CELEX: 61979CC0081
Language: en
Date: 1980-06-19
Title: Opinion of Mr Advocate General Mayras delivered on 19 June 1980. # Denise Sorasio-Allo, Cecilia Aimo-Campogrande, Alain-Pierre Allo v Commission of the European Communities. # Tax abatement for a dependent child. # Joined cases 81/79, 82/79 and 146/79.

OPINION OF MR ADVOCATE GENERAL MAYRAS
      DELIVERED ON19 1980 (
            1
         )
      
         Mr President,
      
      
         Members of the Court,
      
      The three actions before the Court have been brought against the Commission by three of its officials. They are concerned with the conditions under which the tax abatement for dependent children is granted where both parents are officials of the Communities.
      In order not to trespass upon the Court's time I take the liberty of referring to the report for the hearing for an account of the facts which have given rise to these cases and are moreover not disputed.
      The applicants complain that the Commission refuses to grant an official of the Community having a dependent child the right to the tax abatement in question, the pretext being that the spouse, being also an official of the Community, also receives it. In their view this practice contravenes the relevant legal provisions and is ultra vires — that is their first submission; it also gives rise to discrimination against them — that is their second submission which they put forward in the alternative.
      I —
      The provisions which in their first submission they claim have been contravened are:
      
               (a)
            
            
               the second subparagraph of Article 3 (4) of Regulation (EEC, Euratom, ECSC) No 260/68 of the Council of 29 February 1968 relating to the tax assessed by the Communities on their officials salaries and
            
         
               (b)
            
            
               the first subparagraph of Article 2 (2) and Article 2 (6) of Annex VII to the Staff Regulations which lays down the rules relating to remuneration and reimbursement of expenses.
            
         The second subparagraph of Article 3 (4) of Regulation No 260/68 on taxation is the main provision at issue. It provides that: “An additional abatement equivalent to twice the amount of the allowance for a dependent child shall be made for each dependent child of the person liable as well as for each person treated as a dependent child...”. This provision therefore lays down, on the one hand, the principle of and, on the other hand, certain rules for the application of the tax abatement for a dependent child.
      Article 2 (2) of Annex VII gives a definition of “dependent child”. It is not disputed that the applicants have dependent children within the meaning of the first subparagraph of Article 2 (2) or that the expression “dependent child” in the tax regulation is to be understood within the meaning given to it by that paragraph.
      Article 2 (6) of Annex VII is a provision against overlapping of dependent-child allowances. It calls to mind the general principle against overlapping which is set out in Article 67 (2) of the Staff Regulations in relation to the family allowances referred to in that article.
      
               (1)
            
            
               The applicants claim that the breaches of these provisions by the defendant and its ultra vires acts result from the fact that in practice the Commission applies to the tax aspect of dependent-child allowance the rule against overlapping laid down in Article 67 (2) in relation to family benefits. To be more accurate the defendant makes the grant of the tax abatement subject to two additional conditions compared with the tax regulation:
               
                        (a)
                     
                     
                        the receipt by the taxpayer of the dependent-child allowance provided for by Article 2 (1) of Annex VII to the Staff Regulations, where appropriate in conjunction with Article 2 (6), as stated in a note to the applicant in Case 81/79;
                     
                  
                        (b)
                     
                     
                        the existence of a dependent child giving the right to an allowance for the child, as the Commission's defences in the joined cases have enabled the applicants to emphasize.
                     
