Hans-Dieter Jundt and Hedwig Jundt v Finanzamt Offenburg.
Date: 2007-12-18
19. Second, Article 128 of the EEC Treaty concerns vocational training, which includes university education (see Case 24/86 Blaizot and Others  [1988] ECR 379, paragraphs 15 to 20; Case 242/87 Commission  v Council [1989] ECR 1425, paragraph 25; Case C-147/03 Commission  v Austria  [2005] ECR I-5969, paragraph 33; and C-40/05 Lyyski  [2007] ECR I‑99, paragraph 29). To the extent that Article 126 of the EC Treaty was relied upon essentially because of the competence of the Member States for the content of teaching and the organisation of education systems and with reference to the objectives of Community policy within the education sector, it must be pointed out that, at the time of the facts in the main proceedings, the Member States were competent for educational organisation and policy, as is evident from the judgment in Case 293/83 Gravier  [1985] ECR 593, paragraph 19, and that Community policy in the education sector already sought to facilitate the mobility of teachers.
28. In order to determine whether an activity such as that at issue in the main proceedings comes within the scope of Article 49 EC, it should be recalled, first, that according to the first paragraph of Article 50 EC the concept of ‘services’ means ‘services ... normally provided for remuneration’ (Case C-355/00 Freskot  [2003] ECR I-5263, paragraph 54).
29. In that regard, it has already been held that, for the purposes of that latter provision, the essential characteristic of remuneration lies in the fact that it constitutes consideration for the service in question (see, inter alia, Case 263/86 Humbel [1988] ECR 5365, paragraph 17; Case C-422/01 Skandia and Ramstedt  [2003] ECR I-6817, paragraph 23; Case C-76/05 Schwarz and Gootjes-Schwarz  [2007] ECR I-0000, paragraph 38; and Case C-318/05 Commission  v Germany  [2007] ECR I-0000, paragraph 67).
30. Second, the Court has excluded from the concept of ‘services’ within the meaning of Article 50 EC courses provided by certain establishments forming part of a system of public education and financed, entirely or mainly, by public funds (see, to that effect, Humbel , paragraph 18, and Case C-109/92 Wirth [1 993] ECR I-6447, paragraphs 15 and 16). The Court has thus stated that, by establishing and maintaining such a system of public education, normally financed from the public purse and not by pupils or their parents, the State does not intend to become involved in activities for remuneration, but carries out its task towards its population in the social, cultural and educational fields (see Schwarz and Gootjes-Schwarz , paragraph 39).
32. As the Advocate General noted in point 12 of his Opinion, the decisive factor which brings an activity within the ambit of the Treaty provisions on the freedom to provide services is its economic character, that is to say, the activity must not be provided for nothing.
33. By contrast, contrary to the view which the national court appears to take, there is no need in that regard for the person providing the service to be seeking to make a profit (see, inter alia, C-157/99 Smits and Peerbooms  [2001] ECR I-5473, paragraphs 50 and 52).
37. While, under the first paragraph of Article 45 EC, in conjunction with Article 50 EC, the freedom to provide services does not extend to activities connected in a Member State, even occasionally, with the exercise of official authority, that derogation must, however, be restricted to activities which in themselves are directly and specifically connected with the exercise of official authority (Case 2/74 Reyners  [1974] ECR 631, paragraph 45; Case C-283/99 Commission  v Italy  [2001] ECR I-4363, paragraph 20; and Case C-451/03 Servizi Ausiliari Dottori Commercialisti  [2006] ECR I-2941, paragraph 46).
38. It follows from the Court’s case-law concerning Article 39(4) EC that university teaching activities, being activities of civil society, do not fall within the scope of that derogation (see, to that effect, Case 33/88 Allué and Coonan  [1989] ECR 1591, paragraph 7, and Case C-290/94 Commission  v Greece  [1996] ECR I-3285, paragraph 34).
52. According to settled case-law, Article 49 EC precludes the application of any national rules which have the effect of making the provision of services between Member States more difficult than the provision of services purely within one Member State (Case C-381/93 Commission v France  [1994] ECR I-5145, paragraph 17; Case C-158/96 Kohll  [1998] ECR I-1931, paragraph 33; Smits and Peerbooms , paragraph 61; Case C‑136/00 Danner  [2002] ECR I-8147, paragraph 29; and Joined Cases C‑544/03 and C-545/03 Mobistar and Belgacom Mobile  [2005] ECR I‑7723, paragraph 30).
58. Even if one were to assume that the objective of promoting teaching, research and development is an overriding reason relating to the public interest, the fact remains that, in order to be justified, a restrictive measure must comply with the principle of proportionality, in that it must be appropriate for securing the attainment of the objective it pursues and must not go beyond what is necessary to attain it (Case C‑478/98 Commission  v Belgium  [2000] ECR I-7587, paragraph 41, and Case C‑334/02 Commission v France  [2004] ECR I-2229, paragraph 28).
59. In paragraph 23 of Laboratoires Fournier , the Court admittedly held that it could not be ruled out that the promotion of research and development may be an overriding reason relating to the public interest. However, it rejected the argument that a Member State cannot be required to promote research carried out in another Member State and held that national legislation which restricts the benefit of a tax credit only to research carried out in the Member State concerned amounts to a restriction of the freedom to provide services. The Court ruled that such legislation is directly contrary to the objective of Community policy on research and technological development which, according to Article 163(2) EC, seeks in particular to remove fiscal obstacles to cooperation in the field of research.
62. The Court has already stressed the importance of those objectives in the context of Article 18 EC. After having pointed out that the opportunities offered by the Treaty in relation to freedom of movement for citizens of the Union cannot be fully effective if a national of a Member State may be deterred from availing himself of them by obstacles placed in the way of his stay in another Member State by legislation of his State of origin penalising the mere fact that he has used those opportunities, the Court ruled that that consideration is particularly important in the field of education, in view of the aims pursued by Article 3(1)(q) EC and the second indent of Article 149(2) EC, namely, inter alia, encouraging mobility of students and teachers (see Joined Cases C-11/06 and C‑12/06 Morgan and Bucher [2007] ECR I-0000, paragraphs 26 and 27 and case-law cited).
68. However, according to settled case-law, for an argument based on such a justification to succeed, a direct link must be established between the tax concession concerned and the offsetting of that concession by a particular tax levy (see, to that effect, Case C-471/04 Keller Holding  [2006] ECR I-2107, paragraph 40; Case C-347/04 Rewe Zentralfinanz [2007] ECR I‑2647, paragraph 62; and Case C-443/06 Hollmann  [2007] ECR I-0000, paragraph 56).
82. While the areas of competence and responsibilities of the Member States in those fields are not mentioned in Article 128 of the EEC Treaty, which was the relevant provision at the time of the facts in the main proceedings, it follows from paragraph 19 of Gravier  that, at the material time of the main proceedings, educational organisation and policy were not as such included in the spheres which the EEC Treaty had entrusted to the Community institutions.
86. The Member States are in fact bound, when exercising the areas of competence reserved to them, to comply with Community law, in particular the provisions on the freedom to provide services. The Court has ruled thus in several fields, including direct taxation and education (see, inter alia, Schwarz and Gootjes-Schwarz , paragraphs 69 and 70, and Commission  v Germany , paragraphs 85 and 86).
87. Consequently, the competence and the responsibility of the Member States for the organisation of their respective education systems cannot have the effect of removing tax legislation such as that at issue in the main proceedings from the scope of the Treaty provisions on the freedom to provide services or of rendering compatible with Community law the refusal to grant the tax concessions in question to teachers offering their services in the universities of other Member States.