OPINION OF ADVOCATE GENERAL

ALBER

delivered 9 September 2003 (1)

Case C-338/01

Commission of the European Communities

v

Council of the European Union

(Directive 2001/44/EC – Legal basis – Articles 93 EC and 94 EC or Article 95 EC)

I –  Introduction

1.        In the present application for annulment the Commission challenges the Council’s action in basing Directive 2001/44 (2) (‘Directive 2001/44’) not – as the Commission had proposed – on Article 95 EC but rather on Articles 93 EC and 94 EC. The directive in issue regulates mutual assistance between Member States in the recovery of public-law claims, in particular tax claims. The question central to this dispute is whether the rules set out in Directive 2001/44, which relate solely to official assistance in the recovery of taxes but do not concern their calculation or imposition, are ‘fiscal provisions’, to which, under the exception set out in Article 95(2) EC, Article 95 EC does not apply. Whereas under Article 95 EC the joint decision-making procedure laid down in Article 251 EC is applicable, the Council takes decisions under Article 93 EC (harmonisation of indirect taxation) and Article 94 EC (approximation of laws, regulations and administrative provisions) on a unanimous basis after consulting the European Parliament.

II –  Facts and legal framework

2.        On the basis of Article 100 of the EEC Treaty (now Article 94 EC), the Council adopted Directive 76/308/EEC, which initially dealt only with mutual assistance as between Member States in regard to the recovery of claims arising in connection with operations forming part of the system for financing the European Agricultural Guidance and Guarantee Fund, and of agricultural levies and customs duties. (3)

3.        The scope of this directive was subsequently extended on a step-by-step basis, in the first instance by way of Directive 79/1071/EEC (4) – which had been adopted on the basis of Articles 99 and 100 of the EEC Treaty (now Articles 93 EC and 94 EC) – to claims relating to value added tax. Claims relating to excise duties on tobacco products, alcohol, alcoholic beverages and mineral oils were later included by way of Directive 92/12/EEC, which was based on Article 99 of the EEC Treaty. (5)

4.        On 26 June 1998 the Commission submitted a proposal for a new version of Directive 76/308 based on Article 100a of the EC Treaty (now, after amendment, Article 95 EC). (6) It was intended by that proposal that Directive 76/308 should also cover claims relating to direct taxes and taxes on insurance premiums.

5.        The Council, however, decided to change the legal basis and to apply Articles 93 EC and 94 EC for that purpose. Although the Parliament, when setting out its views on this amendment, insisted that Article 95 EC was the correct legal basis, (7) the Council none the less adopted Directive 2001/44 on 15 June 2001 on the basis of Articles 93 EC and 94 EC.

6.        The recitals in the preamble to Directive 2001/44 stress the significance of the new rules in combating tax fraud and safeguarding the financial interests of the Community and the Member States, as well as the fiscal neutrality of the internal market. Recitals (1) to (4) are worded as follows:

‘(1)      The existing arrangements for mutual assistance for recovery set out in Directive 76/308/EEC ... should be modified to meet the threat to the financial interests of the Community and the Member States and to the internal market posed by the development of fraud.

(2)      In the context of the internal market, Community and national financial interests, which are increasingly threatened by fraud, must be protected so as to safeguard better the competitiveness and fiscal neutrality of the internal market.

(3)      In order to safeguard better the financial interests of the Member States and the neutrality of the internal market, claims relating to certain taxes on income and capital and taxes on insurance premiums should be added to the scope of the mutual assistance provided for by Directive 76/308/EEC.

(4)      In order to permit more efficient and effective recovery of claims in respect of which a request for recovery has been made, the instrument permitting enforcement of the claim should, in principle, be treated as an instrument of the Member State in which the requested authority is situated.’

7.        Article 2 of Directive 76/308, as amended by Directive 2001/44, lays down its scope in the following terms:

‘This Directive shall apply to all claims relating to:

[(a) ... – (f) ...]

(g)      taxes on income and capital; (8)

(h)      taxes on insurance premiums;

(i)      interest, administrative penalties and fines, and costs incidental to the claims referred to in points (a) to (h), with the exclusion of any sanction of a criminal nature as determined by the laws in force in the Member State in which the requested authority is situated.’

8.        The new version of Article 7 of Directive 76/308 sets out the information which the requesting State must include in its request for recovery of a claim and the documents which must be attached thereto.

9.        Articles 8 to 10, also in a recast version, regulate the recognition and enforcement of an instrument by the authorities of the requested State. Articles 8 and 9 provide in part as follows:

‘Article 8

1.      The instrument permitting enforcement of the claim shall be directly recognised and automatically treated as an instrument permitting enforcement of a claim of the Member State in which the requested authority is situated.

2.      Notwithstanding the first paragraph, the instrument permitting enforcement of the claim may, where appropriate and in accordance with the provisions in force in the Member State in which the requested authority is situated, be accepted as, recognised as, supplemented with, or replaced by an instrument authorising enforcement in the territory of that Member State.

