Opinion of the Advocate-General
1. The Tribunal de Grande Instance (Regional Court), Béthune, France, has referred a question to the Court of Justice for a preliminary ruling under Article 177 of the EC Treaty (now Article 234 EC), in order to settle a dispute between Roquette Frères and the Direction des Services Fiscaux (Tax Department) relating to the recovery of national taxes paid but not due. Specifically, the applicant company seeks a refund of the sum paid in 1987, in respect of a merger, by way of capital duty levied under national regulations contrary to the provisions of Directive 69/335/EEC (hereinafter Directive 69/335).
I. The facts in the main proceedings
2. In the order for reference, the national court states that, at an extraordinary general meeting held on 19 June 1987, it was agreed that Roquette Frères would merge with Roquette Technique et Dérivés. On 8 July 1987, on the occasion of the merger, the acquiring company paid the sum of FRF 757 926 by way of capital duty, at the higher tax rate (1.20%) provided for in the second subparagraph of the first paragraph of Article 816-1 of the Code Général des Impôts (General Tax Code) then in force.
3. On 24 December 1996 Roquette Frères disputed its liability to pay that duty and applied to the Direction des Services Fiscaux, Pas-de-Calais, for its repayment. The application was rejected on 3 April 1997.
4. On 5 June 1997 Roquette Frères brought an action seeking a declaration that the tax levied on it in 1987 should be cancelled and an order requiring the State to repay the sum paid but not due, together with the accrued interest.
II. Time-limits for initiating tax proceedings and time-bar on the right of recovery
5. Under Article R. 196-1 of the Livre des Procédures Fiscales claims against taxes other than local direct taxes and their related charges must, if they are to be admissible, be submitted no later than 31 December of the second year following that in which the event which gave rise to them occurred.
6. The second paragraph of Article L. 190 of the Livre des Procédures Fiscales establishes that actions brought for the remission or reduction of a tax or in the exercise of a right to deduct on the ground that the rule applied is incompatible with a higher-ranking rule are to be heard and determined in accordance with the provisions of Chapter I of Title III.
The third paragraph provides that, where such incompatibility has been established by a judicial decision, the action for recovery of sums paid or for compensation for damage may only relate to the period following 1 January of the fourth year preceding that of the judgment.
7. In accordance with that legislation, the action for recovery of sums paid but not due by the applicant company may only refer to the period following 1 January 1992, which is the fourth year preceding 1996, when it was held that the levying of
the registration duty was incompatible with Directive 69/335. However, since the tax was paid in July 1987, the claim cannot lead to recovery.
III. The question referred for a preliminary ruling
8. In its action before the Tribunal de Grande Instance, Béthune, Roquette Frères not only requested that a question should be referred for a preliminary ruling under Article 177 of the Treaty but also directly suggested the way in which it should be worded.
9. The Tribunal de Grande Instance, Béthune, has taken the wording suggested by the party and referred to the Court of Justice for a preliminary ruling the question of the legality of Article L. 190 of the Livres des Procédures Fiscales and, in particular, whether the French Government was entitled, under Community law, to make a distinction between the date on which an action became time-barred and the date on which recovery became time-barred, entailing a difference in the treatment of actions under national law and actions commenced on the basis of a judgment of the Court of Justice of the European Communities in which a provision of national law was found to be illegal.
IV. Directive 69/335 and the levying by France of a proportional registration duty in the event of a merger
10. The aim of Directive 69/335 was to eliminate, by means of harmonisation, the indirect taxes on the raising of capital in force in the Member States, namely, the duty chargeable on contribution of capital to companies and the stamp duty on securities, which gave rise to discrimination, double taxation and disparities which interfered with the free movement of capital. Article 7 of the Directive established that the rate of capital duty could not exceed 2% or be less than 1% and made provision for the Member States to reduce the rate by 50% or more in specific circumstances and under certain conditions.
11. In 1973 the Council adopted Directive 73/80/EEC under which, from 1 January 1976, the rate of capital duty was fixed at 1% and the reduced rates at between 0% and 0.50%. Directive 85/303/EEC, repealing Directive 73/80 and amending Directive 69/335, required the Member States, from 1 January 1986, to exempt from capital duty transactions other than those referred to in Article 9 of Directive 69/335, which were, as at 1 July 1984, exempted or taxed at a rate of 0.50% or less.
