Judgment of the Court of 2 August 1993. - Commission of the European Communities v Hellenic Republic. - Failure of a Member State to fulfil obligations - Tax exemptions applicable to temporary and permanent imports of means of transport - Directives 83/182/EEC, 83/183/EEC and 73/148/EEC. - Case C-9/92.



European Court reports 1993 Page I-04467



Parties

Grounds

Decision on costs

Operative part



Keywords

++++

1. Tax provisions ° Harmonization of laws ° Tax exemptions for temporary importation of means of transport and permanent importation of individuals' personal property ° Normal residence for the purposes of Directives 83/182 and 83/183 ° Definition ° Means of proof ° National rules incompatible with the Community rules

(Council Directives 83/182, Art. 7, and 83/183, Art. 6)

2. Freedom of movement for persons ° Rights of entry and residence of nationals of Member States ° Stamping of travellers' passports by the national authorities in order to check the period of time temporarily imported vehicles remain in Greece ° Permissible

(Council Directive 73/148, Arts 2(1) and 3(1))

3. Tax provisions ° Harmonization of laws ° Tax exemptions for temporary importation of means of transport ° Stamping of travellers' passports by the national authorities in order to check the period of time temporarily imported vehicles remain in Greece ° Permissible

(Council Directive 83/182, Art. 7(3))

4. Tax provisions ° Harmonization of laws ° Tax exemptions for temporary importation of means of transport ° Re-export of re-hired vehicles ° Setting of a particular time-limit ° Not permissible

(Council Directive 83/182, Art. 3(b))

Parties

In Case C-9/92,

Commission of the European Communities, represented by Maria Condou-Durande and Daniel Calleja, of its Legal Service, acting as Agents, with an address for service in Luxembourg at the office of Nicola Annecchino, of its Legal Service, Wagner Centre, Kirchberg,

applicant,

v

Hellenic Republic, represented by Fokion Georgakopoulos, Deputy Legal Adviser to the Judicial Council of State, acting as Agent, with an address for service in Luxembourg at the Greek Embassy, 117 Val Sainte-Croix,

defendant,

APPLICATION for a declaration that, by adopting and maintaining in force a system of temporary and permanent importation of means of transport which is incompatible with Council Directive 83/182/EEC of 28 March 1983 on tax exemptions within the Community for certain means of transport temporarily imported into one Member State from another (OJ 1983 L 105, p. 59), and Council Directive 83/183/EEC of 28 March 1983 on tax exemptions applicable to permanent imports from a Member State of the personal property of individuals (OJ 1983 L 105, p. 64), and also with Council Directive 73/148/EEC of 21 May 1973 on the abolition of restrictions on movement and residence within the Community for nationals of Member States with regard to establishment and the provision of services (OJ 1973 L 172, p. 14), the Hellenic Republic has failed to fulfil its obligations under the EEC Treaty,

THE COURT,

composed of: O. Due, President, C.N. Kakouris and M. Zuleeg (Presidents of Chambers), R. Joliet, J.C. Moitinho de Almeida, F. Grévisse, M. Diez de Velasco, P.J.G. Kapteyn and D.A.O. Edward, Judges,

Advocate General: G. Tesauro,

Registrar: H.A. Ruehl, Principal Administrator,

having regard to the Report for the Hearing,

after hearing oral argument from the parties at the hearing on 23 March 1993,

after hearing the Opinion of the Advocate General at the sitting on 21 April 1993,

gives the following

Judgment

Grounds

1 By application lodged at the Court Registry on 8 January 1992, the Commission of the European Communities brought an action under Article 169 of the EEC Treaty for a declaration that, by adopting and maintaining in force a system of temporary and permanent importation of means of transport which is incompatible with Council Directive 83/182/EEC of 28 March 1983 on tax exemptions within the Community for certain means of transport temporarily imported into one Member State from another (OJ 1983 L 105, p. 59, hereinafter "Directive 83/182"), and Council Directive 83/183/EEC of 28 March 1983 on tax exemptions applicable to permanent imports from a Member State of the personal property of individuals (OJ 1983 L 105, p. 64, hereinafter "Directive 83/183"), and also with Council Directive 73/148/EEC of 21 May 1973 on the abolition of restrictions on movement and residence within the Community for nationals of Member States with regard to establishment and the provision of services (OJ 1973 L 172, p. 14, hereinafter "Directive 73/148"), the Hellenic Republic has failed to fulfil its obligations under the EEC Treaty.