Within three months of the date of receipt of the request for recovery, Member States shall endeavour to complete such acceptance, recognition, supplementing or replacement, except in cases where the third subparagraph is applied. They may not be refused if the instrument permitting enforcement is properly drawn up. The requested authority shall inform the applicant authority of the grounds for exceeding the period of three months.

If any of these formalities should give rise to contestation in connection with the claim and/or the instrument permitting enforcement issued by the applicant authority, Article 12 shall apply.

Article 9

1.      ...

2.      The requested authority may, where the laws, regulations or administrative provisions in force in the Member State in which it is situated so permit, and after consultations with the applicant authority, allow the debtor time to pay or authorise payment by instalment. Any interest charged by the requested authority in respect of such extra time to pay shall also be remitted to the Member State in which the applicant authority is situated.

From the date on which the instrument permitting enforcement of recovery of the claim has been directly recognised or accepted, recognised, supplemented or replaced in accordance with Article 8, interest will be charged for late payment under the laws, regulations and administrative provisions in force in the Member State in which the requested authority is situated and shall also be remitted to the Member State in which the applicant authority is situated.’

10.      Article 12(2), finally, provides that contested claims may also be the subject of a request for recovery in so far as the laws of both the requesting and requested States so allow.

III –  Procedure and forms of order sought

11.      On 7 September 2001 the Commission brought an action under Article 230 EC against the Council, in which it claims that the Court should:

–        declare Directive 2001/44 to be void;

–        maintain the effects of the directive until the entry into force of a new directive adopted on the correct legal basis;

–        order the Council to pay the costs of the proceedings.

12.      The Council claims that the Court should:

–        dismiss the application;

–        order the Commission to pay the costs of the proceedings.

13.      By order of 23 January 2002, the Court granted the European Parliament leave to intervene in support of the form of order sought by the Commission, and granted leave to the Portuguese Republic, the Grand Duchy of Luxembourg, the United Kingdom of Great Britain and Northern Ireland, and Ireland to intervene in support of the form of order sought by the Council.

14.      No hearing was held in this case.

IV –  Submissions of the parties

15.      Even though the parties have differing views on the question whether the Council used the correct legal basis for Directive 2001/44, they do agree that, if the Court sets that directive aside, it should order that its effects be maintained in force until such time as a new directive has been adopted.

16.      The Commission first points out that, in view of the separate legislative procedures, the only possible legal basis is either Articles 93 EC and 94 EC (unanimous decision of the Council and consultation of the European Parliament) or Article 95 EC (joint decision-making procedure), but not a combination of Articles 93 EC and 95 EC.

17.      As the provisions of Directive 2001/44 relate to the establishment of the internal market within the meaning of Article 14 EC, Article 95 EC is, the Commission submits, the correct legal basis. This provision is in general to be applied in the case of the approximation of laws within the internal market. The exclusion of the application of Article 95 EC to fiscal provisions, as laid down in Article 95(2) EC, must, as an exception, be construed narrowly and rules out application of Article 95 EC only if unanimity is necessary for the purpose of preserving the fiscal sovereignty of the Member States.

18.      Directive 2001/44, however, deals only with mutual assistance in the recovery of tax claims and the removal of barriers to cross-border enforcement within the single market; it does not deal with national provisions on taxable persons, the basis of taxation or rates of tax. As the directive does not affect the amount of tax payable or the structure of national taxation systems, it does not concern ‘fiscal provisions’ within the meaning of Article 95(2) EC.

19.      There have already, it is true, been cases in which the Council adopted, on the basis of Article 99 of the EC Treaty, a legal measure which the Commission, in its proposal, had based on Article 100a of the EC Treaty. (9) In many other instances, measures relating to cooperation between Member States in the collection of duties were none the less adopted on the basis of Article 100a of the EC Treaty. (10)

20.      The Parliament shares the view taken by the Commission. It also refers to the Court’s case-law to the effect that the choice of the legal basis for a measure must rest on objective factors amenable to judicial review, including in particular the aim and content of the measure. (11) As the procedure under Articles 93 EC and 94 EC, on the one hand, and that under Article 95 EC, on the other, are incompatible, (12) the centre of gravity of the measure is decisive. In the case of Directive 2001/44, this lies in its contribution to the establishment and functioning of the internal market.

21.      The directive makes provision for a general system of cooperation in the recovery of public-law claims – including tax claims – and does not confine itself exclusively to combating fraud. That system is based on the mutual recognition of instruments permitting enforcement of claims and the equal treatment of such instruments from another Member State and domestic instruments. While the directive provides for the application of national enforcement provisions to claims from other Member States, it does not harmonise those provisions. The fact that tax claims, inter alia, were included does not have the result of shifting the centre of gravity away from the establishment of the internal market to the harmonisation of fiscal provisions.

