Report for the Hearing in Joined Cases C-71/91 and C-178/91
I — Facts and procedure
A — Legal background to the dispute
1. Community provisions
a) The purpose of Council Directive 69/335/EEC of 17 July 1969 concerning indirect taxes on the raising of capital (OJ, English Special Edition 1969 (II), p. 412) (hereinafter ‘the Directive’) is to harmonize indirect taxes on the raising of capital, and in particular on the contribution of capital to companies and firms. To this end Articles 2 to 9 define the common rules applicable to capital duty. Article 2 specifies where transactions subject to capital duty are to be taxable. It may be seen from Article 2(1) that those transactions are to be taxable only in the Member State in whose territory the effective centre of management of a company is situated at the time when such transactions take place. Article 3 specifies the capital companies to which the provisions of the directive are applicable, among which appear inter alia the Società per Azioni (public limited company), the Società in Accomandita per Azioni (limited partnership with a share capital) and the Società a Responsabilità Limitata (private limited company). Article 4, Article 8 as amended by Council Directive 85/303/EEC of 10 June 1985 (OJ 1985 L 156, p. 23) and Article 9 list, subject to Article 7, the transactions subject to capital duty and certain transactions which the Member States may exempt. According to Article 4(1 )(a) the formation of a capital company is one of the chargeable transactions. Article 7 of the Directive determines the rates applicable to capital duty. That article was substantially amended by the abovementioned Directive 85/303. As is clear from the second and third recitals in the preamble to that directive, since the Council could not abolish capital duty on account of the losses of revenue which some Member States would sustain as a result of such a measure, its intention was to limit the economic effects of capital duty which were detrimental to the regrouping and development of undertakings. On that basis the amended article provides:
‘1. Member States shall exempt from capital duty transactions, other than those referred to in Article 9, which were, as at 1 July 1984, exempted or taxed at a rate of 0.50% or less. The exemption shall be subject to the conditions which were applicable, on that date, for the grant of the exemption or, as the case may be, for imposition at a rate of 0.50% or less. (...)
2. Member States may either exempt from capital duty all transactions other than those referred to in paragraph 1 or charge duty on them at a single rate not exceeding 1%.
3. (...).’
b) According to the last recital in the preamble to Directive 69/335: Articles 10, 11 and 12 of the Directive implemented the principles set out in that recital.
‘the retention of other indirect taxes with the same characteristics as the capital duty (...) might frustrate the purpose of the measures provided for in this directive and those taxes should therefore be abolished.’
c) Under Article 10 of Directive 69/335:
‘Apart from capital duty, Member States shall not charge, with regard to companies, firms, associations or legal persons operating for profit, any taxes whatsoever:
a) in respect of the transactions referred to in Article 4;
b) in respect of contributions, loans or the provision of services, occurring as part of the transactions referred to in Article 4;
c) in respect of registration or any other formality required before the commencement of business to which a company, firm, association or legal person operating for profit may be subject by reason of its legal form.’
d) Under Article 12 of Directive 69/335:
‘1. Notwithstanding Articles 10 and 11, Member States may charge: (a) duties on the transfer of securities, whether charged at a flat rate or not; (b) transfer duties, including land registration taxes, on the transfer, to a company, firm, association or legal person operating for profit, of businesses or immovable property situated within their territory; (c) transfer duties on assets of any kind transferred to a company, firm, association or legal person operating for profit, in so far as such property is transferred for a consideration other than shares in the company; (d) duties on the creation, registration or discharge of mortgages or other charges on land or other property; (e) duties paid by way of fees or dues; (f) value added tax.
2. The duties and taxes referred to in paragraph 1(b), (c), (d) and (e) shall be the same, whether the effective centre of management or the registered office of the company, firm, association or legal person operating for profit is situated within the territory of the Member State charging the duties or taxes or not; nor may these duties and taxes exceed those which are applicable to like transactions in the Member State charging them.’
