Discriminatory Taxation

Question 1

Where do you find the Treaty base for the prohibition of measures of internal taxation?

Answer 1

Art 110 TFEU

Question 2

Which case established that Art 110 TFEU is directly effective?

Answer 2

Lütticke [1996]

Question 3

How do you assess whether a tax breaches Art 110 TFEU?

Answer 3

(1) is there discrimination between an imported product and a similar domestic one?
(2) if not, is there protection of a domestic product vis-a-vis a competing imported one?
Apply Art 110(1) and then (2)

Question 4

What does Art 110(1) TFEU prohibit?

Answer 4

Measures of internal taxation that discriminate against similar imported products

Question 5

Which case determined that bananas were not similar to other table fruits by an assessment of their organoleptic characteristics, water content and whether they satisfied the same consumer needs?

Answer 5

Commission v Italy (Bananas) [1987]

Bananas were not similar.

Question 6

In which case did the court examine the alcohol content, methods of production and consumer perceptions to conclude that whisky and liqueur fruit wines were not similar products under Art 110(1)?

Answer 6

John Walker v Ministeriat for Skatter [1986]

Question 7

When do you see direct discrimination under Art 110(1)?

Answer 7

• only imported products subject to tax
• imported products are taxed on a different, higher rate
• no tax exemptions for imported ones
• stricter tax conditions for imported ones

Question 8

Which case shows that a tax on powdered baby milk imported from Luxembourg but not payable on one produced in Germany was direct discrimination of similar products under Art 110(1)?

Answer 8

Lütticke [1966]

Question 9

Which case demonstrates direct discrimination under Art 110(1) regarding the excise duty payment dates?

Answer 9

Commission v Ireland (Excise Payments) where excise duty on Irish products could be paid beyond the due date, whilst imported ones could not.

Question 10

Are there any justifications for direct discrimination under Art 110(1)?

Answer 10

NO.

Question 11

What must be done if a directly discriminatory tax is found to exist?

Answer 11

Must be removed by equalizing the taxes or extending the tax benefit of domestic product to the imported one.

Question 12

What is indirect discrimination under Art 110(1)?

Answer 12

Where taxation rules are neutral in formulation but bear more heavily on imported goods.

Question 13

Which case showed indirect discrimination under Art 110(1) where dark tobacco was taxed more favourably than white tobacco, which was almost exclusively imported from other MSs?

Answer 13

Commission v France C-302/00

Question 14

Which case showed indirect discrimination, where there was a special tax levied on all cars with an engine capacity over 16hp and none were produced in France (home MS)?

Answer 14

Humbolt

Question 15

What conditions can justify indirect discrimination?

Answer 15

(1) it pursues a legitimate aim under EU law
(2) the national interest is unconcerned with the origin of the products
(3) measures are proportionate

Question 16

In which case were tax measures discouraging the purchase of large engine vehicles (indirectly discriminatory) justified on environmental protection grounds?

Answer 16

Commission v Greece C-132/88

Question 17

In which case were Italian taxation of two interchangeable products taxed at different rates according to production method justified indirect discrimination due to agricultural policy?

Answer 17

Chemical Farmaceutici

Question 18

What does Art 110(2) TFEU prohibit?

Answer 18

Measures of internal taxation which have a protective effect in favour of domestic products in competition with imported ones

Question 19

Which case established that for Art 110(2) it suffices to say that goods are in competition only partially, indirectly or potentially?

Answer 19

Commission v Denmark 365/85

Question 20

What factors can you consider to assess whether goods are in competition?

Answer 20

• substitutability of goods from consumer perspective
• cross elasticity of demand
• other qualitative factors e.g. their function and distribution, their possibilities for use, substantial price differences between them

Question 21

In which case was it held that wine and beer were goods in competition and so the discriminatory taxation towards wine, which was largely imported was illegal?

Answer 21

Commission v UK (Excise Duties on Wine)

Question 22

In which case was grain-based alcohol held to be in competition with fruit-based or wine products?

Answer 22

Commission v France 168/72

Question 23

If a protective tax measure exists under Art 110(2) then what must be done?

Answer 23

Must change measure of taxation to remove protective effect.

Question 24

Which case is authority for the ability to make restitutionary claims and claims for loss of sale based on illegal taxation subject to the principles of unjust enrichment and national procedural autonomy?

Answer 24

Hans Just