22.      The Council takes issue with the Commission’s view that the principal issue is to construe the derogating rule in Article 95(2) EC. Rather, it argues, it is necessary to identify the correct legal basis. Joint application of Articles 93 EC and 94 EC is not the only possibility in this regard. Articles 93 EC and 95 EC may also be combined, although Article 93 EC requires unanimity and Article 95 EC requires a qualified majority within the Council. (13) In Article 151(5) EC the joint decision-making procedure is also linked to the requirement of a unanimous decision within the Council.

23.      As is clear from the recitals in the preamble, the purpose of the directive is to protect the financial interests of the Community and the Member States as well as better to safeguard the competitiveness and fiscal neutrality of the internal market by making possible effective recovery of tax claims irrespective of where the debtor may be in the Community.

24.      The Council shares the view of the Commission and Parliament that the directive focuses on the establishment and functioning of the internal market. This finding, however, does not advance matters as the connection with the internal market/common market is as much a precondition for the application of Article 95 EC as it is for that of Articles 93 EC and 94 EC.

25.      The new rules set out in the directive may be divided into two groups. In the first place, the scope of the directive is extended to cover claims relating to taxes on income and capital and taxes on insurance premiums. Second, the directive provides for various simplifications or changes in the enforcement of all claims which it covers.

26.      In so far as the directive concerns indirect taxation, the Council considers Article 93 EC to be the correct legal basis. Article 95 EC does not, it argues, under any circumstances constitute the general legal basis from which derogations may be made only in the exceptional cases covered by paragraph (2) thereof. Even if a case is not exceptional within the meaning of Article 95(2) EC, this cannot lead to exclusion of the application of the more specific provision of Article 93 EC, which features in a different chapter of the Treaty. (14)

27.      On this point, the Commission states in its reply that the priority attaching to the special rule in Article 93 EC for the harmonisation of rules on indirect taxation does not in the present case exclude the possibility of basing the directive on Article 95 EC. Article 93 EC can apply only if rules on indirect taxation are in fact being harmonised, which is precisely what Directive 2001/44 does not do.

28.      The Council points out that, according to the case-law, provisions dealing only with arrangements for collection or penalties for tax evasion form part of internal taxation, to which the prohibition of discrimination under Article 90 EC applies. (15) In response, the Commission contends that the judgments relating to Article 90 EC concerned payment periods and rules on penalties, which were precisely not the subject of approximation by Directive 2001/44.

29.      The Council submits further that, because of the extension of the directive to cover amounts owed in respect of taxes on income and capital, it had to have recourse to Article 94 EC as a legal basis in addition to Article 93 EC inasmuch as fiscal provisions were involved, to which Article 95 EC could not, by virtue of paragraph (2) thereof, apply. Rules on the calculation and collection of taxes may have a bearing on the amount actually owed and come within the term ‘fiscal provisions’.

30.      The term ‘fiscal’ in the Community languages is understood as referring to the notion of compulsory duties payable in favour of the public revenue. Within national legal systems, all rules relating to the structure, assessment and recovery of taxes are treated as being fiscal provisions. Article 95(2) EC must be construed accordingly and for that reason Directive 2001/44, which contains rules on mutual assistance in the recovery of taxes, cannot be based on Article 95 EC.

31.      The Council also takes issue with the Commission’s teleological argument to the effect that the concept of fiscal provisions must be narrowly construed, with the result that the exception applies only when the fiscal sovereignty of Member States is affected. This interpretation, the Council argues, is, in the first place, at variance with the wording of Article 95(2) EC. Second, the criterion as to whether fiscal sovereignty is affected is too imprecise and thus unsuitable as a demarcation between the areas of competence of the Member States and those of the Community. Third, the directive is not designed solely to facilitate national administrative authorities in enforcing claims and combating fraud. Were the purpose of the rules limited to this, the directive could then be based neither on Article 94 EC nor on Article 95 EC. Rather, its purpose is to apply national tax law irrespective of where the debtor is established in the Community and to recover claims in order thereby to remove distortions of competition.

32.      The directive, so the Council submits, not only has a subordinate connection with taxation but also consolidates national provisions on cross-border recovery of tax claims.

33.      The Council points out that, in its previous practice, it has always applied Article 93 EC and/or Article 94 EC where legal measures were intended to approximate tax provisions – even if only for mutual assistance in matters of taxation. (16)

34.      The intervening Member States support the Council’s view that Directive 2001/44 involves fiscal provisions within the meaning of Article 95(2) EC as it deals with issues concerning the recovery of tax claims. The Council therefore acted correctly in basing it on Articles 93 EC and 94 EC. They refer in this connection to the Court’s case-law ruling that the legal basis must be chosen in accordance with objective criteria. (17) Even if the provisions of the directive bear a relation to the internal market, they none the less concern first and foremost the collection of taxes and consequently tax law.