2 Directive 83/182 was transposed into national law in the Hellenic Republic by Ministerial Order No * 1254/141/1984 of 1 November 1984, subsequently amended by Ministerial Order No * 247/13 of 1 March 1988 ("Order 247/13"), and Directive 83/183 was transposed by Ministerial Order No * 264/23/2985 of 30 November 1985, as amended by Order No * 245/11 ("Order 245/11") of 1 March 1988. Circulars No * 357 of 22 March 1988 and No * 366/26 *o* 10 of 4 March 1988 respectively implement those orders.

3 According to the Commission, those measures contain provisions incompatible with the directives they are intended to transpose and a circular does not in any event constitute an appropriate instrument for such implementation. Finally, it claims, the Greek Government itself maintained practices incompatible with those directives and also with Directive 73/148/EEC.

4 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the procedure and the pleas and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.

Rules on determining normal residence

5 According to the Commission, the definition of normal residence contained in the first subparagraph of Article 3 of Order 247/13 and in Article 2(1)(c) of Order 245/11 is incompatible with the definition contained in Article 7(1) of Directive 83/182 and Article 6(1) of Directive 83/183. According to those provisions, "normal residence" means the place where a person usually lives, that is for at least 185 days of the calendar year, whereas in the Greek legislation the reference period is not the calendar year but the period of 12 months preceding importation.

6 Directives 83/182 and 83/183, adopted on the basis of Article 99 of the Treaty, seek to eliminate obstacles to the establishment of an internal market resulting from the taxation arrangements applied to temporary and permanent importation of certain means of transport for private or business use. As the Court pointed out in its judgment in Case C-297/89 Rigsadvokaten v Ryborg [1991] ECR I-1943, the concept of normal residence is fundamental to the system established by Directive 83/182. That is equally true of Directive 83/183.

7 The place of normal residence makes it possible to determine into which Member State the vehicle concerned has been temporarily or permanently imported, and which Member State is entitled to apply its tax legislation to it.

8 It follows that the concept of normal residence is a Community concept the scope of which may not be altered by the Member States.

9 The Hellenic Republic contends, however, that under Article 9(1) of Directive 83/182 and Article 11(2) of Directive 83/183 the Member States may maintain or introduce more liberal arrangements than those provided for in the directives. That it claims to be the case as regards the disputed measures. It maintains that taking into consideration the calendar year alone would mean that persons who fulfil the condition of 185 days' residence over a period of 12 months preceding importation but not in the calendar year would not be able to benefit under the provisions of the directive.

10 That argument cannot be accepted. As the Advocate General observed in paragraph 4 of his Opinion, "it is clear that, depending on the period in which the residence in question occurred (...) and on whether or not it was continuous, the fact that the 12-month period preceding importation is taken into account rather than the previous calendar year may prove disadvantageous or favourable [for the persons concerned]". Article 9(1) of Directive 83/182 and Article 11(2) of Directive 83/183 cannot, therefore, justify the Hellenic Republic' s adoption of a definition of "normal residence" different from that in the directives.

11 It follows that the claims alleging breach of Article 7(1) of Directive 83/182 and Article 6(1) of Directive 83/183 are well founded.

The Greek-law requirement, for permanent importation, of at least two years' residence in another Member State

12 The Commission considers that the condition to which Article 4(1) of Order 245/11 subjects the grant of the exemption in the case of permanent importation, which is that the importer must have been normally resident outside Greece for at least two periods of 12 months preceding transfer of that residence, is not mentioned in Article 6(1) of Directive 83/183 and is therefore incompatible with that provision.

