerning services, implement, within the scope of their field of application, the prohibition of discrimination on grounds of nationality. (24) Since, therefore, the third question refers to both Articles 6 and 59 of the Treaty, I must first consider whether the application of the impugned rules constitutes discrimination for the purposes of Article 59 linked to the two elements in the VAT refunds in question.

(ii) The prima facie application of Article 59 of the Treaty

24 Belgium accepts that the principles declared by the Court in ARO Lease govern the answer to be given to the first two questions referred by the national court. Thus, Belgium must refund the principal amounts of VAT included in the price of the goods and services supplied to the applicant in Belgium. (25) Consequently, the dispute between the Belgian State and LPL concerns only the interest appertaining to those sums.

25 The first type of transaction concerns VAT on the garage services provided by Belgian garage operators paid by LPL pursuant to its contracts with its Luxembourg clients; the second concerns VAT on the purchase of new vehicles from Belgian car dealers that were subsequently leased to its Belgian clients. In the latter case, LPL provided the leasing services to Belgian clients, a cross-border transaction covered by Article 59. This is not affected by the fact that, for VAT purposes, the supply at issue is deemed to occur in the Member State of establishment of the service-provider. The rules laid down by Article 9 of the Sixth Directive for determining the place of supply for VAT purposes are designed, inter alia, to avoid `conflicts of jurisdiction, which may result in double taxation'. (26) They are, thus, not relevant to the application of Article 59. Nor, in my opinion, can the fact that the cars were purchased prior to completion of the leasing formalities affect the application of Article 59. The cars were purchased to enable cross-border leasing services to be provided.

26 The second type of transaction concerns the garage services. The underlying transaction, the provision of leasing services to Luxembourg-based lessees, does not fall within the scope of Article 59. (27) The plaintiff has, however, also relied upon the freedom to receive services which is equally guaranteed by Article 59. (28) Although it was entirely fortuitous that some of LPL's Luxembourg clients' employees had the leased cars serviced by Belgian garages, it is clear that, under the comprehensive contracts entered into with its Luxembourg clients, LPL was the real recipient of the services. The services were provided in respect of vehicles owned by LPL, to which, moreover, the bills, including the relevant amounts for VAT, were sent directly by the Belgian garages. For the application of Article 59, it is sufficient that the transaction involves a cross-border element and comprises the provision of a service for remuneration. (29) It follows, in my opinion, that LPL must be regarded as a recipient of the garage services for the purposes of Article 59.

27 Consequently, it is necessary to assess whether, in fact, the different treatment in the impugned Belgian rules of resident and non-resident taxable persons constitutes discrimination on grounds of nationality contrary to Article 59 and, if so, whether it can nevertheless be justified.

(iii) Discrimination and Article 59 of the Treaty

28 The impugned rules contain no direct discrimination on grounds of nationality. The difference in treatment at issue is based not on nationality but, rather, is between the treatment of a taxable person registered in Belgium and in another Member State. Thus, for example, a Belgian undertaking operating a vehicle-leasing business from a Luxembourg subsidiary would be subject to the same Belgian rules as LPL. So, according to Belgium's observations, would a taxable person resident in Belgium who only occasionally engages in economic transactions that are subject to VAT. However, since more non-Belgian than Belgian undertakings are likely to pay VAT on goods and services supplied in Belgium in circumstances entitling them to make refund claims pursuant to the Eighth Directive, any less generous rules applied in respect of claims made by non-residents are consequently capable of adversely affecting more non-nationals than nationals. They may therefore constitute covert or indirect discrimination on grounds of nationality. (30)

29 Nevertheless, the concept of discrimination is not purely formal. As the Court has on many occasions emphasised, `... the different treatment of non-comparable situations does not lead automatically to the conclusion that there is discrimination. An appearance of discrimination in form may therefore correspond in fact to an absence of discrimination in substance. Discrimination in substance would consist in treating either similar situations differently or different situations identically'. (31) This definition of discrimination has underlain the Court's approach, in all areas of Community law, to the application of the principle of non-discrimination on grounds of nationality. (32) In order to assess whether the rules are discriminatory, it is essential in the present case to determine whether the situation of a non-resident taxable person such as LPL is truly comparable with that of resident taxpayers.

