International Law

C-221/06, Frohnleiten

By Allard Knook

An Austrian tax provision made the deposit of waste at a waste disposal site subject to a disused hazardous site levy.

However, it provided for exemption from that tax for the deposit of waste which demonstrably derived from the safeguarding or rehabilitation of contaminated sites, if these sites were entered in official registers.

The tax exemption was possible only in respect of the deposit of waste which originated from suspected contaminated sites or disused hazardous sites located in Austria. The national court asked whether such a national levy was contrary to Articles 10, 12, 23, 49 and 90 EC.

The Court held that EC Treaty provisions relating to charges having equivalent effect and those relating to discriminatory internal taxation could not be applied together.

The Austrian tax was not charged because a border of the Member State which imposed that levy had been crossed. It could not therefore be assessed whether such a levy was consistent with Articles 23 and 25 EC.

The Court reiterated that Article 90 EC supplemented the provisions on the abolition of customs duties and charges having equivalent effect.

Its aim was to ensure free movement of goods between the Member States in normal conditions of competition by the elimination of all formed of protection which might result from the application of internal taxation that discriminates against products from other Member States.

Pecuniary charges resulting from a general system of internal taxation applied systematically, in accordance with the same objective criteria, to categories of products irrespective of their origin or destination fell within Article 90 EC. (see, inter alia, C-41/05 Air Liquide Industries Belgium [2006]).

The Court furthermore reiterated that Article 90 EC was infringed where the tax charged on the imported product and that charged on the similar domestic product were calculated in a different manner on the basis of different criteria which lead, if only in certain cases, to higher taxation being imposed on the imported product.

A system of taxation was compatible with Article 90 EC only if it was so arranged as to exclude any possibility of imported products being taxed more heavily than domestic products and, therefore, only if it could not in any event have discriminatory effect.

For the purposes of assessing whether or not a system of taxation was discriminatory, it was necessary to take into consideration not only the rate of tax but also the basis of assessment and the detailed rules for levying the various duties (see, inter alia, Case C-387/01 Weigel [2004] and Case C-313/05 Brzezi?ski [2007])

The Court concluded that a national provision, which reserved the benefit of exemption from internal taxation to certain domestic products, to the exclusion of imported products, was liable to lead, in certain cases, to higher taxation being imposed on imported products than on domestic products. Such a provision was therefore contrary to the prohibition on discrimination laid down in Article 90 EC.

In the light of that conclusion, there was no need to interpret Articles 10 EC, 12 EC and 49 EC.

Text of Judgment

Full post as published by ECJBlog.com on November 15, 2007 (boomark / email).