2. The national provisions
a) Until the register of companies, planned since 1942 under Article 2188 of the Civil Code, is set up, the various instruments and information concerning companies required by the Civil Code to be registered are entered in the Register of Commercial Companies kept by court registries (hereinafter ‘register’).
b) Presidential Decree No 641 of 26 October 1972 (GURI No 292 of 11 November 1972, supplement No 3), introduced the ‘tassa di concessione governativa’ (administrative charge) for entering a company in the register. The charge is defined in paragraph 75 of the tariff annexed to the decree.
c) Registration of the following instruments is subject to the charge:
the instrument of incorporation;
increases in capital;
extensions of the period of existence of a company;
changes in the objects or the type of company;
mergers.
d) With regard to registration of instruments other than the instrument of incorporation, the amount of the charge, which was initially set at LIT 20000, has been raised to LIT 98000 by Law No 67 of 11 March 1988 (GURI No 61 of 14 March 1988).
e) The charge for registration of instruments of incorporation was raised from LIT 81000 to LIT 5000000 for public limited ‘companies and limited partnerships, LIT 1000000 for private limited companies and LIT 100000 for other companies (that is to say for partnerships) by Article 3(18) of Decree-Law No 853 of 19 December 1984 (GURI No 347 of 19 December 1984), converted into Law No 17 of 17 February 1985 (GURI No 41a of 17 February 1985). Decree-Law No 173 of 30 May 1988 (GURI No 125 of 30 May 1988) increased the amounts of the charge. Article 1 of Law No 291 of 26 July 1988 (GURI No 175 of 27 July 1988), which converted that decree into a law, increased the amount of the charge to LIT 2500000 for private limited companies and to LIT 500000 for other companies. For public limited companies and limited partnerships the law set five different charges ranging from LIT 9000000 to 120000000, according to the amount of authorized capital. Article 36(8) of Decree-Law No 69 of 2 March 1989 (GURI No 51 of 2 March 1989), converted into Law No 154 of 27 April 1989 (GURI No 99 of 29 April 1989), set the amount of the charge at LIT 12000000 for public limited companies and limited partnerships, at LIT 3500000 for private limited companies and LIT 500000 for other companies. The abovementioned Law No 154 added paragraph 8bis to Article 36 of the Decree-Law of 2 March 1989, the result of which is that the amount of the charge for 1988 is LIT 15000000 for public limited companies and limited partnerships with a share capital, LIT 3500000 for private limited companies and LIT 500000 for other companies. Those provisions replaced the abovementioned provisions of Law No 291 of 26 July 1988.
f) Article 3(19) of Decree-Law No 853 of 19 December 1984, cited above, provides that the charge is payable not only when an instrument of incorporation is entered on the register but also on 30 June of each subsequent calendar year.
g) Under Article 8(6) of Decree-Law No 173 of 30 May 1988, as amended by Law No 291 of 26 July 1988, registration and the certificates involved in making a company's documents available for public scrutiny are not suspended if evidence that the charge has actually been paid is not lodged. Non payment of the charge is, however, penalized by fines of between two and six times the amount of the unpaid charge (Article 9 of Decree No 641 of 26 October 1972, cited above).
h) On the specific question of the compatibility of the ‘tassa di concessione governativa’with the provisions of the Directive, the Italian Ministry of Finance Circular No 333204 of 4 October 1986 stated:
‘It is pointed out in this connection that Article 10(c) of the abovementioned directive precludes any charge whatsoever for the registration of companies, with the exception of capital duty; Article 12(d) [sic] provides that notwithstanding the said provisions Member States may charge duties paid by way of fees or dues.
The new administrative charge introduced by Article 3(18) and (19) of Decree-Law No 853 of 19 December 1984 converted into Law No 17 of 17 February 1985 cannot be regarded as a registration charge even though it must be paid initially on registration in the companies’ register as is shown by the fact that it is also payable each subsequent calendar year. It constitutes in reality remuneration required by the State so that it may maintain the administrative departments required to ensure that all instruments concerning a company's existence are available for public scrutiny. In that light the charge which is at issue in the dispute may be classed among the “duties paid by way of fees and dues” which the Member States of the EEC are entitled to apply.’