30 Belgium maintains that the situations of resident and non-resident taxable persons, though both are economically active, are not comparable. In its view, a Luxembourg taxable person who incurs VAT inputs in Belgium is to be compared with a Belgian taxable person who only irregularly engages in taxable economic activities and who, thus, merely occasionally makes VAT declarations in Belgium, or, indeed, with a taxable person who, though regularly subject to VAT on its business activities, makes a declaration seeking the refund of VAT incurred on a transaction entered into other than exclusively for business purposes. (33)

31 I do not agree because I do not find the analogy between the desultory transactions cited by Belgium and the regular business activities of LPL convincing. VAT has been levied in Belgium on a taxable person and paid as part of the price of transactions entered into in that Member State for the purposes of carrying on a taxable vehicle-leasing activity in another Member State. The only material difference for VAT purposes between the circumstances of such a taxpayer and a resident taxpayer, who is also a competing Belgian vehicle-leasing company, is that, under Article 9 of the Sixth Directive, such competitors would be liable to pay VAT on their services in Belgium. The mere non-residence of the taxable person making the claim does not justify his situation being compared only with those who either make occasional VAT returns in Belgium or seek refunds in the special situation of an individual selling a house at a loss and claiming a refund of VAT.

32 The appropriate comparison, in my view, is between a resident and a non-resident taxpayer at the moment a refund application is made; namely, on the one hand, by a resident taxpayer who has an excess for the purposes of Article 18(4) of the Sixth Directive and, on the other hand, by a non-resident taxpayer who has incurred VAT inputs in Belgium either in the course, or for the purposes, of carrying out economic activities that are subject to VAT in another Member State.

33 In my opinion, the simple fact that such applications are inherently likely to occur much less frequently in the case of resident taxable persons - since the VAT liability on their outputs is likely in normal trading circumstances to exceed their VAT inputs - than in that of non-residents is not relevant. LPL, it must be remembered, will be liable to pay VAT in the Member State where its services are deemed to be supplied in accordance with Article 9 of the Sixth Directive; to wit, Luxembourg in the present case.

34 Furthermore, no distinction in principle is made in Article 17 of the Sixth Directive between the right to deduct of resident taxpayers and the right to a refund of non-residents. Instead, Article 17(4), in obliging the Council to adopt rules, as it did by the Eighth Directive, to facilitate the exercise by non-resident taxable persons of the right to a refund, refers to `refunds' being made `in accordance with paragraph 3', which, in turn, obliges Member States to grant `to every taxable person the right to a deduction or refund of the value added tax referred to in paragraph 2 ...'; i.e., VAT paid on the purchase of goods and services `... used for the purposes of his taxable transactions'. The fifth recital in the preamble to the Eighth Directive (quoted in paragraph 18 above) proclaims that the treatment of taxable persons should not differ in accordance with the Member State of their establishment.

35 In addition, national rules under which a Member State's VAT administration, making delayed repayment of VAT to taxable persons, is effectively obliged to compensate non-resident claimants less than residents, are liable to affect competitive trading conditions to the detriment of non-national taxpayers. In particular, where Member States pay interest on refunds, the conditions and rates governing such payments must not differentiate on grounds of the claimant's residence for VAT purposes.

36 How then do the situations compare in the present case? First, under the normal rules for taxable persons resident in Belgium, interest begins to accrue either from the expiry of three months from the end of the calendar year in which the excess arose or, if the third subparagraph of Article 8(1)(3) of Royal Decree No 4 applies, three months after the trimester in which the excess arose. In addition, the taxable person concerned must have requested a refund and made all the appropriate returns within the time, following the expiry of the tax period in which the claim arose. (34) In contrast, for non-resident taxable persons, interest will not accrue until formal notice to pay has been served on the Belgian State. Such notice may, of course, only be served after the expiry of the six-month verification period allowed to Member States under Article 7(4) of the Eighth Directive, under which it is clear that repayment must be made, at the latest, at the end of that period. Thus, whereas the claim of the taxpayer who is resident in Belgium will accrue interest automatically after a certain period has elapsed, his non-resident competitor with a similar claim must take the further step of serving formal notice in accordance with the appropriate Belgian procedural rules. Since such a step probably entails delay and certain extra costs for the non-resident, it constitutes a discriminatory restriction on his freedom to provide or receive services in Belgium.

