Dansk Denkavit ApS and P. Poulsen Trading ApS, supported by Monsanto-Searle A/S v Skatteministeriet.
Date: 1992-03-31
10 As the Court has stated on several occasions, including its judgments in Case 252/86 Bergandi v Directeur-Général des Impôts [1988] ECR 1343, at paragraphs 10 and 11, and in Joined Cases 93/88 and 94/88 Wisselink and Others v Staatssecretaris van Financiën [1989] ECR 2671, at paragraphs 13 and 14, that provision as worded prohibits Member States from introducing or maintaining taxes, duties or charges which can be characterized as turnover taxes. It follows that in order to answer Question 1, it is necessary to determine first what the characteristics of a turnover tax are, and then whether a levy such as the Danish levy is to be regarded as constituting such a tax.
11 With respect first of all to the concept of "turnover taxes", it should be noted that, as the Court stated in the abovementioned judgments and in the judgment in Case 295/84 Rousseau Wilmot v Organic [1985] ECR 3759, at paragraph 16, the purpose of Article 33 is to prevent the functioning of the common system of VAT from being jeopardized by the introduction of taxes, duties or charges levied on the movement of goods and services in a way comparable to VAT. Taxes, duties and charges must in any event must be regarded as being imposed on the movement of goods and services in a way comparable to VAT if they exhibit the essential characteristics of VAT. As the Court stated in the above judgments, 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; 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.
13 Admittedly, as the Danish Government has emphasized, the levy differed from VAT in certain respects. First, it was imposed on undertakings which were not taxable persons for VAT purposes, in which case the basis of assessment, where it was not possible to apply the method used for undertakings which were taxable persons for VAT purposes, was the total amount paid by the undertaking as wages, increased by 90%. Secondly, the levy was not charged on imports, and importing undertakings were not allowed to deduct from the basis for assessment of the levy the value of goods or services imported. Finally, it was regarded as part of the cost of the goods or services and for that reason was not indicated separately on invoices.
14 However, for a tax to be characterized as a turnover tax, it is not necessary for it to resemble VAT in every respect; it is sufficient for it to exhibit the essential characteristics of VAT. In the present case, the differences which have been mentioned do not affect the nature of a levy such as the Danish levy, which resembled VAT in all essential respects. It follows that, notwithstanding those differences, the levy still retained the character of a turnover tax.
21 It must be held in that regard that the Danish Government has not shown that at the time when the contested levy was introduced, Community law could reasonably be construed as permitting such a tax. The prohibition of turnover taxes contained in Article 33 is quite apparent from the wording of that provision. The scope of that prohibition has already been defined by the Court in the Rousseau Wilmot judgment, cited above, in which it held that Article 33 "seeks to prevent the functioning of the common system of VAT from being compromised by fiscal measures of a Member State levied on the movement of goods and services and charged on commercial transactions in a way comparable to VAT" (paragraph 16). It follows that a tax which is levied alongside VAT and which exhibits the essential characteristics of VAT, as specified in paragraph 15 of the Rousseau Wilmot judgment, is charged on commercial transactions in a way comparable to VAT and thus jeopardizes the functioning of the common system.