Viking Motors AS and Others v Tallinna linn and Maksu- ja Tolliamet.
Date: 2018-08-07
26


In that respect, it must be recalled that, under Article 401 of the VAT Directive, the provisions of that directive do not prevent a Member State from maintaining or introducing taxes on insurance contracts, taxes on betting and gambling, excise duties, stamp duties or, more generally, any taxes, duties or charges which cannot be characterised as turnover taxes, provided that the collecting of those taxes, duties or charges does not give rise, in trade between Member States, to formalities connected with the crossing of frontiers.
27


A literal interpretation of that provision leads to the conclusion that, in view of the negative condition in the expression ‘cannot be characterised as turnover taxes’, the maintenance or introduction by a Member State of taxes, duties or charges are authorised only on condition that they are not assimilated to a turnover tax.
28


Although the notion of a ‘turnover tax’ is not defined in either Article 401 of the VAT Directive or any other provision of that directive, it must be pointed out that that article, the interpretation of which is sought by the referring court, is in essence identical to Article 33 of the Sixth Directive.
30


Thus, the Court stated that it was already apparent from the preamble to First Council Directive 67/227/EEC of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes (OJ, English Special Edition 1967 (I), p. 14), that harmonisation of legislation concerning turnover taxes should make it possible to establish a common market within which there is healthy competition and whose characteristics are similar to those of a domestic market, by eliminating tax differences liable to distort competition and hinder trade (judgment of 3 October 2006, Banca popolare di Cremona, C‑475/03, EU:C:2006:629, paragraph 19).
31


A common system of VAT was introduced by Second Council Directive 67/228/EEC of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes — Structure and procedures for application of the common system of value added tax (OJ, English Special Edition 1967 (I), p. 16) and by the Sixth Directive (judgment of 3 October 2006, Banca popolare di Cremona, C‑475/03, EU:C:2006:629, paragraph 20).
32


Under Article 2 of First Directive 67/227, the principle of the common system of VAT involves the application to goods and services, up to and including the retail trade stage, of a general tax on consumption exactly proportional to the price of the goods and services, whatever the number of transactions which take place in the production and distribution process before the stage at which tax is charged (judgment of 3 October 2006, Banca popolare di Cremona, C‑475/03, EU:C:2006:629, paragraph 21).
33


However, VAT is chargeable on each transaction only after deduction of the amount of VAT borne directly by the costs of the various price components of the goods and services. The procedure for deduction has been arranged by Article 17(2) of the Sixth Directive in such a way that taxable persons are authorised to deduct from the VAT for which they are liable the input VAT already charged on the goods or services and that the tax is charged, at each stage, only on the added value and is ultimately borne by the final consumer (see, to that effect, judgment of 3 October 2006, Banca popolare di Cremona, C‑475/03, EU:C:2006:629, paragraph 22).
34


In order to attain the objective of ensuring equal conditions of taxation for the same transaction, no matter in which Member State it is carried out, the common system of VAT was intended, according to the preamble to Second Directive 67/228, to replace the turnover taxes in force in the various Member States (judgment of 3 October 2006, Banca popolare di Cremona, C‑475/03, EU:C:2006:629, paragraph 23).
35


Article 33 of the Sixth Directive accordingly permitted a Member State to maintain or introduce taxes, duties or charges on the supply of goods, the provision of services or imports only if they could not be characterised as turnover taxes (see, to that effect, judgment of 3 October 2006, Banca popolare di Cremona, C‑475/03, EU:C:2006:629, paragraph 24).
36


In order to decide whether a tax, duty or charge can be characterised as a turnover tax within the meaning of Article 401 of the VAT Directive, it is necessary, in particular, to determine whether it has the effect of jeopardising the functioning of the common system of VAT by being levied on the movement of goods and services and on commercial transactions in a way comparable to VAT (see, by analogy, judgment of 11 October 2007, KÖGÁZ and Others, C‑283/06 and C‑312/06, EU:C:2007:598, paragraph 34 and the case-law cited).
37


The Court has stated in this regard that taxes, duties and charges must in any event 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, even if they are not identical to it in every way (judgment of 3 October 2006, Banca popolare di Cremona, C‑475/03, EU:C:2006:629, paragraph 26 and the case-law cited).
38


It has been held that 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 (judgment of 3 October 2006, Banca popolare di Cremona, C‑475/03, EU:C:2006:629, paragraph 27 and the case-law cited). The same holds true as regards Article 401 of the VAT Directive.
39


It appears from the case-law that there are four such characteristics, that is to say, VAT applies generally to transactions relating to goods or services; it is proportional to the price charged by the taxable person in return for the goods and services which he has supplied; it is charged at each stage of the production and distribution process, including that of retail sale, irrespective of the number of transactions which have previously taken place, and the amounts paid during the preceding stages of the production and distribution process are deducted from the VAT payable by a taxable person, with the result that the tax applies, at any given stage, only to the value added at that stage and the final burden of that tax rests ultimately on the consumer (judgment of 3 October 2006, Banca popolare di Cremona, C‑475/03, EU:C:2006:629, paragraph 28).
41


In order to prevent outcomes which are inconsistent with the objective pursued by the common system of VAT as set out in paragraphs 31 to 37 above, any comparison of the characteristics of a tax such as the sales tax at issue in the main proceedings, with those of VAT must be made in the light of that objective. In that connection, particular attention must be paid to the need to safeguard the neutrality of the common system of VAT at all times (see, to that effect, judgment of 3 October 2006, Banca popolare di Cremona, C‑475/03, EU:C:2006:629, paragraph 29).
47


The Court has already held that a tax levied on production in such a way that it is not certain that it will be borne, like a tax on consumption such as VAT, by the final consumer is likely to fall outside the scope of Article 401 of the VAT Directive (judgment of 11 October 2007, KÖGÁZ and Others, C‑283/06 and C‑312/06, EU:C:2007:598, paragraph 50).
48


Whereas, through the mechanism of the deduction of VAT, that tax is charged only to the final consumer and is completely neutral as regards the taxable persons involved in the production and distribution process prior to the stage of final taxation, regardless of the number of transactions involved, that is not the case with a tax such as the sales tax (see, by analogy, judgment of 11 October 2007, KÖGÁZ and Others, C‑283/06 and C‑312/06, EU:C:2007:598, paragraph 51 and the case-law cited).