Opinion of the Advocate-General
1. The present request for a preliminary ruling from the Handelsgericht Wien (Vienna Commercial Court) in Austria concerns the compatibility of certain national rules on the registration of motor vehicles with the Treaty provisions on freedom to provide services or free movement of goods.
2. Under Austrian law, any Austrian resident bringing a motor vehicle registered elsewhere into the country in order to use it there must surrender the licence plates to the authorities within three days and may not thereafter use the vehicle without re-registering it in Austria. The applicant for registration must be resident or at least have a principal place of business in Austria, the vehicle must be insured by an approved insurer, it must pass certain technical tests, and a fuel consumption tax of up to 16% of its value must be paid.
3. The lawfulness of those provisions is questioned in a case in which a vehicle registered in Germany, where it has received technical approval and where taxes have been paid in connection with putting it on the road, is leased by a German company to an Austrian company for a period of three years. Under the leasing contract, the German company remains the owner of the vehicle and the Austrian company may not re-register it in its own name. The issue before the national court is whether the contract is unenforceable because it does not comply with the requirements of Austrian law or whether those requirements are themselves unenforceable because they do not comply with Community law.
The relevant Austrian legislation
4. The main Austrian laws referred to in this case are the Kraftfahrgesetz (Law on Motor Vehicles, the KFG) and the Normverbrauchsabgabegesetz (Law imposing a Standard Fuel Consumption Tax, the NoVAG).
5. In accordance with Paragraph 79 of the KFG, vehicles registered in another country may in general be used in Austria for up to one year, provided that they are not permanently based there.
6. However, under Paragraph 82(8), unless there is proof to the contrary a foreign-registered vehicle is deemed to be permanently based in Austria if it is brought into the country by a person whose principal residence or registered office is in Austria and who uses it there. In that case, it may be used in Austria for only the three days immediately following its entry into the country. After that, the registration documents and plates must be surrendered to the authorities and any further use of the vehicle is conditional upon registration in accordance with Paragraph 37 of the KFG.
7. Paragraph 37(2) lays down a number of conditions, proof of compliance with which is necessary for a vehicle to be registered. In particular:
- the vehicle must be in the lawful possession of the applicant for registration, who must have his principal residence or registered office (or, in the case of firms registered abroad, a principal place of business) in Austria;
- the vehicle must be covered, in accordance with Paragraphs 59(1) and 61(1), by a compulsory insurance certificate issued by an insurer entitled to provide such insurance in Austria;
- the vehicle must also be covered by an inspection certificate issued (in Austria) in accordance with Paragraph 57a of the KFG establishing that it meets the relevant safety and pollution requirements;
- in the case of the first registration of a vehicle acquired from another Member State of the European Union, a certificate must be produced to show that all applicable taxes, including the Standard Fuel Consumption Tax, have been paid.
8. The NoVAG requires Standard Fuel Consumption Tax to be paid on all vehicles supplied for consideration, leased by way of trade or registered for the first time in Austria (Paragraphs 1 and 2, with exceptions in Paragraph 3).
9. Under Paragraph 5, the amount of the tax is calculated essentially on the basis of the consideration paid for the vehicle if supplied new or its normal value, exclusive of VAT, in other cases. The rate applied under Paragraph 6 is in general:
- for motorcycles with an engine capacity of over 125 cc, 0.02% of the taxable value for each cc of capacity over 100 cc;
- for vehicles other than motorcycles, 2% of the taxable value for each litre of fuel consumption per 100 km over 3 litres per 100 km for petrol engines or 2 litres per 100 km for diesel engines.
That amount is calculated to the nearest full percentage point and may not exceed 16% of the basis of assessment.
The relevant Treaty provisions
10. The Treaty provisions referred to in the order for reference are Article 28 EC and Article 49 et seq. EC.
11. Article 28, which falls within the title relating to free movement of goods within the Community, prohibits quantitative restrictions on imports and all measures having equivalent effect between Member States. Article 49 et seq. form part of the chapter concerning services in the title relating to free movement of persons, services and capital.
12. Article 49 provides, in particular:
restrictions on freedom to provide services within the Community shall be prohibited in respect of nationals of Member States who are established in a State of the Community other than that of the person for whom the service is intended.
13. Under Article 50, services are those normally provided for remuneration, in so far as they are not covered by the provisions relating to freedom of movement for goods, capital and persons.
