CELEX: 61984CC0018
Language: en
Date: 1985-03-12 00:00:00
Title: Opinion of Mr Advocate General Mancini delivered on 12 March 1985. # Commission of the European Communities v French Republic. # Tax advantages for newspaper publishers. # Case 18/84.

OPINION OF MR ADVOCATE GENERAL MANCINI
      delivered on 12 March 1985 (
            *1
         )
      
         Mr President,
      
      
         Members of the Court,
      
      
               1. 
            
            
               In this application, brought on 19 January 1984 under Article 169 of the EEC Treaty, the Commission of the European Communities claims that the French Republic has failed to respect the prohibition on measures having an effect equivalent to quantitative restrictions on imports.
               Article 80 of the Loi de finances (Finance Law) for 1980 (Law No 80-30 of 18 January 1980, Journal Officiel de la République Française of 19 January 1980) provides as follows: ‘The publishing firm referred to in Article 39 bis (1) of the Code Générale des Impots (General Tax Code) (that is to say, firms which publish newspapers or monthly or fortnightly periodicals devoted primarily to political news) may, by drawing upon the taxable profits for tax years 1980 and 1981, establish a reserve fund exclusively intended for the acquisition of equipment and buildings strictly necessary for the publication of the newspaper, or may deduct from those profits the expenditure incurred for the same purpose ... ’. Article 80 (5) further provides — and this introduces a change in relation to Article 39 bis — that ‘publishing firms shall not benefit (from the aforementioned tax relief) in respect of any part of their publications which are printed abroad’.
               The Commission considered that that new rule, which compelled French publishers to use national printing houses if they wished to enjoy the benefits for which it provided, infringed Article 30 of the EEC Treaty; it therefore twice requested the French Government to provide it with an explanation. Having received no reply, it sent to the French Government on 5 May 1983 a reasoned opinion in which it requested the Government to adopt the measures needed to put an end to the infringement of the Treaty within a period of one month. As the French Government had not complied with that request by the end of the prescribed period, the Commission lodged an application with the Court of Justice claiming that, by enacting that national publishing firms were not to benefit from certain tax relief in respect of publications which they had printed in other Member States, the French Government had infringed Article 30 of the EEC Treaty.
            
         
               2. 
            
            
               Thus the French Government did not set out its arguments in defence of the contested rule until the action was brought. Its chief argument is very simple: it claims that the rule has nothing to do with Article 30. The preparation and marketing of a publication may roughly be divided into three stages: supply of the paper, printing and distribution of the printed product. The first and third stages concern goods which, as such, must be allowed to circulate freely. That is not the case of the middle stage, since printing certainly cannot be described as a substantive product. It is a service and is therefore subject to the rules laid down in the Treaty in relation to services. It follows that the claim that the French Republic has infringed Article 30, which is intended to ensure the free movement of goods but not of services, is unfounded and must be dismissed.
               In reply to that argument the Commission makes the following observations: (a) according to the first paragraph of Article 60 of the Treaty, ‘Services shall be considered to be “services”...where they are normally provided for remuneration, in so far as they are not governed by the provisions relating to freedom of movement for goods’; (b) therefore, the free movement of services is of a residual nature as regards the other three important freedoms of the Community. A national measure might thus be criticized on the basis of either Article 30 or Article 59; in this case, however, the rule relating to goods is most relevant. The three stages described by the French Government in fact constitute a single process which commences with the order placed by the publishing company with its printer and ends when the printer dispatches the printed copies. In other words, the services provided by the printer are ‘absorbed’, as it were, by the actual supply of the copies ordered by the publisher; therefore the ‘physical’ element of the contractual relations between the persons concerned takes precedence over the ‘incorporeal’ element of the services provided, which therefore have no independent economic existence.
               The French Government replies by pointing out first that the Court has never accepted in its judgments that a service provided can be regarded as ‘absorbed’ by the supply of the goods which constitute the substantive basis for it. On the contrary, in its judgment of 30 April 1974 in Case 155/73 (Sacchi, [1974] ECR 409), the two situations were clearly distinguished. On the other hand, the Commission has not, according to the French Government, shown that the publications in question, regarded as a basis for the service provided, were subject to a quantitative restriction within the meaning of Article 30.
            
