European court of Justice: Sardinian regional tax on touristic stopovers infringes Community law

Legislation adopted by the Region of Sardinia introduced, as from 2006, a regional tax on stopovers for tourist purposes by aircraft used for the private transport of persons or by pleasure boats over fourteen metres in length. The tax is payable by natural or legal persons who have their tax domicile outside the territory of the region. With regard to the pleasure boats, the tax applies to undertakings which carry out transport operations for remuneration or free of charge. With regard to the aircraft, on the other hand, the tax is payable only by undertakings which carry out air transport operations free of charge, for reasons connected with their business activities.In the course of two actions brought against that law by the Italian President of the Council of Ministers, the Italian Constitutional Court made its first reference to the Court of Justice for a preliminary ruling.In his judgment in Case C-169/08 the Court considered that the difference between residents and non-residents constituted a restriction on freedom of movement since there was no objective difference in their situations which could justify the difference in treatment as between the various categories of taxpayer.The fact that taxpayers in Sardinia contribute, through income tax, to the activities of the region, even those for the protection of the environment, was irrelevant since the tax on stopovers was not of the same nature and did not pursue the same objectives as the other taxes paid by Sardinian taxpayers.According to the Court, it is common ground that the tax concerns trade between Member States (since it applies to services provided in connection with stopovers by aircraft and recreational craft and concerns intra-Community trade) and it may distort competition (since it grants an economic advantage to operators established in Sardinia). In addition, the regional tax law which grants certain undertakings exclusion from the obligation to pay the tax in question involves a renunciation by the region of tax revenue which it would normally have received. Lastly, the tax confers a selective fiscal advantage only on enterprises established on the territory of the region, as compared with undertakings which do not have their tax domicile there, since those two categories of undertaking are in a comparable factual and legal situation when they receive stopover services in Sardinia.Source: ECJ press release 101/09 of Nov. 17, 2009

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