37 Secondly, I think that the difference in the rate of interest payable constitutes a discriminatory restriction on the freedom of non-Belgian taxable persons to provide or receive services. The rate of interest paid automatically and on a monthly basis to resident taxpayers, following the expiry of the period permitted under the Code or Royal Decree No 4, exceeds that payable to those non-resident taxpayers who have served formal notice on Belgium.

38 For the reasons stated above (in particular, paragraphs 35 to 37), the rules are capable of discriminating against non-Belgian vehicle-leasing undertakings who provide or receive services in Belgium. Belgium, however, has advanced no specific justification for the impugned aspect of its rules. To my mind, no such justification exists. The Eighth Directive, by allowing Member States a six-month processing period, recognises the difficulties inherent in the verification of refunds to non-resident taxable persons. Once that period has expired the refunding Member State is obliged to apply rules to non-residents that are no less favourable than those applied to resident taxable persons making claims for refunds of VAT. Thus, in the present case, a non-resident taxable person like LPL is entitled, pursuant to the directly effective provisions both of Article 59 of the Treaty and Article 7(4) of the Eighth Directive, to the same treatment in respect of interest on its outstanding refund claims as would apply to comparable resident taxable persons with similar claims.

39 It does not follow that the precise application of the principle of non-discrimination is easy. In particular, it does not necessarily mean that the non-resident taxable person is automatically entitled to interest from the expiry of the six-month period prescribed by Article 7(4) of the Eighth Directive. What does equal treatment entail in a case such as that in the main proceedings? Since a Belgian taxpayer whose excess is not refunded will, depending on the amount involved and the temporal basis upon which it makes its VAT returns, receive interest automatically from the expiry of a certain period, the requirement of equal treatment would require that, in general, undertakings such as LPL also be paid interest routinely from the expiry of the six-month period prescribed in the Eighth Directive. However, if the amount of a non-resident taxpayer's claim is such that, if it were a Belgian taxpayer, it would only automatically attract interest three months after the expiry of the calendar year in which the claim arose, then the Belgian VAT administration, in order to ensure equality of treatment, is only obliged to apply, mutatis mutandis, the same rules to the non-resident's claim: namely, to pay interest automatically from 1 April of the year after the calendar year in which the claim arose, provided, of course, that that particular 1 April occurs not less than six months after the date on which the underlying refund claim was made.

40 It is for the national court to interpret the relevant provisions of the Code and Royal Decree No 4 and then to make all the necessary findings of fact so as to ensure that non-resident taxable persons receive equal treatment. However, it should perhaps be stated that the amount of LPL's claims would seem to be such that, if it were a taxable person resident in Belgium, it would have been entitled to interest sooner than three months after the end of the calendar year in which its various claims arose. (35)

41 The result to be achieved is the equal treatment of VAT repayment claimants within the VAT regime. I have made a comparison between the existing Belgian VAT repayment rules and the rules concerning the normal, but quite distinct, payment of interest on civil debts, only with a view to seeing whether the application of the latter puts non-Belgian claimants at a disadvantage. It is not, however, desirable that those civil-debts rules, as a self-contained and non-discriminatory system, be disturbed. In particular, the non-Belgian claimant should not be deprived of the right to interest at the rate and under the conditions prescribed by Article 91(3) of the Code, when it has, in fact, served formal notice in accordance with the civil-debts rules, if that is a normal right enjoyed by creditors under Belgian law. In addition to its ordinary legal rights but not, however, obviously so as to cause double payment of interest for any period, such a claimant should benefit from payment of interest at the rate specified under the VAT rules as outlined in paragraph 39 above from the time when such interest becomes payable.