12. In spite of the provisions of that Directive, duties continued to be levied in France on certain transactions to raise capital and it was some years before the relevant provisions of the General Tax Code were amended. The 1992 Loi de Finances (Finance Law) abolished the 1% proportional registration duty on the contributions referred to in Article 810-I and II, replacing it with a fixed duty of FRF 430, whilst the 1994 Loi de Finances abolished both the 3% proportional registration duty provided for by Article 812-I-1 on capital increases effected by the capitalisation of profits or of permanent or temporary reserves and the corresponding duty of 1.20% on merger transactions provided for by Article 816-I-2. The abolition of the two latter duties extended to all operations (capital increases and mergers) concluded after 15 October 1993.
13. Société Bautiaa and Société Française Maritime SA, which had paid, in 1990 and between 1987 and 1991 respectively, various sums in respect of registration duty on contributions of capital resulting from merger transactions, applied to the Tax Authority for reimbursement of the sums they had paid, on the ground that the national provisions under which that duty was levied were incompatible with Directive 69/335, as amended by Directive 85/303.
14. Both the Tribunal de Grande Instance, Dax, and the Tribunal de Grande Instance, Quimper, referred a question for a preliminary ruling to the Court of Justice, requesting it to interpret whether Article 7(1) of Directive 69/335, as amended, with effect from 1 January 1976, by Directive 73/80, and subsequently, with effect from 1 January 1986, by Directive 85/303, precluded the application of a national law maintaining at 1.20% the rate of registration duty on contributions of movable assets made in the context of a merger.
15. In its judgment of 13 February 1996, the Court of Justice held that company merger transactions fell within the scope of Article 4(1)(c) of Directive 69/335, which provides for increase of capital by contribution of assets of any kind; it considered that, since the registration duty applied to capital contribution transactions falling within the scope of that Directive, it constituted a capital duty within the meaning of the Directive. Consequently, between 1 January 1976 and 31 December 1985, the maintenance by a Member State of a capital duty of the type in issue was incompatible with Article 7(1)(b) of Directive 69/335, as amended by Directive 73/80, which provided that the reduced rates referred to in Article 7(1)(b) were not to exceed 0.50%. Furthermore, with effect from 1 January 1986, the maintenance of such a duty remained incompatible with the Directive, Article 7(1) having been further amended by Directive 85/303, which clearly provides for the mandatory exemption from all capital duties of increases of capital effected by means of the contribution by one company of the whole of its assets to another.
The reply given to the national courts was that Article 7(1) of Directive 69/335 precludes the application of national laws maintaining at 1.20% the rate of registration duty on contributions of movable property made in the context of a merger.
V. Procedure before the Court
16. Roquette Frères, the applicant in the main proceedings, the French and Italian Governments and the Commission submitted written observations within the period prescribed for that purpose by Article 20 of the EC Statute of the Court of Justice.
At the hearing on 6 April 2000 the representative of Roquette Frères, the Agent for the French Government, the Agent for the Italian Government and the Agent for the Commission submitted their oral observations.
17. The applicant company maintains that the third paragraph of Article L. 190 of the Livre des Procédures Fiscales is incompatible with Community law since it is a procedural rule adopted by the French State in order to render virtually impossible or excessively difficult the exercise of rights conferred by Community law. In the applicant's opinion, the French provision introduces a specific procedure to apply to actions based on the infringement of a provision of Community law by a national regulation, which is different from the procedure which applies where the action for recovery of a sum not due is based on a provision of national law.
It explains that the 1989 amendment, which added paragraphs 2 and 3 to Article L. 190 of the Livre des Procédures Fiscales, was made in reaction to the judgment given on 3 February 1989 in the Alitalia case by the French Conseil d'État (Council of State), which held that certain restrictions on the right to deductions were contrary to the Sixth Directive, and to 17 judgments given on 7 November 1989 by the French Cour de Cassation (Court of Cassation), which held that an action for recovery of sums not due, seeking the refund of a tax declared contrary to Community law, was subject to the 30-year limitation period under general law.