B — Background to the disputes
The facts at the origin of the disputes in the main proceedings as described in the orders for reference and the written observations submitted to the Court are as follows:
1. In Case C-71/91
a) Ponente Carni is a public limited company governed by Italian law, with its registered office at Genoa. It has paid LIT 39000000 in respect of the administrative charge which falls due annually pursuant to the abovementioned national provisions in respect of 1988, 1989 and 1990.
b) After a preliminary administrative complaint which it submitted to the local Finance Office, Ponente Carni applied to the President of the Tribunale di Genova for an injunction on the basis of Article 633 of the Code of Civil Procedure asking that the finance authorities be ordered to refund the abovementioned amount. In support of its application Ponente Carni claimed inter alia that the charge was contrary to the provisions of the directive.
c) In those circumstances by order of 14 January 1991, which was registered at the Court on 21 February 1991, the President of the Tribunale di Genova stayed proceedings and referred to the Court, pursuant to Article 177 of the EEC Treaty, the following questions:
‘(1) Are “duties paid by way of fees or dues” within the meaning of Article 12(1 )(e) of Council Directive 69/335/EEC of 17 July 1969 to be construed as meaning solely charges made for optional services performed individually by the public authorities in the specific interests of the person requesting them, or do they cover the broader concept of charges generally imposed for services performed in the public interest?
2) Do the administrative acts performed by the State in order to “maintain the appropriate machinery for making public all documents relating to the conduct of companies” acquire by virtue of Community Uw the nature of a service performed individually and giving rise to a claim for payment of a pecuniary charge in accordance with Article 12(l)(c) of the said Directive and, if so, is Article 12(l)(c) of that Directive compatible with national legislation which makes a company within the meaning of Article 3 thereof liable for the payment of charges which are not quantified on the basis of the cost of the service?
3) Is Article 12(2) of the Directive compatible with certain provisions of national law (Articles 36(8) and 8bis of Law No 154 of 27 April 1989) which impose on public limited companies (società per azioni) falling under Article 3 of the Directive annual charges which are not quantified on the basis of the cost of the service and which are higher than the charges applied within the territory of the State to private limited capital companies (società di capitali a responsabilità limitata) in respect of like transactions?’
4) Should the annual State fee for entering a company in the companies' register, imposed by Article 36(8) of Law No 154 of 27 April 1989, be viewed as a tax prohibited under Article 10 of the directive?
2. In Case C-178/91
a) Cispadana Costruzioni is a public limited company governed by Italian law with its registered office in Milan. The company brought proceedings before the Tribunale di Milano contesting the validity of the administrative charge payable for 1991 and subsequent years.
b) In parallel proceedings it applied on the basis of Article 700 of the Code of Civil Procedure to the President of the Tribunale di Milano for an interim measures suspending the time-limit for payment of the charge until a judgment was delivered on the substance of the case, or, as the case might be, until the Court of Justice had given judgment on a reference for a preliminary ruling.
c) In those circumstances and in the context of the latter proceedings, by order of 27 June 1991 which was received in the Court Registry on 9 July 1991, the President of the Tribunale di Milano stayed the proceedings and referred the following questions to the Court, pursuant to Article 177 of the Treaty:
‘1) Are “duties paid by way of fees or dues” referred to in Article 12(l)(e) of Directive 69/335/EEC of 17 July 1969 to be construed as meaning solely the charges made for services (optional or mandatory) performed by the public administration specifically for the person requesting them, or do the said “duties paid by way of fees or dues” include charges made for services performed in the public interest?
2) Must the pecuniary charge allowed by Article 12(l)(e) of Directive 69/335/EEC of 17 July 1969 — in respect of “duties paid by way of fees or dues” — be proportional to the actual cost of the service provided (as held on several occasions by the Court of Justice, albeit in cases concerning another matter, namely customs, in relation to costs for a service which was not optional but mandatory: see for example the judgment of 12 July 1977 in Case 89/76 Commission v Netherlands [1977] ECR 1355, paragraph 16; and subsequent judgments, most recently that of 21 March 1991 in Case C-209/89 Commission v Italian Republic) or may the actual cost of the service be completely disregarded?
3) Must Article 10 and Article 12(l)(e) of Directive 69/335/EEC be interpreted as precluding the introduction and/or maintenance of national legislation — of the type introduced by the Italian legislature in the form of Article 3(19) of Decree Law No 853 of 19 December 1984 (converted into Law No 17 of 17 February 1985) and amended by Article 36(8) of Decree Law No 69 of 2 March 1989, converted into Law No 154 of 27 April 1989 — which requires the annual payment of a charge which is not quantified or quantifiable on the basis of the cost of the service provided and, moreover, is of an amount considerably higher than that charged to other capital companies and other undertakings for the same service (for example, for a Società a responsabilità limitata (private limited company) the tax is 3.5 million; for other types of companies it is LIT 500000)?’