D - Article 6 of the Treaty

42 The national court has also asked about Article 6. In the light of the recommendation that I have made to the Court regarding the applicability of Article 59 in circumstances such as those in the present case (paragraphs 24 to 41 above), I do not think that there is any scope for the separate application of Article 6. If the different treatment of resident and non-resident taxpayers in the instant case does not, contrary to the view I have expressed above, constitute covert discrimination on grounds of nationality for the purposes of Article 59, I do not think that it could be so regarded for the purposes of Article 6. Accordingly, I am of the view that it is not necessary for the Court to address Article 6 in the answer which it gives to the national court in respect of the latter's third question.

VII - Conclusion

43 In the light of the foregoing, I propose that the Court answer the questions referred by the Rechtbank van Eerste Aanleg, Brussels as follows:

(1) The first two questions referred should, in accordance with the reasoning underlying the ruling of the Court of 17 July 1997 in Case C-190/95 ARO Lease v Inspecteur der Belastingdienst Grote Ondernemingen, Amsterdam, be answered to the effect that a leasing company established in Member State A does not supply services from a fixed establishment in Member State B, if, in the absence of an office or other physical or human resources in Member State B, the company merely leases a number of vehicles purchased in Member State B to clients established in that State and discharges maintenance bills incurred by other clients resident in Member State A on foot of the use of leased cars in Member State B;

(2) Article 59 of the Treaty must be interpreted as meaning that taxable persons who are not resident in Belgium but who purchase goods or services in Belgium for the purpose of providing cross-border vehicle-leasing services to clients established in Belgium, or who receive services from Belgian garages in the course of supplying services to clients established in Luxembourg, and who subsequently request VAT refunds regarding those goods or services pursuant to the Eighth Council Directive 79/1072/EEC of 6 December 1979 on the harmonisation of the laws of the Member States relating to turnover taxes - Arrangements for the refund of value added tax to taxable persons not established in the territory of the country, cannot, in the event of reimbursement not occurring within the six-month period permitted by Article 7(4) of the Eighth Directive, be granted a lower rate of interest, or one which begins to accrue only from the moment when such persons serve formal notice on the Belgian State in circumstances where, in the case of late refunds of comparable sums of excess VAT paid by taxable persons resident in Belgium, such resident taxable persons are granted both a higher rate of interest and one which automatically begins to accrue as soon as the statutory time-limit prescribed for refund claims made by such residents has expired.

(1) - See Case C-190/95 ARO Lease v Inspecteur der Belastingdienst Grote Ondernemingen, Amsterdam [1997] ECR I-0000.

(2) - It should be noted that the information concerning the interest-payment rules available to the Court has been provided entirely by the written and oral observations submitted to the Court.

(3) - Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment (hereinafter `the Sixth Directive'); OJ 1977 L 145, p. 1.

(4) - Eighth Council Directive 79/1072/EEC of 6 December 1979 on the harmonisation of the laws of the Member States relating to turnover taxes - Arrangements for the refund of value added tax to taxable persons not established in the territory of the country (hereinafter `the Eighth Directive'); OJ 1979 L 331, p. 11.

(5) - However, it appears, inter alia, from Article 8(1)(2) of Koninklijk Besluit nr. 4 (Royal Decree No 4) of 20 December 1969 concerning refunds in respect of VAT (Belgisch Staatsblad, 31 December 1969, hereinafter `Royal Decree No 4'), to which the plaintiff refers in its written observations, and in particular subparagraph (3) thereof, that refunds whose value reaches certain amounts (apparently BFR 25 000 in respect of taxable persons making VAT returns each trimester) are not subject to the calendar-year-plus-three-months rule.

(6) - It is provided that three copies of each request must be made to the Central VAT Office for foreign taxable persons within five years of the date upon which the claim arose and that it must concern amounts in excess of BFR 1 100.