18. The French Government maintains that the action brought by Roquette Frères is admissible since it was filed within the prescribed period. However, the same cannot be said with regard to the substance of the case, because the tax of which it seeks repayment was paid in 1987 and an action for recovery of sums paid but not due, when based on a judicial decision which has declared such payment to be incompatible with a higher-ranking rule, may only relate to the period following 1 January of the fourth year preceding that of the judgment. Since the relevant judicial decision is the judgment of the Court of Justice of 13 February 1996 in the Bautiaa case, recovery is limited to the period between that date and
1 January 1992.
It points out that paragraph 3 of Article L. 190 applies to any action based on the grounds that one rule is incompatible with a higher-ranking rule, irrespective of its rank and nature. It adds that the aforementioned provision extends, in certain circumstances, the normal time-limits for bringing actions under French law, in so far as it gives a second chance to taxpayers who were not aware that the rule applied was invalid and had not appealed within the normal time-limit. Although the time-bar contained in the provision may, in some cases, cause the application for recovery to be dismissed in whole or in part, the French Government considers that the period fixed, between four and five years, is perfectly reasonable.
19. The Italian Government believes that the disputed French legislation is compatible with Community law, since it is applied without distinction to judgments of the Court of Justice and those of national courts, and the time-limit for bringing an action for recovery is reasonable.
20. The Commission considers that the aim of paragraph 3 of Article L. 190, in conjunction with Article R. 196-1, is, firstly, to give taxpayers a new period within which to appeal, ending on 31 December of the second year following that of the judgment and, secondly, to fix a special limitation period by establishing a time from which it is no longer possible to obtain recovery of sums paid though not due, which goes back to 1 January of the fourth year preceding that of the judgment. It adds that published views of administrative law interpret a judgment as meaning, for these purposes, any final, non-appealable judgment of a national court and the judgments of the Court of Justice in actions for failure to fulfil obligations and preliminary ruling proceedings.
It observes that, although those provisions establish a special procedure concerning taxation, they form part of the rules which regulate the ordinary tax procedure at issue and, even though they do not affect all indirect taxation, they apply to actions for recovery of tax in every case in which a national, Community or international court has given judgment holding that the legal provision applied is incompatible with a higher-ranking national, international or Community rule. Furthermore, it considers that both the time-limit for appealing and the period to which recovery of tax paid though not due may relate are reasonable.
VI. Analysis of the question referred
21. In essence, the Tribunal de Grande Instance, Béthune, wishes to know whether Community law precludes the tax legislation of a Member State from establishing that an action for recovery of sums paid but not due, brought on the basis of a judgment that one rule is incompatible with a higher-ranking rule, may relate only to the period following 1 January of the fourth year preceding that of the judgment.
22. Before proposing a reply to this question, I wish to make two preliminary observations concerning the development of the proceedings and a few comments about the attitude adopted by the national court.
23. Firstly, the judgment of the Tribunal de Grande Instance, Béthune, in which it decided to refer a question for a preliminary ruling, was delivered on 24 March 1998. However, for reasons I am not aware of, the document did not reach the Registry of the Court of Justice until almost a year later, to be precise, on 15 March 1999.
24. Secondly, I wish to emphasise that, by judgment of 8 January 1998, the Tribunal de Grande Instance, Angoulême, referred a question to the Court of Justice for a preliminary ruling in an action between the company SA Otor Godard and the Tax Authority. The facts in that case were almost identical to those presented by Roquette Frères, since Otor Godard had also, in 1987, paid a large sum in respect of registration tax on a merger; the same national provisions applied, and the applicant companies were in the same legal position: their applications for recovery of the sums paid but not due, brought on the basis of the judgment of the Court of Justice in the Bautiaa case, were admissible since they had been filed within the prescribed time, but the Tax Authority rejected them on the merits, because the limitation period prescribed by paragraph 3 of Article L. 190 of the Livre des Procédures Fiscales was applicable to them.
When it delivered its judgment in January 1998, the Tribunal de Grande Instance, Angoulême, was unaware of the judgment that the Court of Justice had delivered on 2 December 1997 in the Fantask case, and the Registry sent it a copy of that judgment on 21 July 1998. As a result of that communication, the national court considered that its doubts had been adequately dispelled and withdrew the question which it had referred for a preliminary ruling.
25. When the Registry of the Court of Justice realised that the question referred for a preliminary ruling by the Tribunal de Grande Instance, Béthune, was very similar to that referred by the Tribunal de Grande Instance, Angoulême, it sent to the Béthune court not only the Fantask judgment, but also the judgments in Edis, Ansaldo Energia, Spac and Aprile, which were delivered during 1998 and contain the reply to the question which had arisen, and asked the court whether, after seeing those judgments, it wanted to continue with the question or withdraw it.