C — Procedure before the Court
1. Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted by the Commission of the European Communities, represented by Enrico Traversa, of its Legal Service, acting as Agent; by the Italian Republic, represented by Ivo M. Braguglia, Avvocato dello Stato; by the United Kingdom, represented by John E. Collins, Treasury Solicitor, acting as Agent; by the Kingdom of the Netherlands, represented by B. R. Bot, Secretary General at the Ministry of Foreign Affairs, acting as Agent; by Ponente Carni, represented by Giuseppe Conte and Giuseppe Michele Giacomini, of the Genoa Bar; and by Cispadana Costruzioni, represented by Ernesto Beretta and Aldo Bozzi, of the Milan Bar.
2. By order of 11 May 1992 the two cases were joined for the purposes of the oral procedure and the judgment.
3. Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General the Court further decided to open the oral procedure without any preparatory inquiry. It did, however, ask the Italian Republic to reply to several questions.
4. On the basis of Article 55(2) of the Rules of Procedure Ponente Carni and Cispadana Costruzioni asked that the cases be given priority over others.
II — Summary of the written observations submitted to the Court
The admissibility of the questions referred to the Court for a preliminary ruling
Ponente Carni and the Commission submit that the fact that the questions were raised in the course of ‘summary’court proceedings does not, in accordance with the case-law of the Court, affect the admissibility of the questions.
Substance
A — The subject-matter of the questions referred to the Court for a preliminary ruling
1. The Italian, Netherlands and United Kingdom Governments propose that the question of whether the administrative charge falls within the field of application of Directive 69/335, and more particularly whether it is covered by the prohibition laid down in Article 10 thereof, should first be examined. If the reply to that question proves negative, as they maintain it should, the other questions concerning the interpretation of the provisions allowing for exemption from Article 12 of the directive would become devoid of purpose.
2. The Commission points out that these questions, especially the questions concerning the definition of ‘duties paid by way of fees or dues’, have not yet been expressly examined by the Court, in particular in the two judgments in which the Court had occasion to interpret Articles 10 and 12 of the Directive (Case 36/86 Dansk Sparinvest [1988] ECR 409 and Case 15/88 Maxi Di [1989] ECR 1391 (summary publication)). The Commission points out that it is inconsistent to maintain at one and the same time, as the Italian authorities do in Circular No 33320 of 4 October 1986, cited above, that the administrative charge is not covered by the prohibition introduced by Article 10 of Directive 69/335 and that it falls under the exemptions in Article 12 of the same directive.
B — Article 10 of the Directive
1. The Commission maintains that the administrative charge falls under the prohibition introduced by Article 10(c) of the directive. (a) Article 10(c), prohibiting taxes in respect of company registration, is aimed at preventing Member States from circumventing, by way of taxes charged on registration, the prohibition in Article 10(a) of any taxes whatsoever apart from capital duty in respect of the formation of a capital company. (b) In the case in point, the fact giving rise to the charge is the entering of a company's instrument of incorporation in the register of companies which, under Italian law, is the most important formality required for forming a capital company. (c) No distinction should be drawn between the administrative charge payable when the instrument of incorporation is registered and the annual government charge payable, since 1985, on 30 June of each subsequent calendar year. It follows from the actual terms of Article 3(19) of the said Decree-Law No 853 of 19 December 1984 which introduced the annual charge that it constitutes merely an extension of the original administrative charge. The legal rules concerning the two charges with regard inter alia to their amount, the arrangements for their collection, the authority responsible for determining their basis of assessment and penalties are, moreover, identical. The fact giving rise to the charge payable annually is the continuing entry in the register of the instrument of incorporation of the company. The Commission acknowledges that annual charges are not expressly mentioned in the prohibition in Article 10(c). It maintains, however, that that provision must be interpreted by the Court as necessarily prohibiting such charges. A contrary interpretation would render the provisions of Article 10 ineffective.
