GIL Insurance Ltd and Others v Commissioners of Customs & Excise.
Date: 2004-04-29
29. The United Kingdom and the Commission submit that IPT, far from constituting a turnover tax prohibited by Article 33 of the Sixth Directive, constitutes a tax on contracts of insurance expressly authorised by that very provision.
Findings of the Court
31. It is settled case-law that Article 33 of the Sixth Directive prohibits the Member States from introducing or maintaining taxes, duties or charges in the nature of turnover taxes (Case 252/86 Bergandi  [1988] ECR 1343, paragraphs 10 and 11; Joined Cases 93/88 and 94/88 Wisselink and Others  [1989] ECR 2671, paragraphs 13 and 14; Case C-200/90 Dansk Denkavit and Poulsen Trading  [1992] ECR I-2217, paragraph 10; and Case C-28/96 Fricarnes  [1997] ECR I-4939, paragraph 36).
32. Taxes, duties and charges must in any event be regarded as being such measures if they exhibit the essential characteristics of VAT, even if they are not identical to VAT in all points (see, inter alia, Fricarnes , paragraph 37).
33. Those characteristics are as follows: VAT applies generally to transactions relating to goods or services; it is proportional to the price of those goods or services, whatever the number of transactions carried out; it is charged at each stage of the production and distribution process; and, finally, it is imposed on the added value of goods and services, since the tax payable on a transaction is calculated after deducting the tax paid on the previous transaction (see, in particular, Bergandi , paragraph 15; Case C-347/90 Bozzi  [1992] ECR I-2947, paragraph 12; and Case C-130/96 Solisnor-Estaleiros Navais  [1997] ECR I-5053, paragraph 14).
34. Article 33 of the Sixth Directive does not, on the other hand, preclude the maintenance or introduction of a tax which does not display one of the essential characteristics of VAT ( Solisnor-Estaleiros Navais , paragraphs 19 and 20).
35. In this respect, it is common ground that a tax such as that described by the national tribunal is not a general tax, since it is not intended to attach to all economic transactions in the Member State concerned (see, to that effect, Solisnor-Estaleiros Navais , paragraph 17, and Case C-208/91 Beaulande  [1992] ECR I-6709, paragraph 16). IPT applies only to a specific service, the supply of insurance, since it is charged at the standard rate on the receipt of premiums in connection with contracts of insurance and at the higher rate solely on insurance premiums relating to motor cars, domestic appliances and travel where, in the case of the latter two sectors, the insurance contract possesses certain characteristics.
66. According to settled case-law, Article 87(1) EC defines State aid, which is in principle incompatible with the common market, as aid granted by a State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods, in so far as it affects trade between Member States (see Case C-126/01 GEMO  [2003] ECR I-0000, paragraph 22 and the case-law cited).
68. Article 87(1) EC requires it to be determined whether, under a particular statutory scheme, a State measure is such as to favour ‘certain undertakings or the production of certain goods’ in comparison with others which, in the light of the objective pursued by the system in question, are in a comparable legal and factual situation (Case C-143/99 Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke  [2001] ECR I-8365, paragraph 41, and Case C-409/00 Spain  v Commission  [2003] ECR I-1487, paragraph 47). If that is the case, the measure concerned satisfies the condition of selectivity which is a constituent of the concept of State aid under that provision ( GEMO , paragraph 35, and Spain  v Commission , paragraph 47).
69. The concept of aid encompasses advantages granted by public authorities which, in various forms, mitigate the charges which are normally included in the budget of an undertaking (see, inter alia, Case C-310/99 Italy  v Commission  [2002] ECR I-2289, paragraph 51).
72. In Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke  (paragraphs 42 to 54) the Court held, following its case-law, that the condition of selectivity is not satisfied by a measure which, although conferring an advantage on its recipient, is justified by the nature or general scheme of the system of which it is part (see Case 173/73 Italy  v Commission  [1974] ECR 709, paragraph 33, and Case C-75/97 Belgium  v Commission  [1999] ECR I-3671, paragraph 33). It examined whether the distinguishing criterion used by the national legislation at issue in the main proceedings was justified by the nature and/or general scheme of the legislation, which would mean that the disputed measure was not in the nature of State aid.
74. To that end, it should be observed that the national tribunal considers, in point 10(6) of its order, that the higher rate of IPT and VAT form part of an inseparable whole, which was the aim pursued in introducing the higher rate. That rate was introduced to counteract the practice of taking advantage of the difference between the standard rate of IPT and that of VAT by manipulating the prices of rental or sale of appliances and of the associated insurance. Such conduct had given rise to a loss of income in terms of VAT receipts and to shifts in the conditions of competition in the domestic appliance sector.
75. As the Advocate General suggests in point 84 of his Opinion, in view of its purpose and effect, the higher rate of IPT has the appearance of a regulatory charge intended specifically as a deterrent to the conclusion of connected insurance contracts. The introduction of a higher rate of IPT on certain contracts was not intended to confer an advantage on all operators who offer contracts of insurance subject to the standard rate of IPT, in application of the general system of taxation of insurance.
76. It should be observed that standard rate IPT does not constitute a derogation from the general system of taxation of insurance in the United Kingdom. It is not a tax scheme favouring a specified sector, since it is a system of taxation of insurance premiums intended to compensate for the fact that insurance transactions are not subject to VAT.