35.      In the view of the United Kingdom and Irish Governments, Article 93 EC, within the area of indirect taxation, constitutes a lex specialis in relation to Article 95 EC, as the latter only applies ‘save where otherwise provided in this Treaty’. For the approximation of laws on direct taxation, Article 94 EC alone, and not Article 95 EC, can come into question, because in that case the exception contained in Article 95(2) will come into play.

36.      If the Court should not treat Article 95 EC as being inapplicable by virtue of its paragraph (2), that provision may not in any case, in the Irish Government’s view, be used because Article 95 EC cannot be applied jointly with Article 93 EC, as the Commission itself has stressed. Consequently, apart from Article 93 EC, there remains only the recourse to Article 94 EC in so far as direct taxation is concerned.

37.      The Member States object that the Commission has construed too narrowly the term ‘fiscal provisions’ in Article 95(2) EC. This interpretation narrows at the same time the concept of ‘legislation concerning turnover taxes, excise duties and other forms of indirect taxation’ in Article 93 EC. The Community-law concept of tax law must be interpreted having regard to national legal systems. Under the legal systems of the Member States, provisions on the administration and recovery of tax claims – even where there is a cross-border element – are part of tax law. The distinction which the Commission draws between, on the one hand, the rules on taxable persons, rates of taxation and basis of assessment and, on the other, the rules on the administration and collection of taxes is, they argue, misplaced. (18)

38.      The Luxembourg Government does, admittedly, concede that the Court has repeatedly ruled that concepts of Community law must be given an autonomous interpretation. However, it is not possible to give a legal concept in Community law a meaning that is completely different to that in national law if the legal systems pursue the same objectives.

39.      The Member States submit that Directive 2001/44 allows national authorities to arrange for the recovery of taxes even in other Member States. Through mutual assistance in collection the scope of internal tax rules is extended across frontiers. The directive thereby seeks to safeguard the financial interests of the Member States and impinges on their fiscal sovereignty.

40.      The Luxembourg Government takes the view that it is inconsistent for the Commission, on the one hand, to argue that Directive 2001/44 is not at all intended to harmonise national tax laws but, on the other, to seek to base the directive on Article 95 EC, that is to say, the legal basis for the approximation of laws within the internal market. The Member States must in fact adjust their tax legislation in order to implement, for example, Article 8 of Directive 76/308, as amended by Directive 2001/44, which prescribes automatic recognition or acceptance of foreign instruments within three months.

41.      The Portuguese Government also stresses that Directive 76/308, as amended by Directive 2001/44, in particular Articles 8(1), 10 and 12(2) thereof, affects the rights of taxable persons. To that extent, it argues, an approximation of national tax laws is required. Under Articles 7 and 12(2) of Directive 76/308, as amended by Directive 2001/44, taxable persons cannot challenge an instrument permitting enforcement of a claim in the requested State. This amounts to an infringement of the audi alteram partem principle. In addition, Article 12(2) of Directive 76/308, as amended by Directive 2001/44, introduces a right to compensation if enforcement should prove to be unjustified.

42.      The Member States provide examples from practice in which the Commission based similar measures, not on Article 95 EC, but on Article 93 EC (or on the previous Article 99 of the EC Treaty). (19)

43.      The Irish Government, finally, also points out that, with the introduction of Article 95 EC, the Member States relinquished a significant portion of their sovereign rights. In order to preserve the institutional balance between the Community and the Member States, however, an exception was made for the entire area of taxation, which is of particular significance for State sovereignty. The Commission places this balance in question if it limits the exception in Article 95(2) EC to selected areas of taxation only.

V –  Legal analysis

44.      The issue to be decided in the present case is whether the Council acted correctly in basing Directive 2001/44 on Articles 93 EC and 94 EC or whether it ought to have used Article 95 EC for that purpose.

45.      Articles 93 EC and 95 EC can apply only if harmonisation is necessary to ensure the establishment or functioning of the internal market. The condition governing Article 94 EC is that the provisions to be the subject of approximation have a direct effect on the establishment of the common market.

46.      None of the parties questions the relationship between the provisions of the directive and the internal/common market. It should, however, be noted in this connection that, according to Article 3(1)(c) EC, the internal market is characterised by the abolition, as between the Member States, of obstacles to the free movement of goods, persons, services and capital. The fact that tax claims can be recovered on a cross-border basis does not, however, facilitate Community citizens and undertakings in exercising their basic freedoms.

47.      It would, however, amount to an excessive restriction on the concept of the internal market if this were to be understood as meaning only an untrammelled entitlement to exercise the basic freedoms. Measures to approximate laws may rather also be designed to overcome problems arising from the exercise of basic freedoms and in this way to contribute to the functioning of the internal market.