The main proceedings and the request for a preliminary ruling
14. ASL Auto Service-Leasing GmbH (ASL) is a vehicle-leasing company established at Pullach, on the outskirts of Munich, in Germany. It apparently owns a fleet of some 50 000 vehicles which it leases to clients. Cura Anlagen Gesellschaft mbH (Cura Anlagen) is a company registered in Salzburg, Austria.
15. In February 1999, the two companies entered into a contract under which ASL leased a motor car to Cura Anlagen for a period of 36 months, for a fixed monthly sum (part of which was for the compulsory insurance cover included in the lease) plus an additional rate per 1 000 km over a certain distance travelled. The contract included special conditions for Austria, stipulating in particular that the vehicle would be registered in ASL's name, that Cura Anlagen was not entitled to register it in its own name in Germany or elsewhere and that it was to be used in principle only within Austria.
16. In May 1999, Cura Anlagen brought proceedings against ASL before the Handelsgericht, seeking either an order requiring ASL to register the vehicle in Austria in its own name or consent to registration in Cura Anlagen's name and in any event to pay the environmental tax of EUR 2 460 thereon, or else annulment of the contract on the ground that the vehicle could not lawfully be used in Austria.
17. Some further details may be gleaned from Cura Anlagen's application to the Handelsgericht. According to that document, the parties entered into the contract on the assumption that Cura Anlagen could lawfully use the car in Austria for the whole three-year period despite the fact that it was registered in Germany in ASL's name. However, shortly after bringing the car into Austria, Cura Anlagen learned that it could not use the car there with German registration plates but must register it in Austria and pay the Standard Fuel Consumption Tax. Cura Anlagen asserts that if the parties had known of the relevant provisions and taken them into account, they would have provided for the car to be registered in Austria either in Cura Anlagen's name or - although this would have required ASL to set up a place of business in Austria - in ASL's name. However, since that was not the case, the contract should be either modified so that it can be performed or annulled on the ground that its economic basis was absent ab initio. Cura Anlagen agrees with ASL that the Austrian legislation limits freedom to provide cross-border services within the Community but considers the limitations justified on public-interest grounds.
18. ASL's defence before the national court is essentially that Cura Anlagen is fully entitled to use the car in Austria in accordance with the terms of the leasing contract as it stands, since the Austrian provisions alleged to prevent it from doing so cannot be applied. As restrictions on the freedom to provide services they are incompatible with Article 49 et seq. EC. They are not justified on public-interest grounds and thus cannot be applied. ASL therefore asked the Handelsgericht to seek confirmation of its arguments by requesting a preliminary ruling from the Court of Justice.
19. On 10 November 1999, the Handelsgericht stayed the proceedings and sought a ruling by the Court on the following question:
Are Article 49 et seq. EC (or alternatively Article 28 EC) to be interpreted as precluding the application of provisions of Member State A which prohibit an undertaking established in Member State A from using for more than three days, or for more than a year as the case may be, in Member State A a motor vehicle which is leased from a leasing undertaking established in Member State B and registered in Member State B in the name of the leasing undertaking established there, without obtaining a (second) registration for that motor vehicle in Member State A?
20. Written observations have been submitted to the Court by ASL, by the Austrian, Belgian, Danish and Finnish Governments and by the Commission. At the hearing, only ASL, the Belgian Government and the Commission were represented.
Admissibility
21. The Austrian Government submits that the reference for a preliminary ruling is inadmissible, arguing that the question referred - in particular in so far as it relates to Article 28 EC - is not relevant to the determination of the dispute before the Handelsgericht and that the national proceedings are moreover of a similarly contrived nature to those in Foglia v Novello.
22. As regards the first point, it will be more appropriate to consider the relevance of Article 28 EC when examining the nature of the alleged restrictions. Suffice it to say that the question does not refer solely to that article. However, the Austrian Government also submits that the dispute in the main proceedings concerns the interpretation and enforcement of a private-law contract, and not the application of any provision of the KFG. There is thus in its view no relationship between the question raised and the specific nature of the main proceedings.
23. That argument does not seem convincing. It is true that the Handelsgericht is not strictly being asked to apply or disapply the disputed provisions of the KFG or the NoVAG. However, it is clearly important for a court which is asked to order the enforcement or annulment of a contract to know whether the national provisions which appear to hinder its performance are valid or not.
24. On the second point, the Austrian Government adduces no specific grounds for its contention that the dispute is contrived.
25. Whilst there may be elements in the case-file which hint at the possibility that the situation underlying the main proceedings was engineered with a view to obtaining a ruling on a question of Community law which is of general interest, there seems no doubt that a real contract exists and must be either enforced or annulled, with consequences for the parties. The decision to be taken by the national court is at least in part dependent on a real issue of Community law. The case might thus be compared to, for example, Leclerc-Siplec, in which the Court accepted jurisdiction to answer the question raised, in so far as it was relevant to the subject-matter of the national proceedings, despite the fact that both plaintiff and defendants were in full agreement as to the desired solution.
26. Moreover, unlike the situation in Foglia v Novello, the issue is raised in a court of the Member State in question. It is perhaps unfortunate that the Austrian Government is not a party to the main proceedings, but that drawback may be outweighed by its right to submit full observations to this Court. The fact that it did not attend the hearing may indicate that it has been afforded sufficient opportunity to assert its position.
27. I thus see no reason for the Court to decline jurisdiction in this case.
Nature of the alleged restrictions
28. The national court wishes to know whether the Austrian provisions in issue are precluded either by the Treaty provisions (Article 49 et seq.) governing freedom to provide services or by those (Article 28 et seq.) governing free movement of goods.
29. Most of the parties submitting observations take the view that the facts of the case concern freedom to provide services and not free movement of goods, and I agree.
30. The leasing or hiring-out of motor vehicles can clearly fall within the definition in Article 50 EC in that it is a commercial activity normally provided for remuneration. And, although it undoubtedly involves goods - the vehicles concerned - those goods are not themselves supplied by the lessor to the lessee; what is supplied is rather the use of the goods, which remain the property of the lessor, and supply of the use of goods is logically a service. Moreover, at the hearing ASL pointed out that a full-package lease may provide a good deal more than the car itself; in the present case it included insurance.
31. As the Commission points out, the Court considered in Aro Lease that the leasing of vehicles constituted a supply of services within the meaning of the Sixth VAT Directive and that those services consisted principally in negotiating, drawing up, signing and administering the relevant agreements and in making the vehicles concerned, which remain the property of the leasing company, physically available to customers.
32. The Commission further takes the view that the concept of the provision or supply of services must have a uniform definition in Community law. Again, I agree; there is no discernible reason for differing definitions, which would serve only to confuse the legal position of possibly borderline activities. Moreover, as the Austrian Government points out, the Court held in Eurowings that leasing of aircraft was a service within the meaning of Article 50 EC.
33. In any event, the question of classification as between goods and services is of limited importance, since the main questions to be considered are whether there are any actual restrictions on trade (be it in goods or in services) and whether such restrictions as there may be can be justified. The existence of restrictions is not dependent on the nature of the trade and the permissible grounds of justification are largely identical.
The alleged restrictions
34. Although the national court's question concerns, as it is worded, the legality of only the registration requirement itself and the time-limits to which it is subject, the other conditions attendant upon registration are also relevant to an examination of that legality.
35. The observations submitted to the Court focus largely on whether the Austrian provisions in issue can be justified. However, it may be helpful first to verify in each case whether they do actually restrict the cross-border provision of vehicle leasing services.
36. With regard to possible justification of any restrictions, it will be recalled that Articles 55 and 46(1) EC, read together, permit only restrictions on freedom to provide services consisting of national provisions for special treatment of foreign nationals on grounds of public policy, public security or public health. In addition, the Court has consistently held that restrictions which apply without distinction as regards nationality or Member State of establishment may also escape the prohibition if they are objectively justified by overriding reasons relating to the public interest. Such restrictions must comply with the principle of proportionality: they must be appropriate for securing the attainment of the objective which they pursue and must not go beyond what is necessary in order to attain it.
The registration requirement
- Existence of a restriction
37. Does the requirement that a vehicle brought into Austria by a person based in the country in order to be used there must be (re-)registered in Austria in itself restrict the freedom of vehicle-leasing businesses outside Austria to provide their services in that Member State?
38. The Finnish Government submits that the registration requirement cannot be said to hinder trade in services between Member States unless more severe conditions are imposed on imported vehicles.
39. I cannot agree. The requirement that a vehicle must be (re-)registered in Austria makes it more cumbersome for a German vehicle-leasing business to provide its services in Austria than to do so in Germany, or than it is for its Austrian counterparts to do so in Austria. The Court has consistently held that Article 49 EC prohibits any restriction, even if it applies to national providers of services and to those of other Member States alike, which is liable to prohibit, impede or render less advantageous the activities of a provider of services established in another Member State where he lawfully provides similar services.
40. That being so, the question whether the particular time-limits in issue are restrictive of freedom to provide services need not be considered separately. However, it may be pointed out that the one-year limit laid down in Paragraph 79 of the KFG will not normally affect the cross-border provision of services. Applying as it does to vehicles not permanently based in Austria, it will in most cases affect only leases where the lessee is based outside the country but uses the vehicle for a prolonged period within it. It seems to me that in such circumstances there is no inherent cross-border element in the service provided by the lessor to the lessee.
- Justification
41. When considering whether the registration requirement may be justified, it is none the less necessary to examine both whether it may be justified in principle, and whether the time-limit laid down is justifiable.
42. With regard to justification of the requirement in principle, the Commission and the Member States emphasise considerations of public order and road safety, which I too consider to be relevant. It is essential for many purposes that vehicles used on the public highway should be readily identifiable by means of individual registration plates. From records kept by the Member State of registration details such as the identity of the owner and/or lawful possessor of the vehicle can be ascertained where necessary in cases of road traffic offences or suspected crime, and legal obligations such as compulsory insurance and roadworthiness testing or the payment of relevant taxes can be enforced. Such measures combat fraud and other crime and above all help to enforce standards of road safety and penalise failures to meet those standards.
43. ASL argues that registration in the Member State of origin is sufficient. It points out that any vehicle registered in a State which is a party to the Paris Convention on Motor Traffic of 1926, the Geneva Convention on Road Traffic of 1949 or the Vienna Convention on Road Traffic of 1968 may be used freely in Austria (provided that it has not been brought into the country by an Austrian resident in order to be used there). In addition to those with more exotic number plates, tens of thousands of vehicles registered in Hungary, Turkey, Yugoslavia, Croatia, Germany and Italy are thus driven in Austria every day by tourists, frontier workers and foreign business people. For German-registered vehicles, an agreement on judicial cooperation on police and administrative matters between Germany and Austria ensures that any necessary information is immediately available.
44. That argument has some force. With expanding resources of information technology and increased police and administrative cooperation, in the foreseeable future it will be as easy for the Austrian authorities to obtain information - including, for example, the identity of the lessee where applicable - about a vehicle registered in Finland or Portugal, in Greece or Ireland, as it is now about a vehicle registered in Austria. However, that state of affairs does not yet seem to have been achieved. And even if it could be assumed to exist between Austria and Germany, no consequences could be drawn in Community law which would in effect discriminate between vehicle-leasing businesses operating in Austria depending on whether they were established in Germany or in another Member State.
45. Moreover, as the Commission and the Member States point out, the Member State of registration is not merely a custodian of information about the vehicle but is also responsible for monitoring its roadworthiness and entitled to levy various taxes on it. The taxation of motor vehicles has not been harmonised and differs enormously from one Member State to another. As the Commission pointed out in its interpretative communication on procedures for the type-approval and registration of vehicles previously registered in another Member State, an individual cannot be allowed to register his vehicle in the Member State of his choice, or all vehicles would be registered where the tax rates are lowest. Although that concerned the private ownership of vehicles, similar considerations apply to leasing arrangements - all vehicle-leasing businesses would establish themselves in the State where taxation is lowest.
46. In the same communication, the Commission considered that a person must register his vehicle in the Member State in which he has his normal residence within the meaning of Directive 83/182/EEC, that is to say essentially where he usually lives because of personal and/or occupational ties. The Austrian rules appear to be based on a similar principle, although they concentrate on the user rather than the owner and on the fact of use within the country.
47. That approach seems to me to be perfectly justified. Where a vehicle is used preponderantly in a Member State by a person or entity based there, the only reasonable rule is that records should be kept in that Member State, which should also be responsible for monitoring roadworthiness and levying such taxes as are deemed necessary to fund the road infrastructures and environmental protection measures made necessary by vehicle use. To highlight the point, we may imagine the practical difficulties and distortion of tax revenue which would ensue if all vehicles leased in Denmark (where vehicle taxes appear to be the highest in the Community) were registered in Italy (where they seem to be lowest). The registration requirement itself thus appears fully justified in order to promote road safety and combat tax evasion.
48. However, if it is justifiable for such overriding reasons of public interest that a leased vehicle brought into Austria by an Austrian resident for use there should also be registered there, it seems to me that a requirement of re-registration within three days goes far beyond what is necessary for that purpose and is therefore disproportionate.
49. Even on the rather implausible assumption that the relevant authorities are able to ensure completion of the necessary formalities almost instantaneously, it still does not appear reasonable to refuse the vehicle user a longer period of grace in which to make the application. As ASL has pointed out, many foreign-registered cars may be used in Austria for longer periods, and there does not seem to be any reason for insisting on re-registration practically on crossing the border simply because the user is resident in the country. However, it might well be acceptable to require an application for registration to be made within a relatively short period provided that the lessee could continue to use the vehicle under the original registration until the formalities are completed, ensuring that there is no unnecessary interruption of his enjoyment of it. The additional burden imposed when vehicles are leased from another Member State must be kept to the essential minimum.
50. There is also the question of the duration of the leasing contract. In the present case, it is for three years and that may be a usual period for this type of arrangement. However, vehicles are also hired, perhaps on different terms, for shorter periods. From the documents submitted to the Court, it is not clear whether the short duration of a lease would suffice as proof for the purposes of Paragraph 82(8) of the KFG that the vehicle was not permanently based in Austria or, if so, how short it would have to be to do so. The shorter the duration, the more unjustifiably restrictive it would appear to require a vehicle to be re-registered in Austria in order to be used there - with a subsequent need to go through the reverse procedure at the end of the lease.
51. The Court is not asked to specify what would be a justifiable time-limit for registration and need not give a specific ruling. It is however asked whether the two time-limits in issue (three days and one year) are compatible with freedom to provide services. In that regard, the three-day limit does not appear to lie anywhere near the borderline of justifiability. In contrast, the one-year time-limit, although, as I have said, unlikely in practice to have any repercussion on the cross-border leasing of vehicles, seems far from unreasonably short.
52. For general guidance, the approach taken in Directive 83/182 might serve as a point of comparison, although that directive specifically does not cover the case where the importer of the vehicle is resident in the country of importation. The tax exemptions provided for there apply in principle for a period, whether continuous or not, of six months in any 12. Thus, for the registration of vehicles leased from another Member State, a six-month time-limit might not be considered unreasonably short. However, this is an area in which Member States must, in the absence of Community legislation directly in point, be allowed a degree of discretion. For purposes of efficient control, they may reasonably wish to impose a shorter time-limit where the user of the vehicle is resident in the country, but that time-limit must not be so short as to render compliance impracticable or unduly burdensome, having regard to all the formalities which must be completed.
The residence or place of business requirement
- Existence of a restriction
53. It does not appear to be contested that a requirement that a vehicle used in Austria by a person based there must also be registered in the name of a person based in Austria renders it more difficult or less attractive for vehicle-leasing businesses outside Austria to provide their services in that country.
54. Such a requirement means either that the lessor must have an establishment in Austria or that he must allow the lessee (or another person based in Austria) to register the vehicle in his own name. The first alternative is a recognised restriction on freedom to provide services, involving as it does both inconvenience and expense, while the second involves giving up some of the prerogatives that the lessor, as owner of the vehicle, would normally expect to retain.
- Justification
55. Registration presupposes a name in which the vehicle is registered. It is in the interest of all that the name should be that of the person responsible for the vehicle, ensuring the closest degree of control for both that person and the authorities. However, when a vehicle is leased for a relatively long period, responsibility is shared between the lessor and the lessee on a lasting basis. From information submitted by the Commission in response to a request by the Court, it appears that different solutions are adopted by different Member States. Registration in both names would appear to serve best the interests of all, but it might well be an encroachment on the rights of the owner of the vehicle if registration in his name were completely excluded.
56. The Austrian provisions do not appear to preclude registration in the lessor's name but they require him in that case to have an establishment in Austria. The Austrian Government points out that it may often be necessary, when road traffic offences are committed, to require the person in whose name a vehicle is registered to provide information as to the identity of the driver at a particular moment. That information would be difficult to obtain if the person in question were based in another Member State. The Commission considers that it would be sufficient, and would not hinder the lessor's freedom to provide services, for the vehicle to be registered in his name with an indication of the lessee's particulars and a (joint) obligation on the latter to comply with all requirements arising out of the registration and use of the vehicle.
57. The Austrian Government's submission is reasonable. If a vehicle based in Austria and used by a person established there were registered only in the name of a leasing company established hundreds or even thousands of kilometres away, proper control might be extremely difficult. On the other hand, the Commission's concern for the owner's rights is also justified. If the only way in which the lessor may safeguard those rights is to have the vehicle registered in his own name, then clearly the requirement of a residence or establishment in Austria goes further than is necessary to achieve the aim pursued.
