C-4/81

JUDGMENT OF 25. 11. 1981 — CASE 4/81 HAUPTZOLLAMT FLENSBURG ν ANDRESEN

CELEX: 61981CJ0004
Datum: 1981-11-25
Källa: eur-lex.europa.eu

In Case 4/81 REFERENCE to the Court under Article 177 of the EEC Treaty by the Bundesfinanzhof (Federal Finance Court) for a preliminary ruling in the action pending before that court between

THE COURT (Second Chamber) composed of: O. Due, President of Chamber, P. Pescatore and A. Chloros, Judges, Advocate General: G. Reischl Registrar: H.A. Rühi, Principal Administrator

gives the following

JUDGMENT

Facts and Issues

The facts of the case, the course of the procedure and the observations submitted pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC may be summarized as follows:

I — Facts and written procedure

On 12 January 1976 Hermann C. Andresen GmbH & Co KG (hereinafter referred to as “Andresen”), whose registered office is in Flensburg, applied for customs clearance of 20171 litres of blended spirit called “Goldbranntwein” from Belgium for storage in its own warehouses. The product is a blend consisting of 90% ethyl alcohol of agricultural origin and 10% distillate of wine or spirit derived from wine.

The German Law on the Spirits Monopoly (Branntweinmonopolgesetz) of 8 April 1922 [hereinafter referred to as “the 1922 Law”], as amended on a number of occasions, subjects spirits to a tax on consumption which is levied in three different forms.

a) Under Article 58 of the 1922 Law, domestically produced spirit must be sold to the Federal Spirits Monopoly Administration [hereinafter sometimes referred to as “the Administration”] at the acquisition price (“Branntweinübernahmepreis”) calculated by reference to the basic price (“Branntweingrundpreis”) which, under Article 63 of the 1922 Law, is itself fixed by the Administration on the basis of the production costs of a distillery producing spirit from potatoes with an annual output of 500 hectolitres of ethyl alcohol. Under Article 84 of the 1922 Law the monopoly spirit is subject to the tax on spirits (“Branntweinsteuer”); it is marketed by the Administration at the normal selling price (“regelmäßiger Verkaufspreis”), which is made up of the acquisition price, the tax on spirits and the administrative and operating costs of the monopoly, the last element representing the price margin (“Preisspitze”). During the period in question in the main proceedings, the normal selling price of the monopoly spirit was DM 1833 per hectolitre of ethyl alcohol, the tax on spirits DM 1500, the basic price DM 253 and the acquisition price variable according to the increases or reductions in relation to the basic price.

b) Under Article 78 of the 1922 Law, spirits, which are either exempt from the obligation to sell to the Administration under Article 76 or in breach of that obligation are not sold to it, are subject to a surcharge on spirits (“Branntweinaufschlag”). That surcharge represents the difference between the normal selling price of the spirit and its basic price reduced by the average amount of the costs, fixed annually by order, which the Administration saves by not acquiring the spirit. During the period in question in the main action, the normal selling price of the spirits was DM 1833 per hectolitre of ethyl alcohol, the basic price DM 253, the costs saved DM 31 and, consequently, the spirits surcharge was DM 1549 per hectolitre of ethyl alcohol. Article 79 of the 1922 Law provided for a reduction of the surcharge for certain types of spirit or products and also for increases in certain cases. The difference between the spirits surcharge and the tax on spirits represented the spirits surcharge margin (“Branntweinaufschlagspitze”). During the period in question in the main proceedings the general rate for the spirits surcharge was DM 1549 per hectolitre of ethyl alcohol, the tax on spirits DM 1500 and the surcharge margin therefore DM 49.

c) Under Article 151 (1) of the 1922 Law imported spirit is subject to a monopoly equalization duty (“Monopolausgleich”). During the period in issue in the main proceedings the monopoly equalization duty, which is equal to the difference between the normal selling price of the monopoly spirit (at the time DM 1833) and the basic price (at the time DM 253), was DM 1580 per hectolitre of ethyl alcohol.

The difference between the monopoly equalization duty (DM 1580) and the tax on spirits (DM 1500), which represents the margin contained in the monopoly equalization duty (“Monopolausgleichspitze”), was supposed to be equal to the marketing costs borne by the Administration and charged to domestic products sold by the monopoly and was intended to cover those costs,

By notice of assessment of 16 February 1976 the Hauptzollamt (Principal Customs Office) Flensburg, in accordance with the legislation in force, claimed payment from Andresen of the margin contained in the monopoly equalization duty at the rate of DM 80 per hectolitre of ethyl alcohol, and this came to DM 5172.56.