48.      The functioning of the internal market would be adversely affected if taxable persons were able, by moving their place of residence/establishment, to avoid their obligation to pay taxes on the ground that the cross-border recovery of tax claims was not possible or was possible only at great expense. They would also have at the same time secured competitive advantages over those undertakings that maintained their place of establishment in the State in which the tax claim arose and in which it can be recovered without further requirements.

49.      In its established case-law, the Court has laid down the following general criteria governing the choice of the correct legal basis: ‘in the context of the organisation of the powers of the Community the choice of the legal basis for a measure must be founded on objective factors which are amenable to judicial review. Those factors include in particular the aim and the content of the measure’. (20) Before the objectives and content of the contested directive are examined in greater detail, it is first necessary to comment on the relationship of Article 95 EC to Articles 93 EC and 94 EC and on how the concept of fiscal provisions is to be construed.

A –    Relationship of Article 95 EC to Articles 93 EC and 94 EC

50.      The relationship between Article 95 EC and other legal bases in the Treaty is characterised by two particular features of that provision. Its scope is limited by its subsidiary position in relation to a more specific legal basis (the first sentence of Article 95(1) EC) and by the exceptions to that scope (Article 95(2) EC).

51.      Article 95 EC constitutes a general legal basis for the approximation of the provisions laid down by law, regulation or administrative action which have as their object the establishment and functioning of the internal market, ‘save where otherwise provided in this Treaty’. This subsidiary status is of significance for the relationship with Article 93 EC. Both provisions – Article 93 EC and Article 95 EC – apply only if approximation of laws is necessary for the establishment and functioning of the internal market. In comparison with Article 95 EC, however, Article 93 EC is the more specific legal basis for the harmonisation of legislation concerning turnover taxes, excise duties and other forms of indirect taxation. (21)

52.      Directives which involve the approximation of provisions on indirect taxation may thus, precisely because of the subsidiary status of Article 95 EC, be based (only) on Article 93 EC. This is in line with the exception ratione materiae in Article 95(2) EC, under which Article 95 EC does not apply to fiscal provisions.

53.      The Treaty does not contain any special basis for the approximation of provisions on direct taxation. If the establishment and functioning of the internal market/common market none the less make the approximation of laws in this area necessary, all that remains is recourse to the general provisions of Articles 94 EC and 95 EC. In so far as a directive is directed at the realisation of the internal market, that is to say, in particular at the creation of an area without internal frontiers within the meaning of Article 14 EC, Article 95 EC takes precedence over Article 94 EC as being a specific provision for the approximation of laws (22) unless the measure comes within one of the excepted areas covered by Article 95(2) EC.

54.      If the rule relates to fiscal provisions, application of Article 95 EC is excluded; a legal measure designed to bring about the approximation of national rules on direct taxation can therefore be based only on Article 94 EC.

55.      The parties also discuss the question whether Article 93 EC, possibly in conjunction with Article 95 EC, may be applicable. Under Article 95 EC the Council adopts measures by qualified majority under the joint decision-making procedure. In contrast, measures adopted under Articles 93 EC and 94 EC require a unanimous decision of the Council following consultation with the Parliament. As I set out in detail in my Opinion in Case C-211/01 Commission v Council, (23) an article providing for the joint decision-making procedure under Article 251 EC cannot be used as a legal basis in conjunction with a provision under which the Council must take a unanimous decision after consulting the Parliament.

56.      It is, however, unnecessary in the present case to address this question in greater detail, as the directive extends the system of mutual assistance in the recovery of claims to taxes on insurance, that is to say, indirect taxes, on the one hand, and, on the other, to direct taxes. It affects rules on direct and indirect taxation in equal measure. This finding still does not, however, resolve the question whether, in view of this connection with matters relating to tax law, the exception in Article 95(2) EC becomes applicable. It is, however, clear that Article 95 EC is either inapplicable in its entirety, on the ground that rules on the recognition and recovery of direct and indirect taxes are matters of tax law, or applicable to both areas on the ground that the directive does not provide for harmonisation of tax provisions in the narrower sense.

57.      The concept of legislation concerning indirect taxation under Article 93 EC and that of fiscal provisions within the meaning of Article 95(2) EC must be read in conjunction, with the result that, if Article 93 EC is relevant, Article 95 EC will be inapplicable not only because of its subsidiary status but also at the same time by reason of the exception ratione materiae in Article 95(2) EC. It would be inappropriate in the present case for the term ‘fiscal provisions’ to be given any different meaning with regard to direct taxation. Even if one wished to draw a corresponding distinction, Article 95 EC could not, for direct taxation, be applied alongside Article 93 EC because of the incompatibilities in the procedures governing the adoption of legislation.

58.      It follows from the foregoing remarks on the relationship between the legal bases that the answer to the question as to the correct legal basis for Directive 2001/44 depends to a crucial degree on whether that directive seeks the approximation of provisions relating to taxation.

