European Business Law, the fourth volume in our series, shows how the European authorities simultaneously abolish all restrictions on access to and exercise of economic activities and support the growth of domestic markets, through the harmonization the internal legislation or the enactment of genuinely unified regulations.

European Business Law

The prohibition on discriminatory internal taxation encompasses the prohibition of imposing on the products of other Member States any internal taxation in excess of that imposed directly or indirectly on similar domestic products (Art. 110(1) TFEU), and of imposing on the products of other Member States any internal taxation of such a nature as to afford indirect protection to other products, i.e …

Scope of the prohibition

The prohibition on discriminatory internal taxation encompasses the prohibition of imposing on the products of other Member States any internal taxation in excess of that imposed directly or indirectly on similar domestic products (Art. 110(1) TFEU), and of imposing on the products of other Member States any internal taxation of such a nature as to afford indirect protection to other products, i.e. competing domestic products (Art. 110(2) TFEU). A tax levied on imports, even on products which do not compete with domestic products, is intended to put every kind of product, whatever its origin, in a comparable fiscal situation in the national territory. Thus, a Member State may impose internal taxation on imported products without being caught by the prohibition where there is no similar domestic product or any other domestic products capable of being protected .

Even if the conditions for direct discrimination are not met, taxation might be indirectly discriminatory as a result of its effects .

Article 110(1) TFEU “refers to all taxation which is actually and specifically imposed on the domestic product at all earlier stages of its manufacture and marketing or which corresponds to the stage at which the product is imported from other member states, it being nevertheless understood that the effect of this taxation diminishes in proportion as the previous stages of manufacture and of marketing become more remote and that this burden tends rapidly to become negligible.”  The concept of internal taxation is interpreted in the broad sense and includes charges imposed on the undertaking's activity, such as a charge levied on the international transport of goods by road according to the distance covered on the national territory and the weight of the goods in question . 

The compatibility of a fiscal charge with Article 110(2) TFEU depends on its capacity to have the effect of reducing potential consumption of the imported products to the advantage of competing domestic products on the market in question . The prohibition covers all forms of fiscal protection in favor of domestic products, without it being required to bring evidence thereof from statistic data . Thus, a fiscal system benefits national products to the detriment of imported products where, without establishing any formal distinction according to the origin of products, it is arranged in such a way that all the national production falls within the most favorable tax category . The protective effect is assessed taking account of the respective selling price of competing products and the trend in consumption for each product . Where the difference in selling price between the products is virtually the same before taxation as after taxation, that taxation has not the effect of indirectly protecting domestic production .

For a charge to be lawful, it must not be imposed on the imported product according to a method of calculation or manner of imposition which differs from those applying to the tax imposed to a similar domestic product , such as the imposition of a uniform amount in one case and a graduated amount in the other, where imposition leads, even only in a minority of cases, to higher taxation on the imported product . Thus, Article 110 TFEU does not preclude a national regulation under which a vehicle tax, incorporated in the value of each vehicle, is not refunded to the owner in the event of definitive export of his vehicle for use in another Member State, if the vehicle was first put into circulation at least ten years ago at the time of export, it being irrelevant whether it was mainly used on the territory of the Member State which levied the vehicle tax on a permanent basis and whether it was in fact also used in that way . To establish that the taxation imposed on imported products is higher, account is taken not only of the rate or basis of assessment of the charges in question , but also of the advantages or exemptions which each charge carries with it . Discriminatory internal taxation may also be found where the severity of the penalty in case of offenses concerning the payment of tax varies depending on whether it concerns imported products or domestic sales of goods .

By contrast, the administrative authorities' discretion regarding reduction of the tax is not taken into account when assessing whether there is unlawful internal taxation .

Products are similar within the meaning of Article 110(1) TFEU where they come within the same fiscal, customs or statistical classification . Similarity does not require products to be strictly identical , but to have similar characteristics and to meet the same needs . The use by the consumer of the product must be similar and comparable . Thus, dark- and light-tobacco cigarettes are similar products since they are manufactured from the same base product, tobacco, using comparable processes, have organoleptic characteristics that when they are not identical are nevertheless similar, are subject to uniform European tax treatment and can satisfy the same needs of consumers, even if the average age of consumers is different for each category of products . Likewise, used vehicles imported from other Member States are similar products to used vehicles already registered in the importing State, despite the absence of any national production and the fact that they too were initially imported . By contrast, even if they can be consumed in the same way, Scotch whisky and liqueur wine are not regarded as similar products insofar as their objective characteristics - fruit of origin, method of manufacture and organoleptic properties - are distinct . 