(7) - The wording of the provision refers to full legal interest being payable (`is van rechswege verschuldigd' in the Dutch-language text, or `est exigible de pleine droit' in the French-language text). It may, therefore, be reasonable to assume that the interest payable is compoundable on a monthly basis. Accordingly, the rate of interest of 9.6% over 12 months (namely, 0.8% multiplied by 12) referred to in passing by counsel for the plaintiff at the oral hearing might not fully reflect the effective value for resident taxable persons of the rule in Article 91(3) of the Code, since, if the interest is compounded monthly, the annualised rate would actually approximate to 10.9%.

(8) - In its observations the plaintiff also refers to the third subparagraph of Article 8(1)(3) of Royal Decree No 4. This provision seemingly provides that, in the case of refunds of claims satisfying the criteria for repayment within a trimester or month in accordance with the second subparagraph of Article 8(1)(2) thereof (see footnote 5 above), refunds thereof must be made within three or two months, respectively, of the trimester or month to which they relate. Since the objective of Royal Decree No 4 is, inter alia, to implement Article 76 of the Code, there is no reason to suppose that the rate of 0.8% interest per month applicable under Article 76(1) of the Code would not also apply in respect of claims covered by Article 8(1)(2) of the Decree.

(9) - The Court is informed that, with effect from 1 September 1996, the rate has been reduced to 7% by the Royal Decree of 4 August 1996, Belgisch Staatsblad, 15 August 1996. At the oral hearing, counsel for Belgium informed the Court that the rate is determined essentially by reference to market forces.

(10) - According to Belgium's written observations, the summons (`dagvoording') was issued on 27 June 1995 while the service of formal notice (`ingebrekstelling') for the purposes of the rules governing the payment of interest took place on 26 August 1994. The final precise determination of the relevant dates is, of course, a matter for the national court.

(11) - Belgium refers to the sums of BFR 142 176, in respect of the first semester of 1994, and BFR 181 710, in respect of the period January to May 1995, in its written observations.

(12) - Belgium states in its written observations that the relevant requests were made during the period comprising 18 June 1990 to 12 June 1995 (hereinafter `the refund period'). It emerges expressly from the written observations of LPL (see paragraph 19 below) that its claim in respect of interest only relates to the period following the expiry of six months after each outstanding request was made.

(13) - The plaintiff states in its written observations that between 1989 and 1993, it entered into eight long-term contracts with Belgian clients, in addition to two others with, respectively, a Netherlands and Swiss company, under all of which the vehicles leased were purchased in Belgium.

(14) - Partially quoted in paragraph 3 above.

(15) - See Case C-16/95 Commission v Spain [1995] ECR I-4883, paragraph 8 of the judgment.

(16) - See, in this respect, the view I expressed in my Opinion in Commission v Spain, ibid., at paragraph 14.

(17) - Article 7(4) is quoted in full at paragraph 4 above.

(18) - Case C-330/91 [1993] ECR I-4017, hereinafter `Commerzbank'.

(19) - The plaintiff refers, among others in this respect, to the so-called `avoir fiscal' case, Case 270/83 Commission v France [1986] ECR 273.

(20) - At the oral hearing, counsel for Belgium pointed out that in some cases even taxable persons in Belgium are denied the benefit of the more favourable provisions of Article 92(3) of the Code regarding VAT refunds. The example of a baker purchasing a new house for business and private purposes and later selling it at a loss, while it was still regarded as new for VAT purposes, was cited. Apparently, if a delay in reimbursing the excess of input over output tax were to arise in such a case in Belgium, Article 92(4) of the Code would govern any subsequent refund request.

(21) - In its written observations, Belgium compares the situation of a resident and non-resident taxable person who both make refund claims on 20 April of a given year concerning the first trimester of the year. Whereas the non-resident taxpayer could, it asserts, claim interest with effect from 21 October of the same year, the resident taxpayer's debt could only, under Articles 76(1) and 91(3) of the Code, attract interest from 1 April of the following year. At the hearing, counsel for LPL, responding to this submission, relied upon the `avoir fiscal' case and contended that the mere fact that the non-resident taxpayer benefits advantageously from the rules in some cases does not justify the discrimination from which he suffers in others, such as that involved in the main proceedings.