On 20 February 1976 Andresen lodged an objection against the assessment at the Hauptzollamt Flensburg. The Hauptzollamt rejected that objection by decision of 12 November 1976.

On 30 November 1976 Andresen brought an action before the Finanzgericht (Finance Court) Hamburg. That court upheld the action ruling that ethyl alcohol sold by the Administration as spirit was not subject, in addition to the tax on spirits, to a charge of a fiscal nature and that the imposition of the monopoly equalization duty therefore had the effect of taxing the imported product to the extent of DM 80 per hectolitre of ethyl alcohol more heavily than similar domestic products; such taxation is contrary to Article 95 of the EEC Treaty which, according to the case-law of the Court of Justice, is directly applicable and prevails over national law.

The Hauptzollamt Flensburg appealed against the judgment of the Finanzgericht Hamburg to the Bundesfinanzhof. In support of its appeal it pleaded in substance infringement of Articles 151 (1) and 152 (1) of the 1922 Law and the compatibility of levying the margin contained in the monopoly equalization duty with the first paragraph of Article 95 of the EEC Treaty.

The Bundesfinanzhof took the view that in substance the question which it had to consider was whether the monopoly spirit forming 90% of the domestic product similar to the blended spirit imported by Andresen was subject to an internal tax charge equal to the margin contained in the monopoly equalization duty. Consequently, by order of 2 December 1980 the VIIth Senate of the Bundesfinanzhof decided pursuant to Article 177 of the EEC Treaty, to reserve judgment until the Court of Justice had given a preliminary ruling on the following question:

“Does the expression ‘taxation imposed on a similar domestic product’, within the meaning of the first paragraph of Article 95 of the Treaty establishing the European Economic Community cover a charge arising from the selling price fixed by the Spirits Monopoly Administration for monopoly spirit used in the manufacture of such a product? Is such a charge to be regarded as taxation within that meaning only in so far as concerns that part of the selling price which the Spirits Monopoly Administration is bound under statutory provisions to remit to the State Treasury as a tax on spirits, or does that part of the selling price which is retained by the Spirits Monopoly Administration to cover its costs also constitute such taxation?”

The order of the Bundesfinanzhof was lodged at the Court Registry on 12 January 1981.

Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC written observations were submitted on 17 March 1981 by the Commission of the European Communities, represented by its Legal Adviser, Erich Zimmermann, on 2 April 1981 by Hermann C. Andresen GmbH & Co KG, respondent in the main proceedings, represented by P. Müller-Kemler, Rechtsanwalt in Hannover, and on the same date by the Hauptzollamt Flensburg, appellant in the main proceedings, represented by Gerhard Schulte, Oberregierungsrat [Senior Executive] at the Oberfinanzdirektion (Regional Finance Office), Kiel.

On hearing the report of the Judge-Rapporteur and the views of the Advocate General the Court decided to open the oral procedure without any preparatory inquiry. However, the Commission was invited to state in writing before the hearing its views on the analysis of Community law contained in the judgment of the Finanzgericht Hamburg, which is the subject of the appeal to the Bundesfinanzhof; that request was complied with within the period laid down.

By order of 17 June 1981 the Court decided, pursuant to Article 95 (1) and (2) of its Rules of Procedure, to assign the case to the Second Chamber.

II — Written observations submitted to the Court

The Hauptzollamt Flensburg, the appellant in the main proceedings, observes that the question raised by the Bundesfinanzhof, which must be considered in the light of Article 95 of the EEC Treaty, is concerned with whether in the Administration's normal selling price a charge is included which is equivalent to the margin contained in the monopoly equalization duty levied on imports of spirits.

The fiscal function of the monopoly and its selling prices

a) As a fiscal monopoly, the purpose of the Administration is to raise revenue for the Federal Treasury and primarily to collect the tax on spirits, at the same time, it pursues economic objectives, and especially those of agricultural policy. The spirits monopoly derives its revenue from its selling prices, and in particular from the normal selling price; under Article 106 of the Basic Law [Grundgesetz] the Federal Government is entitled to such revenue. The monopoly's income comprises on the one hand the revenue derived from the tax on spirits and, on the other, the net profit [Reingewinn] made up of that part of the selling price which exceeds the amount of the tax on spirits.

b) The organization of the spirits monopoly is governed by public law: it is managed by the Administration which, under the terms of Article 1 (2) of the Law on the administration of taxes (Finanzverwaltungsgesetz), is a Federal tax authority (“Bundesfinanzbehörde”), matters relating thereto come before the courts with jurisdiction in taxation matters [Finanzgerichtel; its selling prices are fixed by authority and are published in the Bundesanzeiger; in cases of insolvency, its claims rank pari passu with fiscal claims and are recovered in the same manner as taxes; the commission of a fraud causing loss to the Administration (Monopolhinterziehung) gives rise to the same penalties as a tax fraud. The assimilation of monopoly claims to fiscal claims extends to the actual selling price of the goods, that is to say without the tax.