The national court replied that, in the light of the responses of the parties, it had decided to proceed with the reference.
26. In view of these circumstances, I think it is necessary to recall the case-law of the Court of Justice, according to which Article 177 of the Treaty establishes direct cooperation between the Court of Justice and the national courts by way of a non-contentious procedure excluding any initiative of the parties, who are merely given the opportunity to submit observations. I believe it is important to emphasise that doubts regarding the interpretation of Community law must be expressed to the national court. The opinion of the parties cannot be a decisive factor in deciding whether to continue with the reference for a preliminary ruling or to withdraw it, even though what they say must be fully evaluated, with special attention to the grounds on which they base their claims.
Of course, if the solutions recommended by the Study Group on the future of the legal system of the European Communities - in Chapter A(2)(c) of its report which was published public in February 2000 - had been adopted, this would be an example of a question referred for a preliminary ruling which the Court could have resolved by means of a reasoned order, because the reply is obvious and appears in the case-law.
27. I am also surprised that the national court should have echoed the words of the applicant in the main proceedings, which maintains that French legislation has introduced a specific procedure to apply to actions based on the infringement of a provision of Community law by a national regulation, which is different from the procedure which applies where the action for recovery of a sum paid but not due is based on the incompatibility of two national provisions of different ranks.
This surprises me because the national court cannot be unaware of the case-law of the Cour de Cassation which has held, on numerous occasions, that paragraph 2 of Article L. 190 was applicable to an action for recovery of sums paid but not due, brought on the ground that a lower-ranking rule was contrary to and incompatible with a higher-ranking rule, where they were both national provisions.
28. Having said that, it only remains for me to remind the French court which has referred the question for a preliminary ruling of the case-law of the Court of Justice concerning recovery of sums paid but not due, which is clear and extensive.
29. According to that case-law, which is summarised in paragraph 12 of the Deville judgment, in the absence of Community rules concerning the recovery of national taxes which have been wrongly levied, it is for the domestic legal system of each Member State to designate the courts having jurisdiction and to determine the procedural conditions governing actions at law intended to ensure the protection of the rights conferred by the direct effect of Community law, provided that such conditions are not less favourable than those relating to similar actions of a domestic nature, and do not make it impossible, in practice, to exercise the rights which the national courts have a duty to protect.
These two conditions, required of the various national systems regarding claims for refunds of amounts paid but not due, the legality of which derives from a Community provision, are that there must be no discrimination and the actions concerned must not be rendered illusory. Those requirements are an expression of the principle of equivalence (with the requirements laid down for similar domestic claims) and of the principle of effectiveness of Community law, respectively.
30. Following this case-law, the Court of Justice has acknowledged, in the interests of legal certainty which protects both the taxpayer and the authority concerned, that the setting of reasonable limitation periods for bringing proceedings is compatible with Community law. In this connection, the Court has decided that such periods cannot be regarded as rendering virtually impossible or excessively difficult the exercise of rights conferred by Community law, even if the expiry of those periods necessarily entails the dismissal, in whole or in part, of the action brought.
As examples of this established case-law, I can point out that the Court has held that:
- application to a claim for repayment based on breach of Article 95 of the Treaty (now, after amendment, Article 90 EC) of a rule of national law under which proceedings for recovery of charges unduly paid are time-barred after a period of five years is not contrary to Community law, even if the effect of that rule is to prevent, in whole or in part, the repayment of those charges;
- it is not contrary to Community law for a national limitation period applicable to claims for repayment of duties levied in breach of Article 95 of the Treaty or a provision similar to Article 18 of the EEC/Sweden Agreement to start to run from an earlier point in time than that from which the duties were discontinued;
- in the absence of Community rules on the repayment or remission of import or export duties, it is not contrary to the general principles of Community law for the national legislation of a Member State to provide for a mandatory time-limit of three years for the submission of all applications for the repayment of duties unduly levied;
- Community law does not prevent a Member State which has not properly transposed Directive 69/335 into national law from resisting actions for the repayment of charges levied in breach thereof by relying on a limitation period under national law which runs from the date on which the charges in question became payable;
- a time-limit of one year commencing from the date of the entry into force of the measure transposing a directive into national law, which not only enables the beneficiaries to ascertain the full extent of their rights but also specifies the conditions under which loss or damage sustained as a result of the belated transposition will be made good, cannot be regarded as making it excessively difficult or, a fortiori, virtually impossible to lodge a claim for reparation;
- Community law does not prohibit a Member State from resisting actions for repayment of charges levied in breach of Community law by relying on a time-limit under national law of three years, by way of derogation from the ordinary rules governing actions between private individuals for the recovery of sums paid but not due, for which the period allowed is more favourable, provided that that time-limit applies in the same way to actions based on Community law for repayment of such charges as to those based on national law. Nor does Community law prevent a Member State from resisting actions for repayment of charges levied in breach of a directive by relying on a time-limit under national law which is reckoned from the date of payment of the charges in question, even if, at that date, the directive concerned had not yet been properly transposed into national law;
- Community law does not preclude the application of a national provision which, for all actions of repayment of customs charges, imposes a special time-limit of five, and subsequently three, years, instead of the ordinary limitation period of 10 years for actions for the recovery of sums paid but not due, provided that that time-limit, which is similar to that imposed for certain taxes, applies in the same way to actions based on Community law for repayment of such charges as to those based on national law. Nor does Community law prohibit a Member State from resisting actions for repayment of charges levied in breach of Community law by relying on a time-limit under national law even if that Member State has not yet amended its national rules in order to render them compatible with those provisions;
- observance of the principle of equivalence implies that the national procedural rule applies without distinction to actions alleging infringement of Community law and to those alleging infringements of national law, with respect to the same kind of charges or dues. That principle cannot, however, be interpreted as obliging a Member State to extend its most favourable rules governing recovery under national law to all actions for repayment of charges or dues levied in breach of Community law. Thus, Community law does not preclude the legislation of a Member State from laying down, alongside a limitation period applicable under the ordinary law to actions between private individuals for the recovery of sums paid but not due, special detailed rules, which are less favourable, governing claims and legal proceedings to challenge the imposition of charges and other levies. The position would be different only if those detailed rules applied solely to actions based on Community law for the repayment of such charges or levies.
31. The case-law which I have just cited is not called into question by the interpretation provided by the Court of Justice in the Emmott judgment in 1991, according to which, until such time as Directive 79/7 is transposed into national law, a defaulting Member State may not rely on an individual's delay in initiating proceedings against it in order to protect rights conferred upon him by the provisions of the Directive, and a period laid down by national law within which proceedings must be initiated cannot begin to run before that time.
Not long afterwards, in a judgment delivered in 1993, which was confirmed by another delivered in 1994, the Court made it clear that the solution adopted in Emmott was justified by the particular circumstances of that case, in which the time-bar had the result of depriving the applicant of any opportunity whatsoever to rely on her right to equal treatment under a Community directive.
32. In case any doubt still remains, I wish to add that the fact that the temporal effects of the Bautiaa judgment are not limited is irrelevant for these purposes. In this regard it must be remembered that the fact that the Court has given a preliminary ruling interpreting a provision of Community law without limiting the temporal effects of its judgment does not affect the right of a Member State to impose a time-limit under national law within which, on penalty of being barred, proceedings for repayment of charges levied in breach of that provision must be commenced.
33. In the light of this case-law, I consider that the French legislation observes the principle of equivalence, since the procedure applicable to actions for the recovery of sums paid but not due, the legality of which derives from a Community provision, is the same as that which governs similar actions of a domestic nature. It also observes the principle of effectiveness because, although the restriction of the period to which the claim may relate to the four or five years preceding the judgment may mean that, in some cases, the action is dismissed in its entirety, it does not render it virtually impossible or excessively difficult for individuals to exercise rights conferred on them by Community law.
34. I therefore agree with the French Government, the Italian Government and the Commission that Community law does not preclude the legislation of a Member State, when introducing procedures concerning taxation, from establishing that an action for recovery of sums paid but not due, brought on the basis of a judgment that one rule is incompatible with a higher-ranking rule, may relate only to the period following 1 January of the fourth year preceding that of the judgment.
VII. Conclusion
35. In the light of the foregoing considerations, I propose that the Court of Justice should reply to the question referred for a preliminary ruling by the Tribunal de Grande Instance, Béthune, in the following way:
Community law does not preclude the legislation of a Member State, when introducing procedures concerning taxation, from establishing that an action for recovery of sums paid but not due, brought on the basis of a judgment that one rule is incompatible with a higher-ranking rule, may relate only to the period following 1 January of the fourth year preceding that of the judgment.
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