WRITTEN QUESTION E-3840/97 by Nikitas Kaklamanis (UPE) to the Commission (5 December 1997)

Subject: Retroactive imposition of tax on mobile telephones

The Greek Government budget for 1998 for the first time imposes a tax on owners of mobile telephones based on the calls made. This tax (additional to VAT already payable) results in a disproportionate increase in costs for the consumers. It is being imposed retroactively and is seriously undermining competition since the tax is not being imposed on OTE (Greek telephone authority) non-mobile telephones.

Greek consumers object to the amount of the tax and the unacceptable fact that, when they subscribed to the mobile phone network, they were not informed that this tax, which applies retroactively, would subsequently be imposed.

What action will the Commission take in response to this decision by the Greek Government and will it consider instituting proceedings against Greece before the European Court of Justice?

Answer given by Mr Monti on behalf of the Commission (13 February 1998)

The Honourable Member refers to a Greek tax imposed retroactively on the owners of mobile phones based on the calls made. He draws attention to the objections by consumers in Greece to the amount of the tax and to its being levied retroactively. Finally, the Honourable Member asks whether the Commission will consider instituting proceedings before the Court of justice.

In the current state of Community law, the competence to legislate in the field of taxation lies predominantly within the powers of the Member States. However, whilst legislating in this field Member States have to take account of the fiscal provisions of the Treaties and of the secondary legislation in force.

In the light of the information provided by the Honourable Member the tax in question seems not to be in conflict with Article 95 of the EC Treaty, since it is levied on the use of imported and domestic mobile phones alike. A conflict with the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes common system of value added tax: uniform basis of assessment ((OJ L 145, 13.6.1977. )) is not visible, because the tax is not levied on the supply of goods or services in general. Finally, a contradiction with Council Directive 92/12/EEC of 25 February 1992 on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products ((OJ L 76, 23.3.1992. )) is not apparent, because this Directive permits Member States to introduce taxes on other products such as mobile phones provided that those taxes do not give rise to border crossing formalities in intra-Community trade.

Concerning the amount of the taxes, Community law does not prevent the Member States from levying high taxes. Therefore this question has to be resolved on the basis of the national legislation in question.

However, if the relevant tax were imposed only on the private cellular operators, and were to distort competition for the benefit of the public undertaking OTE, the measure should further be examined under the competition rules of the EC Treaty.

Also the retroactivity of national fiscal legislation has to be judged within the framework of the national legislation.

It is useful to recall that the Commission has devoted particular attention to the importance of taxation in the process of European integration. The Commission intends to continue the tasks given to it by the Treaties and to institute proceedings before the Court of justice in all cases where an infringement against Community law is established.