B –    The term ‘fiscal provisions’

59.      One of the central questions in this dispute is how the concept of fiscal provisions within the meaning of Article 95(2) EC and that of legislation concerning indirect taxation in Article 93 EC are to be construed. While the Commission and Parliament take the view that the term ‘fiscal provisions’ for this purpose covers only those substantive provisions that relate to taxable persons, the rate of tax and basis of assessment, the Council and the Member States are of the opinion that the term also covers rules governing the administration and recovery of tax claims.

60.      In support of their interpretation, the Council and the Member States adduce examples of legal measures which did not relate to substantive tax rules but which none the less were based, not on Article 95 EC, but on Article 93 EC and/or Article 94 EC. The Court has, however, ruled in its established case-law that ‘a mere practice ... cannot derogate from the rules laid down in the Treaty. Such a practice cannot therefore create a precedent binding on Community institutions with regard to the correct legal basis’. (24) The examples provided have therefore no bearing on the interpretation of the concept of fiscal provisions.

61.      The wording of Article 93 EC and Article 95(2) EC does not provide any direct indication as to which interpretation is preferable. National tax laws, however, also include provisions on the procedure for determining and enforcing tax claims, as the Council and the Member States have submitted without challenge. It is, admittedly, true that Community-law terms must be construed autonomously having regard to the objectives of the Treaty and the legislative context. That said, however, the meaning of a legal term having essentially the same import in all Member States may be construed in Community law in a manner departing from that understanding only if the Treaty objective being pursued so demands.

62.      The Commission submits in this connection that Article 95 EC forms the general legal basis for the approximation of laws within the internal market. As it constitutes a derogation, the provision in Article 95(2) EC limiting its scope must be construed narrowly.

63.      That argument cannot be accepted. Article 95(2) EC must, at any rate so far as indirect taxation is concerned, be interpreted in conjunction with Article 93 EC. Article 93 EC, however, does not constitute a derogation from the general rule in Article 95 EC but is rather a special rule taking precedence over Article 95 EC. Although there is no special rule on direct taxation corresponding to Article 93 EC, it would none the less be illogical to construe the concept of fiscal provisions in Article 95(2) EC differently with regard to direct taxation from its construction with regard to indirect taxation.

64.      Nor is there any identifiable Treaty objective which might call for the narrow interpretation of the concept of fiscal provisions advocated by the Commission. In particular, there is also no justification on teleological grounds for not bringing provisions on the recovery of tax claims within the scope of tax law for the purposes of Article 95(2) EC.

65.      The limitation of the scope of Article 95 EC has as its purpose and objective to remove from the approximation of laws by majority decision a crucial area of Member States’ powers. In this way the Member States have retained the last word on issues involving their tax systems and fiscal revenue. It cannot be concluded from this setting of objectives that the concept of fiscal provisions does not include the rules on recovery of tax claims as these rules also have a bearing on the level of tax revenue. Thus, for example, the provisions on recovery of tax claims may provide that enforcement may, under certain circumstances, be waived either temporarily or permanently. Provisions on financial penalties and default interest in the event of late payment also have repercussions for State revenue.

66.      It follows from the case-law on Article 90 EC cited by the Council and certain Member States that the prohibition of discriminatory domestic duties is also applicable to national rules on the collection or deferment of indirect taxes (25) as well as to rules on sanctions for infringements of provisions on value added tax. (26) In the same way as Article 93 EC, Article 90 EC belongs to Chapter 2, Title VI, of Part Three of the Treaty (‘Tax provisions’). It must therefore be assumed that the same understanding of the concept of fiscal provisions underlies both provisions.

67.      In conjunction with an examination of the objectives and content of Directive 2001/44, it is necessary to address the Commission’s objection that that directive does not in fact harmonise the rules on deferment of tax claims and penalties for infringements of tax law.

C –    Does Directive 2001/44 concern fiscal provisions?

68.      After thus establishing that the concept of fiscal provisions also includes provisions on the recovery of tax claims, it will next be necessary to examine, having regard to the objectives and content of the directive, to what extent it does in fact concern fiscal provisions in this sense.

69.      According to the first and second recitals in its preamble, the directive essentially pursues two objectives. First, it is designed to counter tax fraud and the concomitant threat to Community and Member States’ finances, in that tax claims can also be recovered where the taxable person is no longer resident in the State in which the tax is payable. Second, the directive seeks to safeguard the competitiveness and fiscal neutrality of the internal market. The exercise of freedom of establishment, the promotion of which is specifically desired within the internal market, should not result in undertakings being able to evade their fiscal duties and thereby acquiring competitive advantages.

70.      The objective of protecting State tax revenue against the threat of tax fraud and tax evasion points to a connection with national tax law.

71.      The substantive rules introduced by Directive 2001/44 can be divided into two groups. First, the scope of Directive 76/308 is extended to the recovery of claims in respect of taxes on income and capital (direct taxation) and taxes on insurance premiums (indirect taxation). Second, the rules on the recognition and recovery of claims for duties covered by the directive are modified along with those tax claims that are henceforth included.