                  In doing so the defendant, it is alleged, fails to understand the scope of the tax regulation, which, being clear and precise, does not admit of any different interpretation.
               On the other hand in the Commission's view the second subparagraph of Article 3 (4) of Regulation No 260/68 is not as clear as the applicants maintain. The defendant certainly concedes that the stress may be laid on the expression “each dependent child” with the result that the existence of a dependent child of the taxpayer would automatically lead to his receiving the tax abatement. But it takes the view — and this is its argument — that the stress may also be laid on the fact that the child must be dependent on the taxpayer so that this abatement amounts to a supplementary family allowance designed to offset the expenses incurred in respect of the child. In its view the second subparagraph of Article 3 (4) does therefore admit of interpretation.
               Although the provision in question is a tax provision it does not follow that it must necessarily be interpreted in favour of the taxpayer or that its basis and purpose may not be taken into account. The basis and purpose of the tax abatement for a dependent child are without question to contribute towards the cost of educating and maintaining children. The tax abatement, at least in practice if not formally, is thus in the Commission's view a supplementary dependent-child allowance, the actual beneficiary being the child. It follows that this abatement can be allowed only once per child. Furthermore from the Commission's standpoint it is in a way materially impossible for the mother and father to contribute at the same time fully to the expense of one child.
               The defendant goes on to say that its practice is followed also in the other Community institutions in accordance, moreover, with Article 10 of Regulation No 260/68 which provides that “The governing bodies of institutions of the Communities shall cooperate for the purpose of applying this regulation in a uniform manner”. It also points out that in all the other Member States as well the dependent-child tax abatement or the equivalent is granted only once per child. That is in particular the case in Italy where the incomes of husband and wife are separately assessed, that is to say in accordance with a system of individual assessment similar to that imposed on officials of the Communities.
            
         
               (2)
            
            
               For my part I share the applicants view that, whatever the approach to the second subparagraph of Article 3 (4), the only condition laid down by that provision for granting the abatement is that the taxpayer has a dependent child so that by adding to its unambiguous wording the defendant has manifestly disregarded it.
               On the other hand, if it is permissible to go beyond the strict limits to any consideration of the actual wording of this provision in order to tackle questions such as the basis and purpose of the dependent-child tax abatement or the situation in the Member States in this connexion I dare say the defendant is right. But the problem happens to be whether it is possible to follow the defendant in this direction.
               In order to determine this question it is in my view necessary to start from the provision which is to be interpreted and not to forget that, in order to validate a practice which cannot be reconciled with its wording, the Commission is bound to call in aid the basis and purpose of the tax rule by means of a broad interpretation against the taxpayer.
               We are in fact confronted with a provision of which it is possible to say discreetly, as the representative of the defendant institution did during the hearing, that it is to be regretted that it does not define the problem more clearly or, to use plainer language, that it is ambiguous and incomplete.
               In these circumstances it is in my view for the Court simply to apply the provision as it is rather than endeavour to hallow the way in which it has hitherto been applied. It is not for the Court to take the place of the authors of the regulation on Community taxation. It is not the task of the Court to legislate but to undertake a review, nor is it the task of a meeting of heads of administration to add to it in reaching agreement on a common application of regulations applying to officials. If, as I believe, an amendment of the second subparagraph of Article 3 (4) of Regulation No 260/68 is urgently necessary, it is the sole responsibility of the Community legislature.
               It seems to me that the duty to do this is all the more pressing as we are concerned with a tax provision. It is a principle accepted in all the Member States of the Community that tax provisions are to be construed strictly and that if there is doubt the interpretation most favourable to the taxpayer must be adopted. There is no justification for a different approach to the tax levied by the Community on the salaries of its servants.
               If these principles happen to give way to the opposite principles there must be a serious reason for this, usually based on equity. On this latter point the applicants assert in their second submission that, in their capacity as spouses of other Community officials, they are discriminated against compared with officials whose spouses work outside the Communities and receive a dependentchild abatement or similar advantage. But the defendant's reply to this is that the system which they advocate, by reason of the fact that the husband and wife who are officials each receive a tax abatement for the same child, also leads to discrimination against those officials whose spouses do not work or, if they do, do not reap an advantage of the kind in question.
               That is why, without wishing to settle that issue now, I believe that there is no discrimination which is so obvious that one may venture to disregard the principles I have mentioned.
               Furthermore the practice criticized by the defendant, which has consisted in adopting a rule against overlapping without there being any provision to that effect, contravenes another universally recognized principle namely that a rule against overlapping cannot be presumed. If the authors of Regulation No 260/68 had intended to adopt such a rule they would have had to mention it expressly. Their failure to state their intention expressly cannot be validly made good by the administration's adopting a practice of this kind which is bound to be legally void. It is therefore impossible to accept the Commission's justification of its view, namely that the dependent-child tax abatement from the practical standpoint, in other words having regard to the objective which it seeks to attain, proves to be a supplementary family allowance, a classification put forward by the defendant in order to be able to apply to it the general principle against overlapping, applicable even without any provision to that effect, which it asserts is based on Article 67 (2) of the Staff Regulations, although that provision refers specifically only to the allowances mentioned in Article 67 (1).
               An analysis of this argument reveals moreover that it does not fully appreciate the facts. As is shown by the document headed “Codification and Terminology of the Personnel Individual Record Sheet” of Commission officials, an official who has a child in respect of which there is, however, no entitlement to the family allowance for a dependent child receives the tax abatement.
               Consequently since a dependent child, in respect of which there is no entitlement to that allowance, may give rise to entitlement to the tax abatement, logically the inference should be drawn that receipt of the tax abatement is not necessarily linked to there being a dependent child giving rise to entitlement to an allowance. This reasoning, however, cannot be accepted because, in the case of two officials who are husband and wife, only the spouse who is in receipt of the allowance and is consequently entitled to it receives the tax abatement.
               Finally there can be no doubt that the practice of avoiding overlapping to which exception is taken disregards the essence of the system of Community taxation. Because the Community legislature has organized a system for taxing the individual the defendant is not entitled to take into consideration the tax situation of another taxpayer, even if that person is the spouse of one of its officials, and then refuse to grant the latter the tax abatement to which from a reading of the relevant provision, he is without question entitled.
            
         II —
      It is also on the basis that the provision at issue is a tax provision that I shall consider the alternative submission which the applicants purport to base on breach of the principles of equal treatment, and of distributive justice and equity.
      These breaches are alleged to occur when, as we have seen, a husband and wife are both Community officials and have a dependent child and only the spouse in receipt of the dependent-child allowance is entitled to the tax abatement, whereas, when the couple consists of an official and a person working outside the Communities, the official receives the tax abatement in any case, that is to say even if the spouse receives a comparable tax abatement under the rules governing his or her remuneration.
      
               1.
            
            
               In the view of the defendant, who relies on the Court's judgment of 16 June 1971 in Joined Cases 63 to 75/70, Fritz August Bode and Others v Commission of the European Communities [1971] ECR 549, this comparison has no justification, because by taking into account a possible tax abatement in the system applicable to the pay of the spouse who is not a Community official it imports a factor which is extraneous to the administration and over which it has no control.
               The applicants agree with that. But they take the view that, even if they restrict themselves to the field of application of Community regulations, the principle of equal treatment has not to that extent been respected. The practice of avoiding overlapping, which they call in question, is not in fact accompanied by its necessary corollary, a duty to declare benefits received from another source.
               The Commission then takes up a practical position and retorts that, although that obligation may be discharged quite easily in the case of family allowances, the calculation of the tax abatement is on the other hand very much more difficult. On the one hand, this abatement is applied monthly at the Commission, contrary to what happens in most of the Member States where it is granted once each year. On the other hand, even if the rules governing the national tax abatement are known, it is often difficult to work out by exactly what amount the tax payable by the official's spouse is reduced.
               However, that objection does not appear to me to be a complete answer to the applicants' complaint. Although it is in fact technically impossible to take into account any tax abatement granted under a law other than Community law, the only way of avoiding discrimination is to abolish the practice against overlapping, instead of applying it to some persons but not to others, which is what happens at present.
            
         
               2.
            
            
               The Commission's second line of defence is the assertion that, if the comparison put forward is taken into account it does not establish the existence of discrimination, for, in accordance with the Court's judgment of 16 December 1960 in Case 6/60, Jean-E. Humblet v Belgian State [1960] ECR at pp. 579 and 580 the comparison must relate to the financial situation of the husband and wife taken as a whole.
               In this connexion I do not in the first place believe that the quotations selected from the Humblet judgment (that, regard being had to “logical, economic and financial considerations, the total income of a taxpayer constitutes an organic whole”, given that in that case the incomes of Mr and Mrs Humblet were included in the total income; “... the essential comparison which is required here must be between Community officials of different nationalities receiving the same gross remuneration and having also in their respective countries equal amounts of other taxable income”) apply as generally as the Commission assumes.
               It seems to me that these passages may be quoted to advantage outside their context only if great care is used: they seem to me to be primarily links in the Court's reasoning in support of its argument. That case was concerned with a very different question from the one with which we are dealing, namely whether the remuneration which the Communities pay their officials may be taken into account for the purpose of fixing the tax rate applicable to their other income or that of their spouse. As will be remembered, the Court's answer to this question was an unqualified negative.
               Is not the argument chosen also inconsistent with the view put forward in another connexion by the Commission? Does not an examination of the financial position of the husband and wife as a whole involve taking into consideration the income of the official's spouse and the tax arrangements applicable to it, which are so many factors outside the Community's field of activity? Furthermore it seems to me to be difficult to reconcile taking that income and those tax arrangements into consideration with the general principles and even the solution provided by the judgment relied on.
            
         
               3.
            
            
               Finally the Commission endeavours to turn to its own advantage the complaint made against it by asserting that the applicant's system itself gives rise to discrimination. In its opinion it discriminates against officials whose spouses are not in gainful employment and also against those whose spouses are gainfully employed in a State which does not operate the system of tax abatements provided for by Community provisions. Both can receive only one tax abatement per child, whereas, if the applicants' view is adopted, where the child's parents are both officials of the Communities, two tax abatements would be granted in respect of one child.
               This reply might be conclusive if, once again, the defendant did not fail to consider the nature of the provision at issue, which provides for a tax abatement, that is to say for a proportion of the taxable product being excluded from the assessment of the tax payable. This abatement operates as a deduction from the tax on the taxpayers' remuneration which is the consideration for their work. Consequently a person who is not at work cannot receive a tax abatement against tax assessed on remuneration and incidental payments. As far as concerns persons working outside the Communities who do not receive any tax abatement for a dependent child, again the defendant is on weak ground in taking into consideration for the sake of its case a factor which is extraneous to the Community's field of activity, when it refuses with good reason to do so in other connexions.
            
         III —
      Since the applicants consider that the practice which they refuse to accept constitutes a wrongful act or omission they also claim that the Court should order the defendant to pay default interest or at least interest to be fixed by the Court. In this connexion the issue between the parties is the applicability to these joined cases of the solution contained in the Court's judgment of 9 July 1970 in Case 23/69, Anneliese Fiehn v Commission of the European Communities [1970] ECR 547 according to which “apart from the exceptional instance the adoption of an incorrect interpretation does not constitute in itself a wrongful act” (page 560).
      In the defendant's view these cases do not disclose any exceptional factor allowing any departure from the principle. On the contrary they have one point in common with the Fiehn case, namely that they also constitute an interpretation of the contested provisions which is presumed to be incorrect.
      On the other hand, the applicants, in order to rule out this principle, put forward two reasons — which cannot be distinguished from their two submissions in support of their application for annulment: the practice complained of is more than an incorrect interpretation of an ordinary provision, it is tantamount to distorting a provision which is unambiguous: it is also discriminatory since it is applied to some officials but not to others.
      In order to determine this question I rely on the reasoning of the Court's judgment of 13 July 1972 in Case 79/71, Aio Heinemann v Commission of the European Communities [1972] ECR 589 according to which an action for damages is an independent legal remedy which cannot be equated with an action for annulment, because it originates in a wrongful act and not in an illegality.
      In these cases I do not believe that the defendant administration has been guilty of such a wrongful act, which presupposes, as the well-established case-law of the Court has laid down, negligence on its part. In addition to the Fiehn judgment and the Heinemann judgment ([1972] ECR at pp. 589 and 590), which have already been quoted, mention must be made in this connexion of the similar case dealt with in the Court's judgment of 28 May 1970 in Joined Cases 19, 20, 29 and 30/69 Denise Richez-Parise and Others v Commission of the European Communities [1970] ECR at pp. 339 and 340 and in other fields of the judgment of 15 December 1966 in Case 62/65, Manlio Seno v Commission of the EAEC [1966] ECR at p. 571, of the judgment of 12 July 1973 in Joined Cases 10 and 47/72, Nunzio di Pillo v Commission of the European Communities [1973] ECR at p. 772 and of the judgment of 24 June 1976 in Case 56/75, Raymond Elz v Commission of the European Communities [1976] ECR at p. 1112.
      Such negligence does not seem to me to have been proved, because, by carrying out the practice deservedly criticized by the applicants, the Commission has only complied, as it has expressly stated (Annex I to its defence), with the decisions adopted by the heads of administration pursuant to Article 10 of Regulation No 260/68, which, as we have seen, provided that there was to be inter-institútional cooperation for the purpose of applying the regulation in a uniform manner.
      As a resuit of these considerations my opinion is that the Court should
      
               —
            
            
               Declare that the applicants were entitled from the date when they took up their duties, and are entitled, for each dependent child to the additional abatement equivalent to twice the amount of the allowance for a dependent child (Cases 81 and 82/79);
               Declare that the applicant is entitled for each dependent child to the additional abatement equivalent to twice the amount of the allowance for a dependent child (Case 146/79);
            
         
               —
            
            
               Annul the applicants' salary statements commencing with the first slip received during the period of three months preceding their complaints to the extent to which the assessment of tax on the said statements does not take into account the dependent-child tax abatement to which they are entitled, and annul the implied decisions rejecting their complaints (Cases 81 and 82/79);
            
         
               —
            
            
               Annul the decision disallowing the additional tax abatement at the time of the determination of the applicant's taxable remuneration as from 1 April 1979 for two dependent children and the implied decision rejecting his complaint (Case 146/79);
            
         
               —
            
            
               Reject the remainder of the applications;
            
         
               —
            
            
               Order the defendant to pay the costs.
            
         I do not wish to conclude my opinion without adding an observation which I believe is not irrelevant, on the enforcement of the judgment to be delivered by the Court if it were to accord with my opinion.
      In consequence of the annulment of the decisions at issue it will be for the defendant to pay the applicants the amounts corresponding to the overpayments of tax. But, contrary to the applicants' assertion in Cases 81 and 82/79, this payment can only cover tax relating to the salary statements which they received as from the third month preceding their complaint.
      With reference to the preceding period the applicants' claims are in fact barred under Article 90 (2) of the Staff Regulations. Since the provision at issue, which has not been subsequently amended, entered into force as far back as 1968, that is to say well before they took up their duties with the Commission, which in the case of Mrs Sorasio-Allo was in 1973, and in the case of Mrs Aimo-Campogrande in 1974 and since their dependent children were alive on those dates, except for Mrs Sorasio-Allo's second child which was born in 1974, they should have submitted their complaints as follows:
      
               —
            
            
               Mrs Aimo-Campogrande: as soon as she received her first salary statement;
            
         
               —
            
            
               Mrs Sorasio-Allo: with regard to the first tax abatement due to her, as soon as her husband Mr Alio received his first salary statement, since he entered into the service of the Commission after she did; with regard to the second tax abatement, on receipt of the first salary statement following the birth of her younger child.
            
         (
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         )	Translated from the French.