58. It may be, however, that the Court has not been fully informed of the details of the Austrian rules, and the final decision as to their proportionality should be left to the national court, which will be better placed to carry out the assessment. If joint registration is possible in the name of both a party resident in Austria (the lessee) and one not so resident (the lessor), if there are separate registers for ownership and possession, or if some other adequate means of recording and safeguarding the lessor's rights as owner is available, then the residence requirement would not appear disproportionate - indeed, it would not even seem to hinder freedom to provide services. But if there is no such possibility, the requirement does in my view go further than is necessary and thus constitutes a prohibited restriction on freedom to provide services.
The insurance requirements
- Existence of a restriction
59. If a vehicle leased to a person based in Austria who uses it there must be insured with an insurer entitled to operate in Austria, does that restrict the freedom of vehicle-leasing businesses established elsewhere to provide their services in Austria?
60. It seems clear that such a rule interferes at least potentially with the freedom of vehicle-leasing businesses, which may have preferential arrangements with insurers based outside Austria, to lease vehicles to clients based in that country, since it may require them to enter into less favourable contracts and in any event restricts their freedom to choose their insurer. However, the issue turns also on what is meant by an insurer entitled to operate in Austria, a matter which I shall examine when considering the possibility that the requirement may be justified.
61. Whether the requirement is restrictive in any individual case will also depend on the terms of the leasing contract - is insurance the responsibility of the lessor or the lessee? In the present case, it appears that the car was insured by ASL with a German insurer, a specific monthly charge being included in the rental invoiced to Cura Anlagen, and that this is common in full-package leasing. That may not be the case for all long-term leases (it is likely to be so for any short-term hire) but the fact that in some cases there might be no actual effect on the lessor's business would not alter the restrictive nature of the requirement in principle. If nothing else, it will always restrict his freedom to choose the insurance arrangements for his vehicles.
- Justification
62. The possible justification for a restriction of the kind envisaged above must be examined in the light of the Community directives which regulate, in considerable detail, the provision of insurance, and in particular of motor vehicle insurance, bearing in mind that compliance with the obligation to insure any vehicle used on the road falls to be monitored and enforced by the authorities of the Member State in which it is registered.
63. As the Commission points out, the answer depends largely on the meaning of the expression with an insurer entitled to provide that class of insurance in Austria (mit einem zum Betrieb dieses Versicherungszweiges in Österreich berechtigten Versicherer).
64. If it means that the insurer must have its head office in Austria and official authorisation (behördlichen Zulassung) there as its home Member State within the meaning of the non-life insurance directives, that is clearly an unjustifiable restriction. However, if the requirement is merely that the insurer must be entitled under those directives to provide services in Austria the restriction, though still present in fact, would seem to be justifiable.
65. Article 7(1) of Directive 73/239, as amended, provides: Authorisation shall be valid for the entire Community. It shall permit an undertaking to carry on business there, under either the right of establishment or the freedom to provide services.
66. Pursuant in particular to Article 3(1) of Council Directive 72/166, Article 1(1) of Directive 84/5, and Articles 2 and 5(1) of Directive 90/232, compulsory motor vehicle insurance for any vehicle based in any Member State must be valid for the entire Community and guarantee the cover required by the law of each Member State, and it must be possible for persons involved in any road traffic accident to ascertain promptly the identity of the insurance undertakings concerned.
67. However, although it must thus be possible in principle for any insurer established and having official authorisation in any Member State to provide motor vehicle insurance in any other Member State without having an establishment there, an important proviso is laid down in Article 12a of Directive 88/357. Under that provision, such an insurer must in particular become a member of and participate in the financing of the national bureau and national guarantee fund of the Member State in which he wishes to provide such services and must appoint a representative resident or established in its territory who shall collect all necessary information in relation to claims, and shall possess sufficient powers to represent the undertaking in relation to persons suffering damage who could pursue claims, including the payment of such claims, and to represent it or, where necessary, to have it represented before the courts and authorities of that Member State in relation to these claims, without that representative constituting a branch, agency or establishment of the insurer.
68. ASL has produced what it claims to be a complete official list of insurers entitled to provide the relevant insurance in Austria, all but two of which, it asserted at the hearing, are firms with their head offices in Austria. Whether that latter point is correct or not, the Court does not have sufficient information to ascertain whether the list is drawn up in compliance with the Community provisions outlined above. That issue must be decided by the national court. Non-compliance with those rules would of course constitute primarily an unjustified restriction on freedom to provide insurance services but in the circumstances of the present case it would also restrict freedom to provide cross-border vehicle-leasing services.
The technical inspection requirements
- Existence of a restriction
69. If a vehicle which is to be leased for use in Austria has already satisfied compulsory roadworthiness and environmental tests in Germany, does a requirement that it also satisfy further tests in Austria constitute a restriction on freedom to provide cross-border vehicle-leasing services?
70. The answer seems clear. There is a restriction because an additional burden is imposed by virtue of the fact that the vehicle is to be used in a Member State other than that of origin. In the comparable field of free movement of goods, the Court took the view in Schloh that roadworthiness testing made the registration of imported vehicles more difficult and more onerous and thus had an effect equivalent to a quantitative restriction on trade. None the less, such testing could be justified on grounds of the protection of human health and life if it was necessary for the attainment of that objective and did not constitute arbitrary discrimination or a disguised restriction on trade.
- Justification
71. There can be no doubt that it is a matter of overriding public interest to ensure that vehicles used on the public highway are as technically and environmentally safe as possible. Moreover, there is a specific obligation on Member States to carry out periodic roadworthiness tests on all vehicles registered in them, under Article 1 of Directive 96/96 (although the issue in the present case concerns not the periodic tests carried out after registration in Austria but the imposition of an initial test for the purposes of that registration).
72. The minimum content of those compulsory tests is specified in considerable detail in Annex II to that Directive. Article 3(1) provides: Member States shall take such measures as they deem necessary to make it possible to prove that a vehicle has passed a roadworthiness test complying with at least the provisions of this Directive; and Article 3(2) specifies: Each Member State shall, on the same basis as if it had itself issued the proof, recognise the proof issued in another Member State showing that a motor vehicle registered on the territory of that other State, together with its trailer or semi-trailer, have passed a roadworthiness test complying with at least the provisions of this Directive.
73. However, Article 5 authorises Member States to impose more extensive, more frequent or more stringent tests than those laid down as a minimum by the directive.
74. Thus, where a vehicle has passed a roadworthiness test in one Member State, any other Member State must recognise the certificate issued in that regard but may none the less require further tests, not covered by that certificate, for the purpose of registration in its territory.
75. Although it predates the adoption of Directive 96/96, the judgment in Schloh is also relevant here. In that case, the Court held that the fact that a vehicle had been used on the road since its previous testing could justify checking, on registration in another Member State, that it had not been damaged and was in a good state of repair, provided that similar testing was required for vehicles of national origin presented for registration in the same circumstances.
76. Applying those considerations to the present case, it follows that when a vehicle leased from a German firm is registered in Austria because the lessee is resident there, and when that vehicle has passed roadworthiness tests in Germany, the Austrian authorities may none the less be justified in imposing further testing (i) in order to verify compliance with any requirements on Austrian-registered vehicles which are not covered by Annex II to Directive 96/96 or by the German tests and/or (ii) in order to check that the state of the vehicle has not deteriorated since it was tested in Germany if it has been used on the road in the intervening period and provided that a similar test is imposed when a vehicle previously tested in Austria is re-registered there.
The Standard Fuel Consumption Tax
- Existence of a restriction
77. At first sight, the levying of this tax might seem to be non-discriminatory, since it apparently applies to vehicle-leasing services provided within Austria in exactly the same way as to cross-border vehicle-leasing services.
78. However, that does not in itself mean that the tax does not discourage cross-border trade; a measure need not be discriminatory in order to fall foul of Article 49 EC. Furthermore, as ASL and the Commission point out, the fact that the tax is levied on a once-and-for-all basis means that an Austrian leasing firm will be able to lease vehicles repeatedly or sell them in Austria without further payment, whereas a German competitor, who may not intend to use or dispose of his vehicles in that way, will have had to pay the same amount of tax - up to 16% of the value of the vehicle - possibly in respect of a very short leasing period. The tax thus constitutes a burden likely to discourage those who do not wish to lease and/or sell their vehicles solely in Austria from offering their leasing services across the Austrian border.
- Justification
79. Taxes levied on motor vehicles may be divided into different categories. Value added tax (VAT) is levied on the sale of a vehicle, or on the supply of a leasing service, according to the place where the operative event occurs and subject to the Community rules contained in the Sixth VAT Directive. Other taxes may be levied on the occasion of a vehicle's being registered or put on the road and/or periodically by virtue of its remaining registered or on the road; such taxes are not the subject of Community harmonisation but must in all events be non-discriminatory.
80. ASL argues that the Standard Fuel Consumption Tax is a disguised increased rate of VAT, contrary to Article 12(3)(a) of the Sixth VAT Directive which permits only a standard rate and two reduced rates. The standard rate of VAT in Austria is 20% and ASL claims that the Standard Fuel Consumption Tax was introduced to compensate for the abolition of the previous increased rate of 32% which applied in particular to the sale or hire of motor vehicles. The tax is, moreover, a percentage of the value of the vehicle.
81. However, the national court's question relates to the compatibility of the Austrian requirements with the Community rules on freedom to provide services. The fact that a tax may not comply with the provisions of the VAT directives is not in itself relevant to that question. Nor does the VAT issue appear even to have been raised before the national court. It would not in my view be proper for the Court to rule on the compatibility with the VAT directives of an ostensibly environmental tax having an ad valorem component in its calculation when that question has not been raised in the main proceedings and is not relevant to the question referred for a preliminary ruling, and when Member States have not been given a full opportunity to submit observations on that issue.
82. In any event, although the amount of the tax does vary according to the value of the vehicle it also varies very significantly according to standard fuel consumption. It can thus serve to discourage the acquisition of vehicles which damage the environment to an excessive degree, the purpose for which the Austrian Government asserts it was introduced. Moreover, with regard to leased vehicles, the ad valorem component in the calculation relates to the value of the vehicle and not to the amount charged for the supply of the service. It cannot therefore be regarded as a turnover tax on that supply for the purposes of the VAT directives.
83. The Austrian Government states that the aim of the Standard Fuel Consumption Tax is to promote ecologically sound practices in the acquisition of private motor vehicles by purchase or lease. There is as yet no Community harmonisation of such taxes, but there can be no question that they contribute to the Community aim, set out in Article 2 EC, of promoting a high level of protection and improvement of the quality of the environment and indeed respond to widespread public and international concern in that regard. In principle, such a tax is justified by overriding reasons relating to the public interest and seems moreover appropriate to achieve the aims it pursues, since a relatively heavy tax, which increases with the advertised fuel consumption of the vehicle, is likely to encourage the acquisition of those which are most fuel-efficient.
84. However, both ASL and the Commission have drawn attention to the fact that the Standard Fuel Consumption Tax is levied at the same rate regardless of the duration of the use or registration of the vehicle in Austria. Yet for a vehicle-leasing business the amortisation of the tax will vary greatly depending on that duration. Thus, where it is known that a vehicle will be registered and based in Austria for only a limited period, provision should be made for the tax to be levied on a pro rata basis.
85. I agree in principle with that view, although it should not be taken as implying necessarily a direct or precise link between the Standard Fuel Consumption Tax and the duration or extent of the vehicle's environmentally-unfriendly activities in Austria. What is required is that the measure should not restrict freedom to provide services by going further than what is necessary to achieve a legitimate aim. Here the aim of the tax appears to be to discourage the acquisition or possession of vehicles with high fuel consumption rather than their use (which might be more effectively discouraged through a tax on fuel itself). However, such an aim could be achieved without discriminating against foreign vehicle leasing businesses by imposing it, for example, as a periodic tax in respect of the continuing registration of the vehicle. Whether by that means or by another, for the tax to be justifiable provision must be made for it to be levied in such a way that it does not burden vehicles leased from other Member States more than vehicles leased from within Austria, having regard to the duration of the use of each vehicle in Austria.
Conclusion
86. Having regard to all the above considerations, I am of the opinion that the Court should give the following answer to the Handelsgericht Wien in the present case:
A national requirement whereby a vehicle leased for use in the territory of Member State A by a person based there from a lessor based in Member State B must be registered in Member State A in the name of a person based there is, although restrictive of the freedom to provide services guaranteed by Article 49 EC, in principle justified by overriding reasons relating to the public interest. However, such a requirement may not be accompanied by other conditions which further restrict that freedom unless they too are justified by similar reasons and do not go beyond what is necessary in order to attain the objective which they pursue. Conditions which are not permissible on those grounds include:
- a time-limit for registration which is so short as to render compliance impracticable or unduly burdensome, having regard to all the formalities which must be completed;
- a prohibition on registration in the lessor's name where the lessor has no residence or place of business in Member State A, unless the lessor's rights as owner are adequately safeguarded in some other way;
- a requirement as to the insurance of the vehicle which does not comply with the provisions governing freedom to provide insurance services within the Community;
- a requirement as to roadworthiness testing which merely replicates tests already effected in Member State B, unless such testing relates to vehicles used on the road since the previous tests and applies equally when the lessor is established in Member State A;
- payment of a tax of up to 16% of the value of the vehicle, unless provision is made for that tax to be levied in such a way that it does not burden vehicles leased from Member State B more than vehicles leased from within Member State A, having regard to the duration of the use of each vehicle within Member State A.
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