2. Ponente Carni and Cispadana Costruzioni put forward arguments which are substantially identical to those of the Commission. Ponente Carni claims, further, that the Government Report accompanying the draft of what became Law No 17 of 17 February 1985 specified that the amendments made by the Law were ‘intended not only to produce revenue, but to check frequent misuse of companies’ instruments of incorporation’. Such purposes run counter to the principles laid down in Article 10 of the directive.
3. The Italian, Netherlands and United Kingdom Governments maintain, on the contrary, that the administrative charge does not fall under the prohibition laid down in Article 10 of the Directive. (a) According to the Italian Government, which relies on the judgments cited above in Case 36/86 Dansk Sparinvest and Case 15/88 Maxi Di and on the last recital in the preamble to the directive to which those judgments refer, Articles 10 and 11 of Directive 69/335 must be interpreted as meaning that a Member State is not authorized to impose on capital companies taxes and duties other than capital duty and those duties and taxes listed exhaustively in Article 12 in connection with the transactions listed in Articles 10 and 11 of the Directive. That prohibition refers, however, only to charges with the same characteristics as capital duty (last recital). As the Commission itself emphasized in Dansk Sparinvest, the Directive applies solely to indirect taxes on the raising of capital and does not otherwise affect taxation of natural persons or companies. In the case in point, the fact that the charge in question is paid each year precludes its being regarded as a registration charge or charge for any other formality required before the commencement of business within the meaning of the Article 10 of the Directive. Moreover, the administrative charge does not concern the transactions, other than the formation of a company, referred to in Articles 10 and 11 of the Directive. Finally the charge does not have the characteristics of a capital duty within the meaning of the last recital in the preamble to the Directive. (b) The United Kingdom states that the Directive has as its objective the harmonization of indirect taxes on the raising of capital so as to eliminate discrimination, double taxation and disparities interfering with the free movement of capital (second recital in the preamble to the Directive). To achieve that object the Directive sets up a common system of capital duty and, as stated in the last recital in the preamble thereto, prohibits indirect taxes with the same characteristics as capital duty (Case 36/86 Dansk Sparinvest, cited above). The Directive cannot, however, have any application to fees or levies which are imposed for the purposes of funding a company registration system or the supervision of companies. In that connection it is pointed out that certain provisions of Article 12 of the Directive, in particular those concerning ‘duties paid by way of fees and dues ’are to an extent declaratory, since those duties, which do not have the same characteristics as capital duty, cannot in any event be regarded as falling under the prohibition introduced by Article 10 of the Directive. The United Kingdom maintains, in addition, that the administrative charge does not constitute a tax in respect of registration or any other formality required before the commencement of business within the meaning of Article 10(c) of the Directive. Those provisions refer to taxes levied on the first registration of a company, not to any annual dues payable such as the government charge. Taxes imposed after registration of the company could not fall under Article 10(c) of the directive unless they were a flagrant attempt to evade the provisions of the directive. Such a flagrant attempt might for example consist of a fee which varied in accordance with the amount of capital contributed to a company, nonpayment of which would lead to the company's being struck off the register. (c) After pointing out the interest with which the result of this case will be viewed, given that all Member States operate a register of companies, the Netherlands Government points to both the objectives and text of the Directive and maintains that an annual charge payable for registration in the register of companies is not covered by the prohibition introduced by Article 10. Such a charge does not hinder the free movement of capital referred to in the first recital in the preamble to the Directive in the absence of any differentiation in the legal system applicable according to the place of establishment or formation of the company. It does not affect harmonization of capital duty (second, sixth and last recital in the preamble) because it does not have the same characteristics as that duty. Capital duty is chargeable on the raising of capital and not, as is the charge at issue, on the entries in a register which are effected in the public interest and/or in the interests of companies. Further, the actual wording of Article 10(c) of the Directive allows an annual charge with the characteristics of the charge at issue to be excluded from its field of application. The Netherlands Government claims that from the information available to it, entry in the register of companies, which is the fact giving rise to the charge, does not constitute a formality required before the commencement of business within the meaning of this provision and does not establish any distinction, as regards the obligation of entry in the register, between the legal forms of companies.
C — Article 12 of the Directive
1. The concept of duties paid by way of fees or dues within the meaning of Article 12(1)(e) of the Directive
a) The Commission points out that the Directive gives no definition of such duties and refers by analogy to the case-law of the Court in which charges having an effect equivalent to customs duties within the meaning of Articles 9 and 12 of the Treaty and consideration for service rendered are distinguished (see, in particular, the judgment in Case 132/82 Commission v Belgium [1983] ECR 1649). Applying that case-law, the Commission points to the following factors in order to define duties paid by way of fees or dues: The Commission suggests, however, that the criterion used in that case-law, according to which payment for a service rendered must constitute consideration for a ‘specific and definite’ advantage which would have the effect of excluding operations imposed by law and carried out in the general interest (Case 340/87 Commission v Italy [1989] ECR 1483, at paragraph 15, and Case 137/89 Commission v Italy [1990] ECR I-847, at paragraph 10) should not be applied. In the specific context of application of the provisions of the Directive, there is no reason of public policy preventing a charge or a fee paid in consideration of such operations from being regarded as a duty paid by way of fees or dues. Unless the concept of ‘duties paid by way of fees or dues’ is divested of all substance, that reservation should not, however, lead to an acceptance that Member States may, without disregarding Article 12 of the Directive, introduce a charge to finance a public service. The charge must correspond to a specific service actually and individually rendered to the trader. The Commission deduces from all the forgoing considerations that duties paid by way of fees or dues within the meaning of the Directive are charges or dues representing consideration for a service which is optional or imposed by law, rendered individually to a capital company in an amount proportionate to the actual cost of the service.
the duties must be proportionate to the service actually rendered (Case 46/76 Bauhuis [1977] ECR 5, at paragraph 7; Case 132/78 Denkavit [1979] ECR 1923; Case 132/82 Commission v Belgium, cited above; Case 158/82 Commission v Denmark [1983] ECR 3573); and their amount should not exceed the actual cost of the transactions in respect of which they are charged (Case 89/76 Commission v Netherlands [1977] ECR 1355, at paragraph 16).
there must be a direct link between the amount of the duties, even if they are set on a flat-rate basis in the form of a fixed amount, and the cost of the factors, with regard to material and staff, necessary to provide such a service (Cases C-111/89 Bakker [1990] ECR I-1735 and C-209/89 Commission v Italy [1991] ECR I-1575).
b) Cispadana Costruzioni produces arguments similar to those advanced by the Commission. In its view duties paid by way of fees or dues may be consideration for formalities dealt with by the administration in the applicant's direct interest, even if those formalities are imposed by law in the public interest. The financial charge made must represent the cost of the service rendered and its amount, even if it is a flat-rate charge, must not exceed the actual cost of the material and work involving in carrying out the transaction requested.
e) Ponente Carni also relies on the case-law of the Court in which a distinction is made between charges having an effect equivalent to customs duties and consideration for services rendered (see in particular the judgments in Cases 63/74 Cadsky [1975] ECR 281; Case 87/75 Bresciani [1976] ECR 129; and Case 132/78 Denkavit, cited above). On the basis of that case-law it maintains that a duty is only paid by way of fees or dues within the meaning of the Directive if it relates to an optional and well-defined service rendered by the State in the interest of the individual and if the amount of that duty is proportionate to the cost of the service rendered. The amount of the duty must in particular be calculated on the basis of the duration of the transaction, the number of persons concerned, the cost of materials and overheads (Case C-111/89 Bakker, cited above).
d) The Italian Government takes the contrary view that that case-law cannot be transposed for the purpose of application of the Directive. In its view duties paid by way of fees or dues relate to remuneration needed by the State in order to ensure the proper running of a public service such as that providing information to the public concerning company instruments, benefiting the general public as well as companies. In that context it must be acknowledged that the fact that the amount of the charge cannot be precisely quantified on the basis of the cost of the service, inter alia as a result of the way the service is organized, has no bearing on the classification of duties paid by way of fees or dues.
e) The United Kingdom, while citing the Court's case-law concerning payment for services rendered (Case 132/82 Commission v Belgium, cited above) maintains that that case can have no bearing on the application of the Directive. The Directive allows for duties paid by way of fees or dues when a company is registered. As is clear from the First Council Directive (68/151/EEC) of 9 March 1968 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, with a view to making such safeguards equivalent throughout the Community (OJ, English Special Edition 1968 (1), p. 41) that registration is imposed in the public interest and not in the interests of the company. According to the United Kingdom, duties paid by way of fees or dues should be fixed at a level corresponding to the overall costs of the service provided, whatever the nature of that service. The duty must not be imposed for the purpose of raising revenue for the State to be expended on wholly unrelated matters.