(22) - The Commission says that it has initiated infringement proceedings under Article 169 of the Treaty by a letter of formal notice sent to Belgium on 5 July 1995 concerning, inter alia, the difference in interest rates at issue in the present case.

(23) - There is now a very extensive case-law dealing with the scope of the prohibition contained in Article 6: see, for example: Case 14/68 Wilhelm v Bundeskartellamt [1969] ECR 1, paragraph 13 of the judgment; Case 293/83 Gravier v City of Liège [1985] ECR 593, paragraph 15; Joined Cases C-92/92 and C-326/92 Collins and Others [1993] ECR I-5145, paragraphs 30 to 32; Case C-398/92 Mund & Fester v Hatrex International Transport [1994] ECR I-467, paragraph 14.

(24) - See, for example, Case 36/74 Walrave v Union Cycliste Internationale [1974] ECR 1405, paragraphs 5 and 6 of the judgment.

(25) - It is clear that LPL has always been liable for VAT in Luxembourg on its leasing activities. The circumstances of this case, accordingly, differ from those of Case C-302/93 Debouche v Inspecteur der Invoerrechten en Accijnzen [1996] ECR I-4495, where a Belgian lawyer, who was exempt, under a transitional exemption applied by Belgium under Article 28(3)(b) of the Sixth Directive, from VAT on the lawyers' services provided by him in Belgium, sought a refund of VAT included in the cost of leasing a car from a leasing company in the Netherlands which he used exclusively for his professional activity in Belgium.

(26) - See Case 168/84 Berkholz v Finanzamt Hamburg-Mitte-Altstadt [1985] ECR 2251, paragraph 14 of the judgment and Case C-167/95 Linthorst, Pouwels and Scheren v Inspecteur der Belastingdienst [1997] ECR I-1195, paragraph 10.

(27) - The Court has consistently held that wholly internal situations do not fall within the scope of Article 59; see, for example, Case C-41/90 Höfner v Elser [1991] ECR I-1979, paragraph 37 of the judgment and Case C-70/95 Sodemare and Others v Regione Lombardia [1997] ECR I-3395, paragraph 38.

(28) - It refers to Joined Cases 286/82 and 26/83 Luisi and Carbone v Ministero del Tesoro [1984] ECR 377, paragraph 16 of the judgment, and Case 186/87 Cowan v Trésor Public [1989] ECR 195, paragraph 15.

(29) - In Case 352/85 Bond Van Averteerders v Netherlands State [1988] ECR 2085, the Court held (paragraph 16 of the judgment) that, as regards a service provided by a cable network operator established in one Member State to broadcasters established in another, it was `... irrelevant that the broadcasters generally do not themselves pay the cable network operators for relaying their programmes', since `Article 60 does not require the service to be paid for by those for whom it is performed'.

(30) - See, in respect of income taxation, Case C-175/88 Biehl [1990] ECR I-1779, paragraph 14 of the judgment, and, as regards corporation tax, Commerzbank, loc. cit., paragraph 15.

(31) - See Case 13/63 Italy v Commission [1963] ECR 165, at p. 177.

(32) - See, for example, Case 106/83 Sermide v Cassa Conguaglio Zucchero [1984] ECR 4209, paragraph 28 of the judgment.

(33) - See paragraph 21 and footnote 20 above.

(34) - Apparently by 20 January of the following year where the calendar-year-plus-three-months rule applies and, where returns are made each trimester, by the 20th day of the month following the end of the trimester: see the second subparagraph of Article 8(1)(3) of Royal Decree No 4.

(35) - To recapitulate, where returns are made each trimester, it would appear that an excess of BFR 25 000 must, if requested, be refunded within three months of the trimester in which it arose: see Article 8(1)(2) and 8(1)(3) of Royal Decree No 4 discussed in footnotes 5 and 8 and also in paragraph 36 above.