72.      Article 7 of Directive 76/308, as amended by Directive 2001/44, regulates in greater detail the information which requests for enforcement must contain. These requirements are supplemented by the Commission’s implementing directive based on Article 22 of Directive 76/308, as amended, (27) which makes provision for, inter alia, the introduction of a form to be used for such requests.

73.      The central element of the new rules is provided by Article 8 of Directive 76/308, as amended by Directive 2001/44, under which Member States are required to give automatic recognition to an instrument from another Member State permitting enforcement of a claim and to treat it as a domestic instrument (Article 8(1)). Under Article 8(2) Member States may also provide that the instrument permitting enforcement is to be recognised, supplemented or replaced within a maximum of three months in accordance with the provisions of the State of the authority to which the request is addressed (Article 8(2)).

74.      These two provisions, however, require in any event adaptation of the national provisions on recovery of tax claims. In the first place, there must be a decision in the State of the requesting authority as to the procedure to be followed in the event of enforcement in another Member State, particularly with regard to the information which the request for enforcement must contain. Second, the tax provisions to be applied by the authority of the requested State must provide that instruments from another Member State are also to be enforced in the same way as corresponding domestic instruments. In so far as a Member State reserves to itself the right to recognise, confirm or replace a foreign instrument, it also requires for that purpose corresponding provisions of national law.

75.      Even though Directive 2001/44 does not provide that the national implementing provisions must form part of tax law, this will none the less in practice be the case as foreign instruments are to be treated as equivalent to corresponding domestic instruments. As the directive prescribes that a tax ruling made in another Member State is to be treated as equivalent to a domestic tax ruling with regard to recovery, the relevant implementing rules must be treated as being part of tax law.

76.      The Commission, however, is correct when it points out that the nature and manner of enforcement, that is to say, any possible deferment or enforcement of contested claims (Articles 9(2) and 12(2) of Directive 76/308, as amended by Directive 2001/44), are not matters that have been harmonised. Rather, the Member States will to that extent simply apply their existing rules to instruments from another Member State.

77.      Thus, not all of the rules in Directive 2001/44 lead to harmonisation of national tax provisions. Further, they certainly do not affect the central aspects of tax law in the Member States. On the other hand, however, they also have – as has already been stated (28) – what is really no more that quite an indirect link to the establishment and functioning of the internal market inasmuch as they merely counter the undesirable side effects rising from the exercise of basic freedoms.

78.      It may, by way of conclusion, be stated that the directive affects national tax-law provisions in two ways. It makes it possible for the requesting State to enforce its claims even beyond its own borders by addressing a request to the authority of another Member State. The possibility of enforcement abroad has a bearing on the level of tax revenue in the State of the requesting authority.

79.      At the same time, the State to which the request is addressed is obliged to add to the tax claims that are enforceable under its national provisions those claims that are to be enforced pursuant to a request made by the authority of another Member State. In view of this influence which the directive exerts on the form of national fiscal provisions, Article 95 EC cannot, by virtue of paragraph (2) thereof, serve as a legal basis.

80.      The Council therefore acted correctly in basing Directive 2001/44 on Article 93 EC in so far as it affects provisions on indirect taxation – in casu, taxes on insurance premiums – and on Article 94 EC in so far as it relates to the recovery of claims involving taxes on income and capital.

VI –  Costs

81.      Under Article 69(2) of the Rules of Procedure, the unsuccessful party must be ordered to pay the costs if they have been applied for in the successful party’s pleadings. As the Council has applied for costs and the Commission has been unsuccessful in its submissions, the Commission must be ordered to pay the costs. Pursuant to Article 69(4) of the Rules of Procedure, the Member States which have intervened in the case and the European Parliament must bear their own costs.

VII –  Conclusion

82.      On the basis of the foregoing, I propose that the Court should:

–        dismiss the application;

–        order the Commission to bear the costs of the proceedings and order the European Parliament, the Portuguese Republic, the Grand Duchy of Luxembourg, the United Kingdom of Great Britain and Northern Ireland, and Ireland to bear their own costs.

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1 – Original language: German.

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2  – Council Directive 2001/44/EC of 15 June 2001 amending Directive 76/308/EEC on mutual assistance for the recovery of claims resulting from operations forming part of the system of financing the European Agricultural Guidance and Guarantee Fund, and of agricultural levies and customs duties and in respect of value added tax and certain excise duties (OJ 2001 L 175, p. 17).

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3  – Council Directive 76/308/EEC of 15 March 1976 on mutual assistance for the recovery of claims resulting from operations forming part of the system of financing the European Agricultural Guidance and Guarantee Fund, and of the agricultural levies and customs duties (OJ 1976 L 73, p. 18).

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4  – Council Directive 79/1071/EEC of 6 December 1979 amending Directive 76/308/EEC on mutual assistance for the recovery of claims resulting from operations forming part of the system of financing of the European Agricultural Guidance and Guarantee Fund, and of agricultural levies and customs duties (OJ 1979 L 331, p. 10).

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5  – Council Directive 92/12/EEC of 25 February 1992 on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products (OJ 1992 L 76, p. 1), as amended by Directive 92/108/EEC (OJ 1992 L 390, p. 124).

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6  – COM(1998) 364 final ─ 98/0206(COD) (OJ 1998 C 269, p. 16).  Following the first reading in the European Parliament the Commission amended its proposal in order to take account of the changes made by the Parliament (COM(1999) 183 final, OJ 1999 C 179, p. 6) but did not alter the legal basis.

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7  – Decision of 16 May 2001 (OJ 2002 C 34 E, p. 207).

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8  –      The term ‘taxes ... on capital’ presumably refers to the duty better known in German tax-law terminology as Vermögensteuer (cf. the French (‘impôts sur la fortune’) and Dutch versions (‘belastingen op vermogen’)).

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9  – Council Regulation (EEC) No 218/92 of 27 January 1992 on administrative cooperation in the field of indirect taxation (VAT) (OJ 1992 L 24, p. 1).

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10  – Decision No 888/98/EC of the European Parliament and of the Council of 30 March 1998 establishing a programme of Community action to ameliorate the indirect taxation systems of the internal market (Fiscalis Programme) (OJ 1998 L 126, p. 1); Council Regulation (EEC) No 718/91 of 21 March 1991 amending Regulation (EEC) No 3/84 introducing arrangements for movement within the Community of goods sent from one Member State for temporary use in one or more other Member States (OJ 1991 L 78, p. 4); Council Regulation (EEC) No 2726/90 of 17 September 1990 on Community transit (OJ 1990 L 262, p. 1).

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11  – Case C-269/97 Commission v Council [2000] ECR I-2257, paragraph 43.

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12  – The Parliament refers in this connection to Case C-42/97 Parliament v Council [1999] ECR I‑869, paragraphs 42 and 43.

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13  – The Council refers in this connection to Case 165/87 Commission v Council [1988] ECR 5545.

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14  – The Council refers in this connection to Case C-84/94 United Kingdom v Council [1996] ECR I‑5755, paragraph 12.

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15  – In this connection the Council cites Case 55/79 Commission v Ireland [1980] ECR 481, paragraph 8, and Case 299/86 Drexl [1988] ECR 1213.

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16  – The Council refers at this point to Directive 92/12 (cited in footnote 5) and to Regulation No 218/92 (cited in footnote 9).

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17  – Cases C-155/91 Commission v Council [1993] ECR I-939 and C-187/93 Parliament v Council [1994] ECR I-2857.

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18  – The Member States also refer in this connection to the case-law on Article 90 EC cited by the Council (see point 28 above).

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19  – Reference is made here to Directive 92/108 (cited in footnote 5) and Council Directive 2001/115/EC of 20 December 2001 amending Directive 77/388/EEC with a view to simplifying, modernising and harmonising the conditions laid down for invoicing in respect of value added tax (OJ 2002 L 15, p. 24).

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20  – Case C-155/91 (cited in footnote 17); Case C-271/94 Parliament v Council [1996] I-1689, paragraph 14; Case C-300/89 Commission v Council [1991] ECR I-2867, paragraph 10; Case C-426/93 Germany v Council [1995] ECR I-3723, paragraph 29; Case C-42/97 Parliament v Council [1999] ECR I-869, paragraph 36.

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21  – Compare the similarly structured relationship between Articles 118a and 100a of the EC Treaty in Case C-84/94 United Kingdom v Council (cited in footnote 14, paragraph 12) and that between Articles 129c and 100a of the EC Treaty in Case 68/86 United Kingdom v Council [1988] ECR 855, paragraph 24.

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22  – See Case C-350/92 Spain v Council [1995] ECR I-1985, paragraph 29 et seq., in particular paragraph 41, in which the Court declared Article 100 of the EC Treaty to be inapplicable where the conditions governing the application of Article 100a of the EC Treaty were satisfied.

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23  – Opinion of 13 March 2003 in Case C-211/01 Commission v Council, points 71 to 83.

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24  – Case 68/86 (cited in footnote 21), paragraph 24.

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25  – Case 55/79 Commission v Ireland, cited in footnote 15.

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26  – Drexl (cited in footnote 15) and Case C-276/91 Commission v France [1993] ECR I-4413.

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27  – Commission Directive 2002/94/EC of 9 December 2002 laying down detailed rules for implementing certain provisions of Council Directive 76/308/EEC on mutual assistance for the recovery of claims relating to certain levies, duties, taxes and other measures (OJ 2002 L 337, p. 41).

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28  – See points 46 to 48 above.