Where there is no domestic product similar to the imported product, the prohibition on internal taxation also applies if the charge is imposed on whole classes of domestic or foreign products which are all in the same position no matter what their origin . 

Article 110(2) TFEU prohibits the levying of any internal imposition affecting an imported product more than a competing domestic product. Competition does not need to be direct: it may only be partial, indirect or potential . Where products are capable of meeting identical needs, it must be acknowledged that there is a certain degree of substitution for one another . The assessment of substitutability is not limited to consumer habits in a Member State or in a given region, which should not prevent from finding the existence of competition between products . Even if there is no direct competition, any internal taxation, levying a specific fiscal charge on the imported product in such as way as to protect certain activities distinct from those used in the manufacture of the imported product, is prohibited . 

Case 27/67 Fink-Frucht GmbH v Hauptzollamt München-Landsbergerstrasse [1968] ECR 327, LawLex200900001797JBJ; Case C-383/01 De Danske Bilimportører [2003] ECR I-6065, LawLex200900000604JBJ.

Case C-290/05 Nádasdi [2006] ECR I-10115, LawLex200900000371JBJ.

Case 45/75 Rewe-Zentrale v Hauptzollamt Landau-Pfalz [1976] ECR 181, LawLex200900001978JBJ.

Case C-676/21 Veronsaajien oikeudenvalvontayksikkö, Judgment of 2 February 2021, LawLex202300002005JBJ.

Case 15/81 Schul [1982] ECR 1409, LawLex200900001565JBJ.

Case 20/76 Schöttle v Finanzamt Freudenstadt [1977] ECR 247, LawLex200900001651JBJ.

See Case 299/86 Drexl [1988] ECR 1213, LawLex200900002312JBJ, national legislation which penalizes offences concerning the payment of value-added tax on importation more severely than those concerning the payment of value-added tax on domestic sales of goods.

Case 74/76 Ianelli v Meroni [1977] ECR 557, LawLex200500005392JBJ.

Case 27/67 Fink-Frucht GmbH v Hauptzollamt München-Landsbergerstrasse [1968] ECR 327, LawLex200900001797JBJ.

Case 148/77 Hansen v Hauptzollamt Flensburg [1978] ECR 1787, LawLex200900001557JBJ; See, also, Case C-367/93 Roders and others v Inspecteur der Invoerrechten en Accijnzen [1995] ECR I-2229, LawLex200900000541JBJ, which considers that liqueur wines are different from table wines by reason of the fact that they are usually consumed as aperitifs and dessert wines; Case C-421/97 Tarantik [1999] ECR I-3633, LawLex200900000778JBJ, concerning motor vehicles.

Case C-367/93 Roders and others v Inspecteur der Invoerrechten en Accijnzen [1995] ECR I-2229, LawLex200900000541JBJ.

Case 28/67 Molkerei Zentrale Westfalen-Lippe v Hauptzollamt Paderborn [1968] ECR 211, LawLex200900001804JBJ.

Case C-302/00 Commission v France [2002] ECR I-2055, LawLex200900001445JBJ.

Case C-2/09 Regionalna Mitnicheska Direktsia [2010] ECR I-4939, LawLex201100000395JBJ, imported used vehicles imported must be considered as similar or competing products, insofar as a product becomes a national product once imported and placed on the market.

Case 243/84 Walker v Ministeriet for Skatter og Afgifter [1986] ECR 875, LawLex200900001722JBJ.

Case 78/76 Steinike & Weinlig [1977] ECR 595, LawLex200400002811JBJ.

Case 168/78 Commission v France [1980] ECR 347, LawLex200900001586JBJ; Case 170/78 Commission v United Kingdom [1980] ECR 417, LawLex200900001601JBJ.

Case 170/78 Commission v United Kingdom [1980] ECR 417, LawLex200900001601JBJ.

See, for example, for ouzo and Whisky: Case C-230/89 Commission v Greece [1991] ECR I-1909, LawLex200900002064JBJ.

Case 170/78 Commission v United Kingdom [1980] ECR 417, LawLex200900001601JBJ; Case 168/78 Commission v France [1980] ECR 347, LawLex200900001586JBJ.

Case C-230/89 Commission v Greece [1991] ECR I-1909, LawLex200900002064JBJ.

Case 356/85 Commission v Belgium [1987] ECR 3299, LawLex200900002301JBJ.

Case C-167/05 Commission v Suède [2008] ECR I-2127, LawLex200900000673JBJ.

European Business Law

64. Scope of the prohibition

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

64. Scope of the prohibition

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise