CJEC, 8th chamber, October 24, 2008, No C-364/08

THE COURT (Eighth Chamber)

1 This reference for a preliminary ruling concerns the interpretation of Articles 43 EC and 49 EC.

2 The reference was made in the context of proceedings between Mr Vandermeir and État Belge - SPF Finances - relating to the taxation of a vehicle registered and leased in Luxembourg.

Legal context

3 According to the referring court, the following national legislation is applicable to the main proceedings.

4 Article 3 of the Code of taxes assimilated to income tax, in the version applicable to the main proceedings ('the Code'), which forms part of Title II, 'Road tax on motor vehicles', provides:

'A tax shall be imposed on steam and motor vehicles designed either for the transport of persons or for the road transport of goods or any other types of items.'

5 Article 6 of the Code provides:

'Every person who uses one or more vehicles defined in Articles 3 and 4 for his own use ... , whether he is the owner or in personal possession thereof, whether he has permanent or habitual use thereof under a lease or other agreement, shall be subject to the tax.'

6 Article 21(1) of the Code reads as follows:

'The tax shall be payable by the natural or legal person who is or who should be noted on the registration certificate, so long as a vehicle is or should be entered in the name of that person in the licence register of the vehicle registration department.'

7 Article 5(1)(9) of the Code exempts from the tax 'motor vehicles used by Belgian residents provided for them by their employer, where the employer is established abroad and the vehicle is registered there'.

8 Article 94(1)(1) of the Code, which forms part of Title V, 'Registration Tax', provides:

'A tax assimilated to income tax shall be levied in favour of the State on:

(1) cars ... , as those vehicles are defined in the rules governing the registration of motor vehicles ..., in so far as those vehicles are or must be issued with a registration plate ... supplied under these rules.'

9 According to Article 99 of the Code, vehicles referred to in Article 94(1)(1) of the Code are to be regarded as put into use on the public highway in Belgium if they are, or are required to be, entered in the licence register of the Road Traffic Office.

10 Article 108 of the Code, which forms part of Title VI 'Countervailing excise charge', states:

'A countervailing excise charge shall be levied in favour of the State on cars ... with diesel motors.'

11 Article 2 of the Code, which forms part of Title I 'Common provisions', allows the Belgian State to impose administrative fines where a taxpayer infringes the provisions of the Code.

12 Article 3 of the Royal Decree of 20 July 2001 concerning vehicle registration, in the version applicable to the main proceedings, provides:

'(1) Persons residing in Belgium shall register the vehicles that they intend to put into circulation in Belgium with the register of vehicles referred to in Article 6, even if those vehicles have already been registered abroad.

Persons shall be deemed to be resident in Belgium if they meet one of the following conditions:

(a) they are entered in the population register of a Belgian commune;

...

(2) In the cases referred to below, the registration in Belgium of vehicles registered abroad, and put into circulation by persons mentioned in paragraph 1, is not compulsory for:

...

2. a vehicle used by a natural person for business purposes and only incidentally in a private capacity and which is provided by a foreign employer to whom that person is linked by a contract of employment; in such a case, a certificate issued by the [value added tax] authorities must be carried in the vehicle; the detailed conditions for the use of the vehicle shall be fixed by the Minister for Finance;

... .'

The main proceedings and the question referred

13 Mr Vandermeir resides in Belgium.

14 In 2004, he worked as a freelance journalist in Luxembourg, where he owned an office and where almost all of his clients were situated. The fact of his establishment in that Member State has been confirmed by the social security inspectorate of Luxembourg.

15 In February 2004, Mr Vandermeir leased from a Luxembourg company a vehicle registered in Luxembourg in the name of that company with the registration number FM7687.

16 On 10 August 2004, the Belgian Customs Services inspected Mr Vandermeir and drew up a record of breaches of the legislation relating to vehicle registration.

17 That record was forwarded to the Belgian tax authorities, which, in due course, issued notices of assessment finding Mr Vandermeir liable to pay road tax, registration tax, a countervailing excise charge and an administrative fine.

18 On 23 December 2005, Mr Vandermeir lodged a complaint against the taxes, charge and fine.

19 As that complaint was dismissed by decision of 26 June 2007, Mr Vandermeir brought proceedings before the referring court.

20 It is in those circumstances that the tribunal de première instance d'Arlon decided to stay proceedings and to refer the following question to the Court for a preliminary ruling:

'Do Articles 43 [EC] and/or 49 EC preclude national legislation of one Member State, such as the legislation in question, which requires a self-employed person residing in that Member State to register his vehicle there, although he carries on business almost exclusively in a second Member State from a fixed establishment that he owns there, and the vehicle is neither intended to be essentially used in the first Member State on a permanent basis, nor is in fact so used?'

The question referred for a preliminary ruling

21 Pursuant to the first subparagraph of Article 104(3) of the Rules of Procedure, where the answer to a question referred to the Court for a preliminary ruling may be clearly deduced from existing case-law, the Court may, after hearing the Advocate General, at any time give its decision by reasoned order.

22 First of all, it should be noted that, apart from certain exceptions not relevant to the main proceedings, taxation of motor vehicles has not been harmonised at Community level. The Member States are thus free to exercise their powers of taxation in that area provided that they do so in compliance with Community law (see Case C-451-99 Cura Anlagen [2002] ECR I-3193, paragraph 40; Case C-464-02 Commission v Denmark [2005] ECR I-7929, paragraph 74; Joined Cases C-151-04 and C-152-04 Nadin and Nadin-Lux [2005] ECR I-11203, paragraph 40; Case C-232-03 Commission v Finland, judgment of 23 February 2006, paragraph 46; order in Case C-242-05 van de Coevering [2006] ECR I-5843, paragraph 23; and order of 22 May 2008 in Case C-42-08 Ilhan, paragraph 17).