2. Application of that concept
a) According to the Commission the administrative charge cannot be regarded as a duty paid by way of fees or dues, first, in view of the fact that there is no direct link between the cost of entry in the register and the amount of the charge and, secondly, because of the disproportionate nature of that amount. In order to prove that the charge is disproportionate the Commission takes as its basis a study in comparative law of the legislation applicable in the various Member States, from which it appears that the charge is much higher than the average amounts applied in the other Member States (48.5 times the average amount for public limited companies and 14 times the average amount for private limited companies). That disproportion in relation to the charges payable in the other States becomes even more obvious when the fact that the administrative charge is levied annually is taken into account. The Commission also founds its argument on the amount of the charge applicable to the registration of documents other than the instrument of incorporation of the company, amounting to LIT 98 000. Lastly, it relies on the differentiation made between the charge payable for registration of public limited companies and that payable for private limited companies. That differentiation cannot be justified by a difference in the cost of the service rendered. The argument that the difference is due to the fact that public limited companies use the register's services more frequently cannot be accepted, inasmuch as the services required are already charged for by way of fees or dues quite separate from the charge at issue. The Commission disputes in particular the argument put forward by the Italian Government that the charge is the consideration needed by the State in order that it may maintain all the administrative services responsible for ensuring that documents concerning companies may be made available for public scrutiny. With that argument the Italian Government is acknowledging the true purpose of the charge, which is to procure additional revenue for the State. It constitutes in fact a charge on the existence of companies which is separate from taxes on companies' revenue and assets, in disregard of both the letter and the spirit of the Directive's provisions.
b) Cispadana Costruzioni relies, in substance, on arguments identical to those put forward by the Commission, and lays particular emphasis on the disproportion of the charge in comparison with the charges made in other Member States and on the fact that in the Italian rules concerning registration of company instruments there are duties, distinct from the administrative charge, which are payable by way of fees or dues.
e) Ponente Carni claims that the charge does not constitute consideration for an optional service but, on the contrary, represents a charge payable annually and systematically to the tax authorities. The charge is not paid in consideration of a specific advantage benefiting companies. As Law No 100 of 24 December 1976, amended by the Law of 21 February 1989, provides, duties paid for services rendered by the register of companies and by the chambers of commerce and industry, which also keep a register in which companies are entered, are already levied separately. Further, and in any event, the amount of the charge is disproportionate in relation to the service rendered and the charges made in other Member States. It must be pointed out in this connection that the Italian Government cannot quantify the cost of those services. Furthermore, there is no reason to make any distinction between the amount charged on registration of public limited companies and the amount charged on registration of private limited companies. Lastly, it should be noted that chambers of commerce and industry, which offer services equivalent to those provided by the court registries, make charges which are much lower than the government charge.
d) The Italian Government disputes those various arguments and maintains, on the contrary, that the charge in question is necessary if the system for entering companies in the register is to continue to run properly. It emphasizes that the cost of the service rendered cannot be precisely quantified because the charges are spread over the registries of all the courts.
3. The distinction made by the national rules between public limited companies and private limited companies in order to determine the amount of the charge
The two questions referred to the Court for a preliminary ruling relate to the question whether that distinction is in conformity with the provisions of the Directive. The third question raised by the President of the Tribunale di Genova concerns more particularly whether that distinction complies with the provisions of Article 12(2) of the Directive.
a) The Commission, the Italian Government and the parties to the main proceedings all agree that that distinction is not per se contrary to the provisions of the directive. The Commission stresses, however, that the distinction demonstrates the absence of a link between the amount of the charge and the cost of the service rendered. With regard more particularly to the provisions of Article 12(2), the Commission claims that these are intended to avoid any discrimination against companies from another Member State (first sentence) and discrimination against companies as opposed to undertakings which have chosen a legal form other than that of a company (second sentence). The Italian Government claims that that distinction is justified by the fact that because of their more complex organization public limited companies make more use of the register's services.
III — The Italian Government's replies to the questions put by the Court
(a) First question
The Italian Republic is asked to indicate the conditions under which capital duty is levied in Italy in application of Articles 2 to 9 of Council Directive 69/335/EEC of 17 July 1969.
Reply
In Italy contributions of capital to capital companies referred to in Articles 2 to 9 of the Directive are subject to registration duties governed by Presidential Decree No 131 of 26 April 1986 (GURI, ordinary supplement No 99 of 30 April 1986).
The conditions under which those duties are applied are set out in Article 2(a) of the Decree and Article 4 of the tariff annexed thereto.
(b) Second question
The Italian Republic is asked to specify the taxes and dues other than the ‘tassa di concessione governativa’which are levied on registration of companies' instruments of incorporation in the register of companies or any other register, in particular that kept by chambers of commerce and industry.
Reply
a) For registration of a company's instrument of incorporation in the register of companies, in addition to the administrative charge the chancellory duties referred to in No 12 of the table annexed to Law No 900 of 24 December 1976 (GURI No 8 of 11 January 1977) are payable. Those duties amount to LIT 8000 (Article 3(1)(b) of Law No 99 of 21 February 1989, GURI No 66 of 20 March 1989). There are no other registers in which a company's instrument of incorporation must be compulsorily registered.
b) Companies, like any other natural or legal person carrying on an industrial, commercial or agricultural activity, must declare their activity to the Chamber of Commerce, Industry, Craft Industries and Agriculture. This does not involve entry of the instrument of incorporation in a register but is a declaration of activity to the Chamber of Commerce in the area in which that activity is exercised (Articles 47 and 48 of Royal Decree No 2011 of 20 September 1934, GURI No 299 of 21 December 1934). The procedure for making the declaration is laid down in Articles 81 to 84 of the regulation approved by Royal Decree No 29 of 4 January 1925 (GURI No 24 of 30 January 1925) which remained in force subsequent to the said Royal Decree No 2011. Companies, like any other natural or legal person, must pay secretariat dues amounting at present to LIT 20000 (Article 52 of the said Royal Decree No 2011, and No 17 of the table annexed to Decree-Law No 973 of 23 December 1977, (GURI No 5 of 5 January 1978), converted, with amendments, into Law No 4 of 27 February 1978, GURI No 62 of 3 March 1978).
(c) Third question
The Italian Republic is asked to specify the legal consequences attached to nonpayment by a capital company of the administrative charge (a) on registration in the register of companies of a company's instrument of incorporation and (b) on 30 June of each subsequent year.
Reply
a) Nonpayment of the charge prevents registration and its effects (Article 8 of Decree No 641 of 26 October 1972 cited above). The first paragraph of Article 2297 of the Codice Civile provides:
‘As long as a company is not entered in the register of undertakings, relationships between the company and third parties, subject to the joint and unlimited liability of all the members, shall be governed by the provisions concerning partnerships.’
b) Nonpayment of the annual charge leads to application of a surcharge of 10 or 20% of the charge due (second paragraph of Article 9 of Decree No 641 of 26 October 1972). Proof of actual payment of the annual charge must be lodged by 31 July each year at the registry in whose register the company is entered. Late lodging of proof is penalized by an administrative penalty of LIT 100000 (Article 8(4) and (5) of Decree-Law No 173 of 30 May 1988 converted, with amendments, into Law No 291 of 26 July 1988). With regard to the various consequences of nonpayment of the annual charge, certain doubts have arisen in the past. It was considered that nonpayment did not affect the actual registration of the company and hence its validity, but only ‘... completion of the procedures (registration of the activities of a company, certification, stamps and the like) which are carried out on the basis that initial registration continues to be valid’ (circular issued by the Ministero di Grazia e Giustizia No 8/630/8 of 26 March 1988). Subsequently Decree-Law No 173 of 30 May 1988 was enacted, which provides in Article 8(6):
‘Registration and certificates relating to disclosure of a company's instruments are not suspended if the said proof is not lodged within the period prescribed’.
F. Grévisse
Judge-Rapporteur
1 Language of the case: Italian.
2 Transaltor's Note: The French version of ‘fees or dues’ is ‘droits ayant un caractère rémunératoire’.