Comparison of the margin contained in the monopoly equalization duty with the normal selling price

a) Of the elements making up the selling price of monopoly spirit, the monopoly equalization duty levied on imported spirits enabled the tax on spirits and the difference between the net selling price and the basic price to be offset. The margin contained in the monopoly equalization duty represents the latter element, which essentially allowed the monopoly to cover its costs and, in certain cases, to realize a net profit; the margin may also be defined as that part of the monopoly equalization duty which exceeds the tax on spirits. The margin contained in the monopoly equalization duty was levied separately where the imported product was transported to a warehouse designated for the storage of taxable spirit (Branntweinsteuerlager); only spirits taxed at the rate of the tax on spirits could be stored in such a warehouse.

b) A comparison of the margin contained in the monopoly equalization duty with the corresponding element in the Administration's selling price reveals their uniformity on a number of points.

There is uniformity of arithmetic formulae. The formula for the margin contained in the monopoly equalization duty is as follows: margin contained in the monopoly equalization duty equals normal selling price minus basic price of the spirit minus tax on spirits; the element of a fiscal nature contained in the selling price is calculated by using the same formula.

There is also uniformity of functional presentation. The margin contained in the monopoly equalization duty is an element of the monopoly equalization duty, and the element of a fiscal nature part of the normal selling price. The monopoly equalization duty must be calculated from existing values; the same is true of the corresponding element in the selling price.

In addition, there is structural uniformity. As part of a tax, the margin contained in the monopoly equalization duty has a fiscal nature; the same is true of the corresponding element in the selling price. The latter belongs and is related to values fixed by authority, that is to say the normal selling price, the basic price and the tax on spirits; it is passed on to the monopoly's customers on its special terms through the intermediary of the selling price.

The nature of the fiscal element in the normal selling price

The element in the normal selling price made up of the difference between the net selling price and the basic selling price is certainly not a tax in the classical sense. Nevertheless, in the context of the fiscal monopoly, it is undeniably a form of taxation imposed by authority and determined according to basic values laid down by that authority, and is equivalent to classical taxation inasmuch as, like a tax, it is “fixed” specially and separately. Such a charge, which is passed on to the purchaser through the fiscal monopoly, cannot be regarded as a fee for a service of an economic nature. The spirit acquired under the obligation to sell is to be regarded, even at that point, as revenue in kind of the fiscal monopoly; the subsequent sale of the spirit constitutes a conversion of the revenue and a further increase therein by an amount equal to the sum of the operating costs and the net profit (an amount covered by the difference between the net selling price and the acquisition price). It is inherent in the very nature of a fiscal monopoly that the operating costs and the net profit should be passed on to third parties.

It would have been possible to achieve the same result by raising an additional tax on the domestic selling price.

The fiscal monopoly concerned in the main proceedings constitutes a form of fiscal charge levied by authority which is equivalent to the imposition of taxation and must be considered in the light of Article 95 of the EEC Treaty. A comparison of the margin contained in the monopoly equalization duty and the internal charge levied through the monopoly reveals an equal level of taxation.

Hermann C. Andresen GmbH & Co. KG, the respondent in the main proceedings, takes the view that the reference for a preliminary ruling asks in substance whether or not the element “costs of the monopoly administration”, contained in the Administration's selling price in addition to the acquisition price and the tax on spirits, must be regarded as taxation within the meaning of the first paragraph of Article 95 of the EEC Treaty.

Characterization of the normal selling price

a) For the purposes of this case there is no need to settle the question whether the German spirits monopoly is a fiscal monopoly. At the relevant time the intervention of the monopoly was undeniably based on “commercial principles” under Article 5 of the 1922 Law; notwithstanding the fact that its organization was governed by public law, in exercising the powers conferred upon it by the 1922 Law the monopoly had to apply within the confines of the law, commercial and not fiscal principles. That rule found specific application in the fixing of the selling prices and the spirits surcharge applicable to spirits exempt from the obligation to sell. In fixing the normal selling price the Administration applied commercial principles; in order to calculate the selling price of a product, a businessman would take account of the purchase price, the tax charge, his own costs (administration, marketing, overheads, personnel costs, depreciation etc.) and, where possible, would provide for an adequate profit; a businessman who buys several products at different prices and combines them in order to manufacture other products would calculate in aggregate on the basis of average rates the costs included in the selling prices which he had to bear. The Administration bought the spirit at many different prices, in some cases blended it, and then processed and sold it at many different prices. In so doing it took particular account of its own costs to an extent which always allowed it ultimately to realize a profit, albeit a small one, which it calculated according to the principles of commercial accounting and paid to the Federal Treasury independently of the tax on spirits.