         
               3. 
            
            
               Although the arguments put forward by the parties both contain an element of truth, they are in my view rather weak. There is no need to recall that masterpiece of Renaissance printing, the famous Mainz Bible, or the lawsuit brought against its creator, Johann Gutenberg, in order to recognize that printing is not a mere service but a difficult and refined art, even as regards the preparation of a periodical review. Nor can it be denied that publications are products or goods, since they clearly appear under heading No 49.02 of the Common Customs Tariff. However, the problem in this case does not concern the definition under Community law of the publications referred to in Article 80 of the French Finance Law. The Court is asked whether that provision, by limiting the grant of certain tax benefits for French publishers, constitutes a measure likely to hinder, directly or indirectly, actually or potentially, intra-Community trade in the periodicals produced by such publishers.
               In order to answer that question, I would observe first of all that the French Government does not deny that the provision cited has a restrictive effect; at the hearing it in fact expressly admitted that, by defining it as an ‘effect induced by an obstacle (to the freedom) to provide, services’. On that premise, it is a question of establishing whether the restriction provided for in Article 80 actually affects intra-Community trade or rather, as the French Government maintains, constitutes an obstacle to the freedom to provide services; for that purpose it is sufficient to consider in detail the content of the contested rule, to determine the practical effect of the restriction to which it gives rise.
               As has already been stated in Section 1, the tax relief provided for by Article 80 may consist of a reserve fund constituted by means of the earmarking of part of the profit of the undertaking or the deduction from those profits of the expenditure incurred in the marketing of the newspaper or periodical. In both cases, therefore, the advantage offered to undertakings consists in tax relief for a part of the profits which they make from the sale of their publications. The inference to be drawn from that statement is clear: by providing that publishers ‘shall not benefit (from such advantages) for the part of their publications which (are) printed abroad’, the French legislature in fact sought to deny tax relief to the profits made from the sale of publications printed in the territory of other States.
               
               If that is the position, however, it clearly appears that the ‘practical effect’ of the rules is not to hinder the freedom to provide printing services, since that does not provide profits for publishers; its effect is rather to prevent the grant of the tax advantage in respect of profits obtained, wholly or in part, from the sale of French newspapers printed abroad and imported into France from abroad in order to be marketed there. Seen in that light, the provision clearly contains a measure having an equivalent — and therefore restrictive — effect. I would go further: the measure is discriminatory. Indeed, although the French Government stated at the hearing that the publications in question are chiefly marketed in France, it did not state that they are not also sold in other markets in the Community. If the periodical was printed in France, sales abroad would necessarily confer upon the publisher a tax-free profit; that would not be the case, however, if copies of the same periodical, printed abroad, were imported and sold in France or re-exported from France to other Community markets.
            
         
               4. 
            
            
               We are entitled and obliged to close our examination of the provision in question at this point. The Commission has several times stated that by this action it intended only to criticize the restrictive and discriminatory nature of Article 80 (5) of Law No. 80-30 of 18 January 1980 and not the entire system of tax relief provided for by Article 39 bis of the General Tax Code. The discussion between the parties as to whether the contested rule may be regarded as aid within the meaning of Articles 92 and 94 of the Treaty and as to the resulting procedural consequences are therefore superfluous: they involve an interesting question of interpretation but are extraneous to the matter in dispute, as defined by the applicant.
            
         
               5. 
            
            
               On the basis of the considerations set out above, I propose that the Court should rule as follows: By providing that publishers are not to benefit from tax relief in respect of any part of their publications printed in other Member States, the French Republic has failed to fulfil the obligations laid down in Article 30 of the Treaty.
               As the unsuccessful party, the French Government must be ordered to bear the costs.
            
         (
            *1
         )	Translated from the Italian.