3.The Commission of the European Communities discusses the practical significance of the problems raised by this case and makes a legal analysis of the effect which the relevant legislation and practices of the Member States have on the free movement of goods and workers and on the right of establishment.As regards the practical aspect of the problem, the Commission points out that the establishment of the common market has the effect of creating an increasing number of “trans-frontier” ties of a family and business nature involving the use of road vehicles.This, it explains, is because business is often done across frontiers and people may work on one side of a frontier and live on the other side so that they travel to and return from work in cars which are either registered in their name in the country in which they reside or registered in their name or that of the employing firm in the country in which they work.The Commission points out that such vehicle usage is governed by fiscal legislation whose underlying principle is that a resident of Country A must not drive in his own country a vehicle registered in Country B and that such a prohibition is necessary in order to prevent tax evasion because without it value-added tax and road-vehicle tax would easily be evaded.The Commission considers however that the personal and economic circumstances in question are now so complex and varied that an outright prohibition on driving a car registered in another country no longer meets the requirements of daily life from the personal and business point of view.It then sets out the annoying problems which are thus created for the individuals and the businesses concerned which, without having any intention of evading tax, are subject to such an outright prohibition. It cites by way of example a number of cases concerning the private use of cars, the business use of commercial vehicles, the private and business use of vehicles belonging to a business and the particular case of a national of the Federal Republic of Germany who was prohibited from using in his country a car which he had rented in another Member State until his own car, which had been damaged in an accident abroad, was repaired.Individuals affected by the absolute prohibition must often either give up their job in order to maintain their family life or give up their family life in order to keep their job. In some situations the nationality of the driver of a goods vehicle prevents goods from being delivered since a lorry may be seized if the driver does not have the “right” nationality. Lastly, the economic ability of an individual to exercise his freedom of establishment is impaired by the fact that problems of this kind arise at frontiers unless the “right” national is employed to drive one's vehicle and the vehicle is registered in the “right” country so as to prevent it from being seized in one country or another.The Commission then observes that some of these problems have been overcome by Directive 83/182/EEC.It points out, however, that those tax exemptions concern only three kinds of situation:(a) Where a non-resident temporarily imports a private vehicle or various other means of transport for a limited period of time (Article 3);(b) Where a private vehicle is temporarily imported for business use provided also that the person importing it normally resides outside the State of importation (Article 4) and(c) Where a vehicle is used to travel to and return from work and the driver's residence and place of work are located in different countries, provided that the vehicle is registered in the countiy of residence.In the Commission's view, those tax exemptions, which moreover do not cover “commercial” vehicles (that is to say, according to Article 2 (a) of the directive, vehicles intended for transporting persons and goods or for special use), are not sufficient for resolving the problems which have to be faced by individuals whose circumstances are not covered by the directive and who, being obliged to travel between their place of residence and the place of work located in different countries, fall under the aforementioned prohibition.It points out that, in order to resolve those problems, the Community is endeavouring to bring about gradual harmonization in accordance with the principles laid down in Directive 83/182/EEC.The Commission makes the following observations on the question whether national legislation making it an offence for residents in the territory of a Member State to use motor vehicles covered by temporary importation rules and consequently imported free of import duty is compatible with the provisions of the EEC Treaty if such temporary use is made without any intention of evading tax.Dealing first with the free movement of goods, it points out that a similar question was submitted to the Court in Case 823/79 Cardati in which the Court held that Member States retain broad powers to take action in respect of temporary importation specificially for the purpose of preventing tax evasion and that if the measures adopted for that purpose are not excessive they are compatible with the principle of the free movement of goods.The Commission observes, however, that the facts in Cardati were different from those of the present case because they concerned an Italian resident driving in Italy a vehicle registered in Germany whose owner had left it behind in order to be able to use it when he came to stay in Italy.The Commission therefore takes the view that the question still remains whether the relevant national fiscal provisions hinder the free movement of goods inasmuch as they constitute a quantitative restriction on exports or a measure having equivalent effect which is contrary to Article 34. In this regard it considers that the relevant national provisions are in fact designed to prevent tax evasion and have no purposes which the Court, in a consistent line of decisions (for example in Case 15/79, Groenveld v Produktschap voor Vee en Vlees, [1979] ECR 3409), has held to be contrary to Article 34 of the Treaty.However, the Commission raises the question whether such an interpretation of Article 34 of the Treaty takes sufficient account of the facts of the present case. It accordingly considers that an outright prohibition imposed on a person residing in the Netherlands against driving a vehicle registered in another Member State, even if this is done in order to export goods from the Netherlands to another Member State, is an obstacle to normal trade and thus constitutes a measure having an effect equivalent to a restriction on imports prohibited by Article 34.In the Commission's view, despite the wide powers which Member States have in fiscal matters, such an outright prohibition is excessive. Where a vehicle belongs to a company established outside the Netherlands whose business consists of purchasing flowers in one country and selling them in another, it must be free to employ whom it wishes to drive its vehicles so that it can carry on business lawfully without any intention of evading tax. The prohibition laid down by the Netherlands legislation restricts the company's freedom to conduct its business as it wishes and impedes exports contrary to Article 34.In the present case there is also a breach of Article 48 which provides that:“Freedom of movement for workers shall be secured within the Community by the end of the transitional period at the latest.”It points out that Article 48 was implemented by Regulation (EEC) No 1612/68 of 15 October 1968 on freedom of movement for workers within the Community (Official Journal, English Special Edition 1968 (II), p. 475) and that therefore the crucial question in the present case is whether the rights conferred by Article 48 and Regulation No 1612/68 may be invoked by a national of State A against restrictions imposed by that State if such measures affect his right to take up employment in State B. The Commission considers that it is a question of “reverse discrimination” which as such has apparently still not been decided by the Court. This question has been raised in connection with Article 52 in Case 115/78, Knoors, [1979] ECR 399, Case 136/78, Auer, [1979] ECR 437, and in Case 246/80, Broekmeulen v Huisarts Registratie Commissie, [1981] ECR 2311 and has also been raised in Case 175/78, Regina v Saunders, [1979] ECR 1129, a case directly concerning Article 48. To some extent the judgments delivered in the Knoors and Auer cases might be contradictory in so far as in the Knoors case a Netherlands national was allowed to invoke provisions of Community law against the Netherlands whereas in the Auer case a French national was not allowed to invoke provisions of Community law against France. It adds, however, that the distinguishing feature in those two cases seems to have been the state of secondaiy law which was decisive for the outcome of both cases.The Commission also refers to the Broekmeulen case which mainly turned on the interpretation of Directive 75/362/EEC even if it is stated in a passage in paragraph 20 of the decision that Articles 48, 52 and 59 may be relied upon by a national as against the government of his country. In the Saunders case Mr Advocate General Warner, commenting on the Knoors case, expressed the opinion that nothing that the Court had stated thereto could be considered as stating a sweeping principle that no provision of the Treaty, or no provision of it about the free movement of persons, could apply in a case wholly internal to a Member State.The Commission considers that, irrespective of the ratio decidendi of the judgments in the Knoors, Auer and Broekmeulen cases — for this case is not one wholly internal to a Member State but one directly affecting the possibility for workers to find employment in another Member State — if the defendant in this case had been resident in Germany, the prohibition laid down by the national legislation in question would undoubtedly not have applied to him.The effect of that prohibition is that a Netherlands national may not take up employment in another country, in this case Germany, if the employment requires him to drive his employer's vehicles on lawful business to and from the Netherlands. Such a restriction therefore constitutes an infringement of Article 48 of the EEC Treaty.The question also arises whether the provisions in question constitute a restriction upon the freedom of establishment provided for in Article 52. For reasons similar to those stated by Mr Advocate General Warner in the Saunders case, the Commission believes that in an appropriate case the rights conferred by Article 52 may also be relied upon by the person concerned in his own Member State.No Member State may adopt laws or practices to prevent its own nationals from freely exercising the right of establishment in another Member State.The Treaty requires that a national of a Member State, such as the defendant's employer established in the Federal Republic of Germany, must not be restricted, when carrying on his business, in his choice of employees by problems concerning nationality required for driving his business vehicles; in the present case a German undertaking employing a German driver would not encounter the same difficulties. The Commission therefore considers that such restrictions arising from the unlimited exercise by Member States of their sovereign powers in fiscal matters indirectly affect the actual exercise of the right of establishment as provided for in the Treaty since they influence the choice of employees.In conclusion the Commission observes that it might be argued that the most that may be required of Member States in this regard is that they should allow vehicles to be used on their roads for business purposes but should be entitled to maintain an absolute prohibition where the carrying on of a business involves problems such as employees' travelling to and from work or visiting their families on the other side of the frontier. However, in the Commission's view, such a narrow view of fiscal sovereignty seems to take no account of the reality of daily business and private life.The Commission acknowledges that it is necessary to base fiscal control in this field on a presumption that some fraud will take place. However, it considers that such a presumption must not lead to results entirely out of proportion to the problem in question or contrary to other relevant rules of Community law. In this regard it refers to the judgment of the Court in the Gaston Schul case ([1982] ECR 1409, paragraph 33 at p. 1431) in which it was held that:“The concept of a common market as defined by the Court in a consistent line of decisions involves the elimination of all obstacles to intra-Community trade in order to merge the national markets into a single market bringing about conditions as close as possible to those of a genuine internal market. It is important that not only commerce as such but also private persons who happen to be conducting an economic transaction across national frontiers should be able to enjoy the benefits of that market.”The Commission also points out that, in assessing the present case in the light of the problems which it describes, it must be borne in mind that there is in fact a conflict of laws which arises in many other cases owing to the existence of links to two different countries.It may be that, if the arguments it advances in its written observations are considered separately, they are open to the criticism that the facts of this case do not strictly speaking meet the substantive requirements of Articles 34, 48 or 52 as hitherto interpreted and applied. Nevertheless, it believes that considered in its entirety the present case exemplifies a particularly acute problem and reveals a state of affairs incompatible with the fundamental principles of the common market.In view in particular of the judgment of the Court in the “Cassis de Dijon” case (Case 120/78 [1979] ECR 649, paragraphs 8 and 14) it therefore proposes that the question of the national court should be answered as follows:“In the present state of Community law obstacles to the free movement of goods, the free movement of workers and the exercise of the right of establishment or the freedom to provide services must be accepted in so far as they arc necessary in order to satisfy requirements relating in particular to effective fiscal control.However, an outright prohibition imposed on a person resident in the territory of a State against driving in that State a vehicle registered in another State goes further than is necessary for that purpose and as such cannot override the fundamental freedoms conferred by the Treaty.”
Source: EUR-Lex, © European Union, 1998-2026. Reuse authorised under Decision 2011/833/EU.