b) With a view to ensuring the greatest possible equality of treatment of the purchaser of monopoly products and the purchaser of spirit exempt from the obligation to sell, the legislature took account of the fact that the costs of the monopoly are also borne by a manufacturer of alcohol which is not subject to the obligation to sell; that fact is clear from Article 79 of the 1922 Law which provides that in calculating the spirits surcharge a deduction is to be made in respect of the average amount of the costs which the Administration saves by not acquiring the spirit.

c) The Administration certainly does not have complete freedom of action; it is bound in connexion with the distilling rights, which it fixes annually on the basis of foreseeable demand, to contract at prices which will ensure that its costs are covered; the same requirement exists for purchases. Those consequences flow directly not from its status as a public body but from the function which it fulfils as a monopoly.

d) A purchaser of spirits must conclude a contract of sale with the Administration which is governed by private law under Article 433 of the German Civil Code [Bürgerliches Gesetzbuch]. In return for the service provided by the monopoly (delivery and transfer of the goods), he must furnish the quid pro quo, namely the selling price; the selling price is invoiced to the purchaser as a single amount and only the turnover tax is separately stated; the elements consisting of the selling price, taxation and the monopoly's own costs are not separately indicated; recovery of the selling price must, if necessary, be sought through the civil courts, whether or not the part of the price which remains unpaid represents the amount of the taxes alone.

e) The Administration's position is in no way different from that of the proprietor of a distillery which is not subject to the obligation to sell and which, having acquired the raw materials, produces a distillate under its distilling right and subject to the control of the customs authorities, is taxed thereon and then calculates the selling price taking account of the purchase price of the raw materials, the taxes and its own costs in accordance with “commercial principles”.

f) The fact that the Administration is not a private undertaking but a Federal authority is irrelevant. There are numerous examples of cases where by virtue of the law authorities of the State participate in economic life on commercial principles and in return for payment. The price asked by those authorities does not thereby assume the character of taxation within the meaning of Article 95 of the EEC Treaty.

That is also true of the normal selling price of the Administration. On selling the monopoly spirit, the Administration incurs liability for the tax on spirits; it passes the tax for which it is liable on to the purchaser by including it in the selling price. Consequently, the purchaser does not make a payment to the Administration which can be divided into the tax which he owes as a customer of the Administration and the selling price arising under civil law; he pays a single selling price arising under civil law and calculated by the vendor on commercial principles, a separate indication being given by law of one tax only, namely the turnover tax.

Comparison of the charges

a) No part of the normal selling price asked by the Administration is of a fiscal nature. Nevertheless, it is necessary to compare the charges in the context of the application of the first paragraph of Article 95 of the EEC Treaty, since such a comparison must cover not only taxes borne directly but also those borne indirectly.

b) A German importer of blended spirit, which is similar to the imported product, buys monopoly spirit from the Administration at the normal selling price; that price includes the tax on spirits payable by the Administration with the result that the buyer suffers the tax indirectly through the relevant part of the normal selling price (where the purchase is made under an accompanying document or for storage in a bonded warehouse, the buyer is even taxed directly as the new person liable for the tax). An importer is subject to the same charge through that part of the monopoly equalization duty which is equivalent to the tax on spirits and, consequently, in that respect is not discriminated against.

c) The question put concerns only discrimination against an imported product. There can, in any case, be no discrimination against a national product where the commercial principles laid down by law are properly applied: in calculating his price the importer's supplier too must not only take account of the prime cost but, like the monopoly, must include his own costs in accordance with commercial principles; the monopoly's costs included in the contested price margin pursuant to commercial principles find their counterpart in the portion of the importer's purchase price which reflects his supplier's own costs which have been calculated in accordance with the same principles and added to the prime cost.

d) The imported product would in fact bear the commercial margin equal to the price margin twice if, being included first in the selling price of the importer's supplier, it had to be paid a second time in the form of a tax in order to offset the commercial margin included in the monopoly's selling price. In that regard it is not relevant that the portion covering costs included both in the monopoly's selling price and in the selling price of the importer's supplier is computed on an aggregate basis.