The existence of restrictions on the freedom of establishment and on freedom to provide services

23 Under Article 43 EC, restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State are prohibited.

24 According to established case-law, all measures which prohibit, hinder or make less attractive the exercise of that freedom must be regarded as such restrictions (see Case C-55-94 Gebhard [1995] ECR I-4165, paragraph 37; Case C-442-02 CaixaBank France [2004] ECR I-8961, paragraph 11; and Case C-298-05 Columbus Container Services [2007] ECR I-10451, paragraph 34).

25 Even though, according to their wording, the provisions of the EC Treaty concerning freedom of establishment are directed to ensuring that foreign nationals and companies are treated in the host Member State in the same way as nationals of that State, they also prohibit the Member State of origin from hindering the establishment in another Member State of one of its nationals or of a company incorporated under its legislation (see Case C-264-96 ICI [1998] ECR I-4695, paragraph 21; Case C-196-04 Cadbury Schweppes and CadburySchweppes Overseas [2006] ECR I-7995, paragraph 42; and Case C-414-06 Lidl Belgium [2008] ECR I-0000, paragraph 19).

26 An obligation to register vehicles, such as that imposed by the legislation in question in the main proceedings on self-employed persons residing in Belgium, impedes access by those persons to self-employed work in other Member States and is thus liable to hinder or make less attractive their exercise of freedom of establishment (see, to that effect, Commission v Denmark, paragraph 46; Nadin and Nadin-Lux, paragraphs 36 and 37; and Commission v Finland, paragraph 40).

27 As a result, that obligation constitutes a restriction on the freedom of establishment prohibited, as a rule, by Article 43 EC.

28 Article 49 EC prohibits restrictions on freedom to provide services within the European Community.

29 According to established case-law, that provision precludes the application of any national legislation which, without objective justification, impedes a provider of services from actually exercising that freedom or which has the effect of making the provision of services between Member States more difficult than the provision of services purely within one Member State (see Cura Anlagen, paragraphs 29 and 30, and orders in Case C-435-04 Leroy [2006] ECR I-4835, paragraph 11, and van de Coevering, paragraphs 19 and 20).

30 An obligation to register vehicles, such as that at issue in the main proceedings, has the effect of making cross-border leasing activities more difficult (see Cura Anlagen, paragraph 37, and order in Leroy, paragraph 12).

31 Therefore, that obligation constitutes a restriction within the meaning of Article 49 EC.

Justification for the restrictions on the freedom of establishment and freedom to provide services

32 It is evident from the case-law of the Court that a Member State may impose an obligation to register a motor vehicle leased by a worker residing in that Member State from a company established in another Member State where that vehicle is intended to be used essentially in the first Member State on a permanent basis or where it is, in fact, used in that manner (see, to that effect, Cura Anlagen, paragraph 42; Commission v Denmark, paragraphs 75 to 78; NadinandNadin-Lux, paragraph 41; and Commission v Finland, paragraph 47).

33 On the other hand, if those conditions are not satisfied, the connection with one Member State of the vehicle registered in another Member State is weaker, so that another justification for the restriction in question is necessary (see Commission v Denmark, paragraph 79; Commission v Finland, paragraph 48; and order in van de Coevering, paragraph 26).

34 With regard to a possible justification for the registration obligation in question in the main proceedings, the Court has already held, first, that it is contrary to Article 43 EC for the domestic legislation of one Member State to require a self-employed person residing in that Member State to register there a company vehicle made available to him by the company for which he works, established in another Member State, when it is not intended that that vehicle should be used essentially in the first Member State on a permanent basis and it is not, in fact, used in that manner (see Nadin and Nadin-Lux, paragraph 55, and order in Leroy, paragraph 13) and, secondly, that it is contrary to Article 49 EC for the domestic legislation of one Member State to require a person residing in that Member State to register there a vehicle rented from a leasing company established in another Member State, when it is not intended that that vehicle should be used essentially in the first Member State on a permanent basis and it is not, in fact, used in that manner (see order in Leroy, paragraph 14).

35 It follows that, since Mr Vandermeir does not use his vehicle in the conditions set out in paragraph 32 above, the fact that he is self-employed in Luxembourg as a natural person who owns a fixed establishment in that Member State and not as a director or manager of a company established in that Member State, or the fact that he has leased a vehicle from a Luxembourg company himself and not through an employer who then made a vehicle available to him, cannot justify a registration obligation such as is at issue in the main proceedings.

36 Taking all the above considerations into account, the answer to the question referred must be that Articles 43 EC and 49 EC are to be interpreted as precluding national legislation of one Member State, such as that in question in the main proceedings, under which a self-employed person residing in that Member State is required to register there a vehicle leased from a company established in another Member State, when it is not intended that that vehicle should be used essentially in the first Member State on a permanent basis and it is not, in fact, used in that manner.

Costs

37 Since these proceedings are, for the parties to the main proceedings, 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 (Eighth Chamber) hereby rules:

Articles 43 EC and 49 EC are to be interpreted as precluding national legislation of one Member State, such as that in question in the main proceedings, under which a self-employed person residing in that Member State is required to register there a vehicle leased from a company established in another Member State, when it is not intended that that vehicle should be used essentially in the first Member State on a permanent basis and it is not, in fact, used in that manner.