13 The Hellenic Republic argues that the Member States may lay down a minimum period of "normal residence". That term assumes that domicile is characterized by continuity and stability, which cannot be inferred from the factors mentioned in the directive alone, which are residence for 185 days during the calendar year and personal and occupational ties.

14 That argument cannot be accepted. As pointed out in paragraph 8 of this judgment, Directive 83/183 does not leave the Member States any freedom to supplement the concept of normal residence defined in Article 6(1).

15 Consequently, the claim alleging breach of that provision is well founded.

Proof of normal residence

16 The Commission considers that the defendant has failed to transpose into national law Article 7(2) and (3) of Directive 83/182 and Article 6(2) and (3) of Directive 83/183. Under those provisions, proof of the place of normal residence may be adduced by any means, in particular by production of an identity card or any other valid document. It is only where the competent authorities of the Member State of importation have doubts as to the validity of a declaration of normal residence or for the purpose of certain specific controls that they may request additional information or evidence.

17 Orders 247/13 and 245/11 are restricted, by Articles 15 and 29 respectively, to introducing a rule placing the burden of proof of normal residence on the applicant. The rules on proof of normal residence are to be found in Title II of Circular No * 366/26 *o*. The latter, addressed to the customs authority, specifies the various documents which may be taken into account in determining normal residence.

18 According to the Commission, a circular is not an appropriate instrument for the transposition of directives which, like those in the present case, are intended to create rights for individuals. The Greek legislation confers on the customs authority a broad discretion as to the evidence which may be required irrespective of the existence of doubts as to the place of normal residence.

19 The Hellenic Republic challenges that claim, pointing out that Circular No * 366/26 *o* is compatible with the directives and that, contrary to the Commission' s assertions, the evidence mentioned therein cannot be demanded where there are no doubts as to the place of normal residence.

20 It should be noted in this regard that, as the Court has consistently held (see, inter alia, Case C-58/89 Commission v Germany [1991] ECR I-4983), where a directive is intended to create rights for individuals, the persons concerned must be able to ascertain the full extent of their rights and, where appropriate, rely on them before the national courts. Such is not the case where the instrument chosen in order to transpose a directive is a circular the provisions of which do not have direct effect as regards third parties.

21 As the Commission has observed, the ministerial orders in question make no provision for the transposition of Article 7(2) and (3) of Directive 83/182 or Article 6(2) and (3) of Directive 83/183, which permit individuals to establish their normal residence by any means and restrict the requiring of additional information or evidence solely to cases in which doubt arises as to the validity of a declaration of normal residence or in which certain specific controls are carried out.

22 Finally, Title II of Circular No * 366/26 *o* lists the various documents which the customs authorities may take into consideration in determining normal residence. According to the last paragraph of that title, those documents "shall also serve to establish a person' s residence for 185 days in each 12-month period, where this cannot be determined from the passport alone".

23 Those provisions do not clearly establish that proof of normal residence may be adduced by any means and that it is only in case of doubt or where certain specific controls are carried out that additional information or evidence may be required. Consequently, they cannot in any event be considered to constitute proper transposition of Article 7(2) and (3) of Directive 83/182 and of Article 6(2) and (3) of Directive 83/183.

The Greek-law requirement, for permanent importation, of a five years' residence permit as proof of change of normal residence

24 The Commission considers that the requirement of a five years' residence permit as proof of normal residence, laid down in Title III of Circular No * 357, is also contrary to Article 6(2) and (3) of Directive 83/183.

25 The Hellenic Republic argues that this objection is inadmissible, since it was only in its answer to a question asked by the Court that the Commission referred for the first time to Circular No * 357. Consequently, the applicant has, in its opinion, unacceptably widened the scope of the action.

26 In that regard, it is sufficient to note that the requirement of a five years' residence permit for the grant of the exemption had already been mentioned by the Commission in the pre-litigation procedure. Since the reference to the circular merely served to substantiate this objection, it must be held to be admissible.

27 In its reply to the reasoned opinion, the Hellenic Republic acknowledged the existence of that requirement but regarded it as justified. It considers it absurd to expect a Member State to grant the exemption provided for by Directive 83/183 before the person concerned is authorized to reside in its territory.

28 In this context it should be noted that Article 6 of Directive 83/183 contains general rules for determining normal residence. It defines that term in order for it to have the same meaning in all the Member States and lays down rules for determining normal residence so as to prevent unjustified hindrances to the grant of the exemption from being created by excessively strict requirements of proof.

29 In the light of those objectives, Article 6 of Directive 83/183 must be interpreted as concerning not only proof of normal residence in the Member State of origin but also transfer of normal residence to the Member State of importation. The requirements as to proof are the same in both cases and, again in both cases, there is a risk that grant of the exemption may be hindered.

30 Next, transfer of normal residence may be proved by means other than a residence permit, in particular by a contract of employment for an indefinite period or by a lease. Consequently, requiring a residence permit as the only proof of such a transfer creates unjustified obstacles to the grant of the exemption. Those obstacles come about as a result of the period allowed for issuing the permit which, pursuant to Article 5(1) of Council Directive 64/221/EEC of 25 February 1964 on the coordination of special measures concerning the movement and residence of foreign nationals which are justified on grounds of public policy, public security or public health (OJ, English Special Edition 1963-1964, p. 117), is six months from the date of application. The specific aim of Directive 83/183 is to eliminate such obstacles.

31 Finally, with regard to the argument put forward by the Hellenic Republic in its answer to the reasoned opinion, it should be borne in mind that the Court has consistently held (see, inter alia, Case 48/75 Royer [1976] ECR 497) that a residence permit is not a measure giving rise to a right for a national of a Member State to reside in another Member State in order to exercise a fundamental freedom or in the cases provided for by legislation adopted under the Treaty, but simply proof of such right of residence.

32 For the reasons mentioned in the previous paragraphs, transfer of normal residence may be proved by any means, regardless of the formalities required to establish the right of residence.

33 It follows that the claim alleging breach of Article 6(2) and (3) of Directive 83/183, concerning the Greek-law requirement that a five years' residence permit must be produced in order to establish transfer of normal residence, is also well founded.

Stamping of passports

34 The Commission objects to the Hellenic Republic' s practice of stamping passports with vehicle registration numbers when vehicles enter and leave Greek territory in order to monitor how long vehicles remain there. It claims that this practice is contrary to Articles 2(1) and 3(1) of Council Directive 73/148/EEC of 21 May 1973 on the abolition of restrictions on movement and residence within the Community for nationals of Member States with regard to establishment and the provision of services, and to Article 7(3) of Directive 83/182.

35 In the Commission' s view, it is clear from the decisions of the Court that the abovementioned provisions of Directive 73/148 prohibit any formality for authorizing entry into the territory of a Member State in addition to the checking of passports or identity cards at the frontier, wherever or whenever that authorization is issued and whatever the form it takes. According to the Commission, the practice at issue, even if applicable only to persons travelling with a passport and not to those travelling with an identity card, constitutes a real obstacle to freedom of movement for persons and is therefore contrary to the abovementioned provisions.

36 With regard to the alleged breach of Article 7(3) of Directive 83/182, the Commission points out that that provision allows controls to be made only where there are serious doubts as to the place of residence of the person temporarily importing the vehicle. That is not the case with the practice in question which systematically concerns passport holders.

37 In this respect, it must be observed that the practice in dispute does not constitute an obstacle to the free movement of persons contrary to the abovementioned provisions of Directive 73/148. Under that practice, travellers had to produce their passports as proof of identity and had no cause to refuse to have them stamped as a means of checking the length of time vehicles remained in Greece.

38 Article 7(3) of Directive 83/182 is concerned with proof of normal residence or of its transfer and not with controlling compliance with the period for which the exemption is granted. Since there are no relevant provisions of Community law, the Member States are free to adopt measures such as those at issue.

39 The claim alleging breach of Articles 2(1) and 3(1) of Directive 73/148 and of Article 7(3) of Directive 83/182, concerning the stamping of travellers' passports with the registration numbers of their vehicles, cannot therefore be upheld.

Setting of a time-limit for the re-export of vehicles re-hired in accordance with Article 3(b) of Directive 83/182

40 The Commission considers that, by setting a time-limit of 10 days for the re-export of a vehicle re-hired in accordance with Article 3(b) of Directive 83/182, Article 8(2) of Ministerial Order No 247/13 infringes the former provision.

41 The Hellenic Republic argues that Article 3(b) contains a rule prohibiting any temporarily imported vehicle from being disposed of or hired out, together with an exception to that rule permitting re-hiring where the vehicle belongs to a firm having its head office in the Community and is in the country concerned as a result of a hire contract which ended in that country. However, the vehicle may be re-hired only in order to be re-exported and not in order to be used in the territory of the Member State of temporary importation throughout the duration of that importation. According to the defendant, if the directive were to be interpreted in the way suggested by the Commission, this would lead to distortion of competition as car-hire firms having their head office outside Greece would use vehicles costing less than vehicles used by hire firms governed by Greek law.

42 That argument cannot be accepted. Article 3(b) of Directive 83/182 contains a complete body of rules applicable to the hire of certain temporarily imported means of transport, which does not lay down any specific time-limit for the re-export of vehicles re-hired to non-residents, which must accordingly take place within the period allowed for temporary importation. If the Community legislature had intended to avoid the situation described by the Hellenic Republic, it would itself have set a time-limit for the re-export in question.

43 It follows from all the foregoing considerations that the Hellenic Republic has failed to fulfil its obligations under the Treaty

° by failing to adopt the measures necessary to transpose into national law the provisions of Article 7 of Council Directive 83/182/EEC of 28 March 1983 on tax exemptions within the Community for certain means of transport temporarily imported into one Member State from another and Article 6 of Council Directive 83/183/EEC of 28 March 1983 on tax exemptions applicable to permanent imports from a Member State of the personal property of individuals;

° by adopting a definition of "normal residence" different from that laid down by the abovementioned provisions;

° by requiring at least two years' residence in another Member State for the grant of the exemption in the case of permanent importation, contrary to Article 6(1) of Directive 83/183;

° by requiring the production of a five years' residence permit as proof of transfer of normal residence, contrary to Article 6(2) and (3) of Directive 83/183;

° by setting a time-limit of 10 days for re-exporting of a vehicle, hired out in accordance with Article 3(b) of Directive 83/182, contrary to that provision.

Decision on costs

Costs

44 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs. Since the Hellenic Republic has been essentially unsuccessful, it must be ordered to pay the costs.

Operative part

On those grounds,

THE COURT

hereby:

1. Declares that,

° by failing to adopt the measures necessary to transpose into national law the provisions of Article 7 of Council Directive 83/182/EEC of 28 March 1983 on tax exemptions within the Community for certain means of transport temporarily imported into one Member State from another and Article 6 of Council Directive 83/183/EEC of 28 March 1983 on tax exemptions applicable to permanent imports from a Member State of the personal property of individuals;

° by adopting a definition of "normal residence" different from that laid down by the abovementioned provisions;

° by requiring at least two years' residence in another Member State for the grant of the exemption in the case of permanent importation, contrary to Article 6(1) of Directive 83/183;

° by requiring the production of a five years' residence permit as proof of transfer of normal residence, contrary to Article 6(2) and (3) of Directive 83/183;

° by setting a time-limit of ten days for re-export of a vehicle, hired out in accordance with Article 3(b) of Directive 83/182, contrary to that provision,

the Hellenic Republic has failed to fulfil its obligations under the Treaty;

2. Dismisses the remainder of the action;

3. Orders the Hellenic Republic to pay the costs.