The reply to be given to the question put

The question put by the Bundesfinanzhof should be answered as follows:

A charge arising from the selling price fixed by the Spirits Monopoly Administration for monopoly products is not to be regarded as taxation imposed on similar domestic products within the meaning of the first paragraph of Article 95 of the EEC Treaty. In particular, the part of the selling price intended to cover the monopoly's costs does not constitute taxation within the meaning of the first paragraph of Article 95 of the EEC Treaty.

The Commission points out in relation to the facts that since the entry into force of the Law of 2 May 1976 amending the 1922 Law, which was enacted following the judgments of the Court of Justice of 17 February 1975 (Case 45/75 Rewe [1976] ECR 181 and Case 91/75 Miritz [1976] ECR 217), the spirits surcharge levied on spirits exempt from the obligation to sell to the monopoly and the monopoly equalization duty imposed on imported spirits have been equal to the amount of the tax on spirits charged on spirits sold by the Administration; following the restructuring of the monopoly the question raised in this case could therefore no longer arise.

The legal point at issue is whether a charge arising from the selling price fixed by the Administration for monopoly spirit must be regarded as taxation imposed on a similar domestic product within the meaning of the first paragraph of Article 95 of the EEC Treaty; more particularly, the issue is whether the imposition of the margin contained in the monopoly equalization duty (DM 80) on imported ethyl alcohol is compatible with the first paragraph of Article 95.

There can be no doubt that a domestic product similar to the blended spirit imported by Andresen exists in Germany; the tax charge imposed on similar domestic blended spirit is made up of the tax charged on each of its two constitutents, that is to say of 90% spirit purchased from the Administration and 10% brandy.

The normal selling price

The selling price fixed by the Administration cannot in itself be regarded as a tax. Admittedly it cannot be said that the selling price contains no element of tax by reason alone of the fact that purchasers of monopoly spirit are merely required to settle an account for the purchase price, and the possibility cannot be excluded a priori that the selling price of the monopoly spirit contains elements of a fiscal nature; however, the selling price in its entirely cannot be regarded as a tax. At most, it includes the quid pro quo for the delivery of the goods. It is immaterial in this matter that the spirits monopoly is a tax monopoly and that it derives its revenue from the sale of products subject to the monopoly.

The elements making up the normal selling price.

a) As far as the various elements making up the normal selling price of the monopoly spirit are concerned, the only question to be settled is whether the price margin can be considered as a tax. In that connection account must be taken of the fact that the acquisition price is determined by the basic price as varied by the increases and reductions provided for, consequently, it is not fixed at a constand level. The fixed acquisition price, for its part, does not necessarily correspond to reality and is merely used as a book figure for the purposes of calculation. For that reason the price margin contained in an element of the selling price of the monopoly spirit is not a fixed amount which is payable in all the Administration's transactions and is fixed at a level allowing its administrative and operating costs to be covered. According to the case-law of the Court, only a charge “which is introduced and quantified by the public administration” can be taken into account in the comparison of the charges required under the first paragraph of Article 95. The selling price applied at that time by the German spirits monopoly did not include a precisely quantified charge imposed on ethyl alcohol of agricultural origin, equal to the margin contained in the monopoly equalization duty. In order that a charge may be regarded as taxation within the meaning of the first paragraph of Article 95, it must be precisely quantified, otherwise an accurate comparison of the respective charges borne by a domestic product and an imported product is not possible.

b) In any event, it would not be justified to tax imported spirit to the same extent as domestic products marketed by the Administration. The Administration incurs costs in connection with the monopoly spirit which are unrelated to the imported products, particular, the costs of transporting, purifying, denaturing and storing the monopoly spirit. Those costs arise neither for imported ethyl alcohol nor for spirit produced by German distilleries which are not subject to the obligation to sell to the Administration. For the latter type of spirit the German legislature reduced the spirits surcharge margin by an amount equal to the costs saved by the Administration. The margin contained in the monopoly equalization duty levied on imported ethyl alcohol should be reduced by the same amount.

c) In reply to the argument that if, in making the comparison of charges required by the first paragraph of Article 95, the imposition of monopoly costs on the similar domestic product were ignored, the result would be discrimination against domestic products, it may be pointed out that Article 95 does not prohibit the Member States from imposing on their domestic products taxation in excess of that borne by imported products.

In that connection it should not be forgotten that the spirits sold by the Administration which are used in the manufacture of blended spirit contribute by means of the margin contained in the selling price to the Administration's costs to an extent which is not precisely ascertained. The spirit which is not subject to the obligation to sell to the Administration, for its part, is exempt from part of the costs contained in the price margin since it is not marketed by the Administration. Imported ethyl alcohol is in the same situation since it is neither purchased nor sold by the monopoly. Consequently it seems justifiable only to impose a level of taxation on imported ethyl alcohol equivalent to the spirits surcharge margin imposed on spirit which is not subject to the obligation to sell; it seems appropriate that a Member State which operates a spirits monopoly and in so doing does not clearly disclose in the monopoly's selling prices the charge for the costs of operating the monopoly, should apply in the case of imported products the rules which it laid down for the other category of spirit not sold by the monopoly administration. The comparison of charges required by the first paragraph of Article 95 must in this case be made between the tax imposed on imported spirit and that borne by spirit which is not subject to the obligation to sell to the monopoly.

The reply to the question put

The question raised by the Bundesfinanzhof should be answered as follows:

Taxation imposed on a similar domestic product within the meaning of the first paragraph of Article 95 of the Treaty may not be regarded as covering a charge arising from the selling price fixed by the Spirits Monopoly Administration for monopoly spirit used in the manufacture of such a product, where that charge is not precisely quantified.

Such a charge is to be regarded as taxation within the meaning aforesaid in so far as concerns that part of the selling price which the Spirits Monopoly Administration is bound under statutory provisions to remit to the State Treasury as a tax on spirits. The part of the selling price which is retained by the Spirits Monopoly Administration to cover its costs is not to be regarded as such taxation, in so far as that part is not precisely quantified.

If the legislative provisions on the taxation of domestic products provide that products which are not purchased and sold by the Spirits Monopoly Administration are subject to a tax which is precisely quantified and is intended to cover the costs of the Spirits Monopoly Administration, taxation of an equivalent amount may be imposed on an imported product.

III — Oral procedure

At the sitting on 17 September 1982 oral arguments were presented and answers to questions asked by the Court were given by the following: Mr Miiller-Kemler, for Hermann C. Andresen GmbH & Co KG, the respondent in the main proceedings, and Mr Zimmermann, for the Commission.

Andresen contested the view that the spirits surcharge margin imposed on domestic spirits exempt from the requirement to sell to the Administration could be included as a term in the comparison of charges; the charge levied on imported spirits should in fact be compared with the normal selling price for monopoly spirits.

The Commission took the view, contrary to that which it expressed in its written observations, that there was no fundamental difference, in so far as their designation as tax charges for the purposes of Article 95 of the EEC Treaty was concerned, between the spirits surcharge margin levied on spirit exempt from the requirement to sell to the Administration and the margin contained in the normal selling price of monopoly spirits. In that regard it was necessary to correct the misconception that the margin contained in the normal selling price did not constitute a tax. However, in order to prevent the imported product from bearing a double charge, it should, like domestic spirit which is not sold to the Administration, be exempted from the costs which the Administration saved by not acquiring that spirit. The margin contained in the monopoly equalization duty imposed on imported spirits should therefore be reduced by the average amount of those costs (DM 31).

The Advocate General delivered his opinion at the sitting on 15 October 1981.

Decision

1. By order of 2 December 1980, received at the Court on 12 January 1981, the Bundesfinanzhof [Federal Finance Court] referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty two questions on the interpretation of Article 95 of the EEC Treaty in order to enable it to assess the compatibility with that provision of the levying of a tax charge referred to as the “Monopolausgleichspitze” [margin contained in the monopoly equalization duty] on imported spirits pursuant to the tax legislation in force in the Federal Republic of Germany during the period prior to the adoption of the Law of 2 May 1976 amending the Law on the Spirits Monopoly.

2. It emerges from the order for reference and from the documents before the Court that on 12 January 1976 the respondent in the main proceedings requested customs clearance for home use for a consignment of blended spirit from Belgium consisting of 90% neutral spirit, comparable to German monopoly spirit, and 10% spirit derived from wine. It should be noted that at the present stage of the proceedings the tax imposed on the latter constituent is not at issue and that the dispute is confined to the tax charged on the constituent corresponding to domestic monopoly spirit.

3. It must be recalled that at the time when the product in question was imported, imported spirits were subject to a tax referred to as the “Monopolausgleich” [monopoly equalization duty], which was composed of two elements, namely, the equivalent of the tax on spirits amounting to DM 1500 per hectolitre and the Monopolausgleichspitze amounting to DM 80 per hectolitre. The latter element of the tax charge was the equivalent, in the calculation of the selling price of monopoly spirit, of the Preisspitze [price margin], which was obtained by deducting from the monopoly's selling price of DM 1833 per hectolitre the amount of the tax on spirits and the “basic price” of the spirit fixed by the Administration at DM 253 per hectolitre.

4. Andresen contests the compatibility with Article 95 of the Treaty of levying the Monopolausgleichspitze on imported spirits on the ground that that charge was the equivalent of an element included in the calculation of the monopoly's selling price, namely the Preisspitze, which in fact was not of a fiscal nature but represented the monopoly's administrative costs and other economic charges.

5. Andresen successfully brought an action before the Finanzgericht [Finance Court] Hamburg, as is clear from the judgment given by that court on 26 January 1978. In the grounds of that judgment, the Finanzgericht held that there was no relationship between the Monopolausgleichspitze, which was unquestionably of a fiscal nature, and the amount by which the monopoly's selling price exceeded the sum of the basic price and the tax on spirits. According to the Finanzgericht, although that amount is fixed by authority, it in fact represents economic charges borne by the monopoly which, as such, cannot be offset by a tax on imported spirits.

6. The Hauptzollamt [Principal Customs Office] lodged an appeal against that judgment before the Bundesfinanzhof claiming in substance that the element of the monopoly's selling price corresponding to the Monopolausgleichspitze was proportional to amounts fixed by authority and, under the special conditions of a fiscal monopoly, was passed on to the monopoly's customers as an integral part of its selling price. According to the Hauptzollamt, there can therefore be no doubt that there are elements equivalent to the Monopolausgleichspitze contained in the monopoly's selling price which are unquestionably of a fiscal nature, with the result that there is no discrimination against imported spirits.

7. In the grounds of its order for reference, the Bundesfinanzhof raises the question whether at the relevant time domestic monopoly spirit was actually subject to an internal fiscal charge equivalent to the Monopolausgleichspitze levied on imported spirits. The Bundesfinanzhof considers that in view of the various elements taken into account in determining the monopoly's selling price, namely, in addition to the tax on spirits, the acquisition price of the spirit and the monopoly's administrative and marketing costs, there is some doubt whether the element referred to as the “Preisspitze”, which is equivalent to the Monopolausgleichspitze charged on imported spirits, may be regarded, either wholly or partly, as a tax charge.

8. The Bundesfinanzhof draws attention to the fact that under the system applicable to domestic spirit which is not sold to the monopoly and is subject to a charge referred to as the “Branntweinaufschlag” [spirits surcharge], that charge is reduced by a fixed rate deduction, amounting at the time to DM 31 per hectolitre, in order to take account of the costs which the monopoly saves in the case of spirits exempt from the requirement to deliver to it. The Bundesfinanzhof does not rule out the possibility that that system may possibly serve as a basis for determining the system applicable to imported spirits.

9. In order to resolve those problems, the Bundesfinanzhof referred to the Court the following two questions :

Is such a charge to be regarded as taxation within that meaning only in so far as concerns that part of the selling price which the Spirits Monopoly Administration is bound under statutory provisions to remit to the State Treasury as a tax on spirits, or does that part of the selling price which is retained by the Spirits Monopoly Administration to cover its cost also constitute such taxation?”

10. During the procedure before the Court the respondent in the main proceedings maintained that since the Preisspitze included in the calculation of the monopoly's selling price is not of a fiscal nature, the imposition of the Monopolausgleichspitze on imported spirits is discriminatory in its entirety. It claims that the Preisspitze, far from constituting taxation borne by domestically produced spirit, in fact represents the monopoly's administrative and marketing costs; moreover, it serves to finance subsidies granted to national production by means of the greatly varying acquisition prices which the monopoly pays to various producers of spirits.

11. The respondent's view was initially supported by the Commission, which stated that only elements which were unquestionably of a fiscal nature could be taken into account for the purpose of comparing the taxation imposed respectively on the national and imported products. Whereas the fiscal nature of the Monopolausgleich, including the Monopolausgleichspitze, is undeniable, the composition of the monopoly's total selling price is difficult to analyse. Of the elements making up that price, only the tax itself is undoubtedly of a fiscal nature. In the case of the Preisspitze, however, any fiscal components are intermingled with those arising from the commercial administration of the monopoly. At that stage the Commission took the view that, in the interest of the clarity required for the application of the provisions of the Treaty, a fiscal charge might not be equated for the purpose of the comparison of charges under Article 95 with a component of the monopoly's selling price whose nature, fiscal or other, could not be determined with certainty.

12. In its oral observations the Commission altered its views on that point. Referring to the grounds of the order for reference of the Bundesfinanzhof, it expressed the opinion that it would be more appropriate to draw an analogy between the fiscal system applicable to imported spirits and the fiscal system applicable to domestic spirits not subject to the monopoly. Consequently, it proposes that the questions raised should be answered to the effect that the rule against discrimination contained in Article 95 would be complied with if imported spirit received the same treatment as spirit which is not subject to the monopoly, that is to say, if the Monopolausgleichspitze were reduced by the fixed rate deduction applicable to the Branntweinaufschlag. The Commission considers that that solution would have the advantage of avoiding distortion of competition in favour of imported spirits vis-à-vis domestic spirits not subject to the monopoly. In reply to a question asked by the Court, it stated that it adhered to that opinion because it considered that the first view which it put forward would call in question the Court's decision in its judgment of 17 February 1976 in Case 45/75 Rewe v Hauptzollamt Landau [1976] ECR 181.

13. The Court considers that the first view put forward by the Commission conforms more closely to the requirements of Article 95 and that there is, moreover, no inconsistency between that solution and the grounds of the judgment of 17 February 1976.

14. It must first be pointed out in that regard that since in this case the imported product is spirit which is similar to the monopoly spirit in the Federal Republic of Germany, the comparison of fiscal charges envisaged by Article 95 must be carried out with reference to the system of taxation applicable to monopoly spirit and not with reference to the system applicable to exempt spirit. Indeed, the point at issue in this case is not the similarity of two products but the structure of two systems for the taxation of an identical product which differ according to whether the product is marketed by the monopoly or is imported.

15. In order to make that comparison, it is necessary to analyse the structure of the monopoly's selling price as based on the scheme of the German legislation. It is clear from that legislation that in the computation of that price only the tax on spirits itself is unquestionably of a fiscal nature. The other two elements making up the price, namely the basic price and the Preisspitze, are fixed at the discretion of the Administration; under that method of calculation, the basic figure is constituted by the total selling price, so that the element referred to as the “Preisspitze” is determined by deducting from that total price the sum of the tax on spirits and the basic price. It thus becomes evident that the Preisspitze is in fact merely a residual amount which is inextricably involved in the determination by the monopoly of the total selling price and the basic price. The basic price is in turn an average price based on a fixed estimate.

16. It follows that the Preisspitze is necessarily a varying amount of indeterminate composition covering all aspects of the monopoly's commercial administration; however, it is not possible to determine the extent to which it is an element equalizing the prices paid to producers, what proportion thereof covers the administrative, management and marketing costs of the monopoly and what proportion represents a possible profit, which alone may be of a fiscal nature since it is remitted to the State Treasury.

17. It must be recalled that in its judgment of 17 February 1976, the Court considered that the scope of Article 95 “could not be so extended as to allow any kind of compensation between a tax created so as to apply to imported products and a charge of a different nature imposed, for example, for economic purposes on the similar domestic product”. It is true that the Court accepted that there might be an exception to that principle, but only where the imported product and the similar domestic product were both equally subject to a government tax which was “introduced and quantified by the public administration”. It is evident from a consideration of the foregoing that in view of the intermingling of the basic price of the spirit and the Preisspitze due to the method of calculating the monopoly selling price, any fiscal element which may be included in the Preisspitze is indeterminate to such a degree that it does not satisfy the requirement that it should be a government tax which is introduced and quantified by the public administration.

18. Thus it is clear that, in the computation of the selling price of monopoly spirit,, only the amount representing the tax on spirits may be taken into account for the purposes of the comparison of fiscal charges envisaged by Article 95 of the Treaty. Conversely, any other component of the monopoly price which is not in the nature of a fiscal charge, determined as to amount, must be excluded from that comparison. Indeed, the Preisspitze, like the basic price, corresponds, in a proportion which it is impossible to calculate, to economic charges which fall on any importer of spirits from other Member States. It follows that the levying of the Monopolausgleichspitze on imported spirits is discriminatory.

19. In view of the monopoly's discretion in fixing its prices, that is the only solution which will guarantee that the comparison of fiscal charges which is central to Article 95 is not distorted to the detriment of imported products by the impact on the level of taxation imposed on those products of non-fiscal charges, particularly economic charges, borne by the monopoly.

20. Consequently, the reply which must be given to the questions raised by the Bundesfinanzhof is that the term “taxation”, contained in Article 95 of the Treaty, must be regarded as covering, in so far as the selling price for spirits fixed by a national monopoly is concerned, only that part of the price which the monopoly is required by law to remit to the State Treasury as a tax on spirits, determined as to amount, to the exclusion of all other elements or charges, economic or other, included in the calculation of the monopoly selling price.

Costs

21. The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds, THE COURT (Second Chamber), in answer to the questions referred to it by the Bundesfinanzhof by order of 2 December 1980, hereby rules: