Andreas Hoves Internationaler Transport-Service Sàrl. is a company under Luxembourg law established in the Grand Duchy of Luxembourg whose business is the national and international transport of goods.

Mr Hoves is one of its managers, and also manages the German company Hoves Speditionsgesellschaft mbH. Until the end of 1995, the Luxembourg company acted exclusively as carrier for the GmbH, which dealt with planning the use of the vehicles and the activity of the drivers.

The Luxembourg-registered Hoves company registered 15 lorries in its name there, and paid Luxembourg vehicle tax in respect of them. In addition, the Luxembourg authorities issued that company with cabotage authorisations (permitting a carrier established in a Member State to carry on national road haulage in another Member State). Hoves employed eight drivers, all German residents.

In the course of a tax dispute, the German authorities sought to determine the place where the management of the Hoves company was based. Taking the view that the town of Rhede in Germany was the place from which the company was managed, they also considered (Finanzgericht Münster) that the vehicles had a regular base in Rhede (Germany), that being the place where decisions concerning the use of the vehicles were taken.

Therefore, and in accordance with German law, the vehicles had to be registered in Germany and made subject to payment of vehicle tax in Germany.

The Finanzgericht Münster had doubts, however, as to whether that legal situation complied with provisions of Community law, especially the regulation laying down the conditions under which non-resident carriers may operate national road haulage services within a Member State and thedirective on the application by Member States of taxes on certain vehicles used for the carriage of goods by road. It therefore referred the matter to the Court of Justice of the EC.

In accordance with that regulation, the carrying out of cabotage transport operations is subject to the legislative and administrative provisions in force in the host Member State in a certain number of areas. Vehicle tax is not expressly mentioned in that context.

From the point of view of the freedom to provide services, the Court of Justice has held that to require the carrier to register the vehicles in the host Member State would be the very negation of the freedom to provide a cabotage service by road, the exercise of which presupposes that the motor vehicle in question is registered in the Member State of establishment.

The regulation is aimed at removing all restrictions against the person providing the services on the grounds of his nationality or the fact that he is established in a different Member State from the one in which the service is to be provided. The Court emphasises that to require a carrier to pay a tax on the motor vehicles in the host Member State, even though he has already paid such a tax in the Member State of establishment, would be contrary to that objective.

The Court further considers that the Luxembourg Hoves company was entitled to entrust certain decisions concerning the organisation of transport operations to a company in Germany, without thereby ceasing to be a company providing cabotage services by road.

Moreover, if the German authorities had doubts as to the lawfulness of the cabotage authorisations, it was their responsibility to refer the matter to the Luxembourg authorities for the situation to be re-examined.

In addition, as to whether the concept of the regular base of the vehicles allows the host Member State to tax once again those vehicles previously taxed in the Member State of registration, the Court has held that the legislation assumes the existence of a single Member State of registration of the vehicles.

The Court finds that the objective of the regulation, namely to encourage the development of cabotage services by road, could not be achieved if the host Member State were able to claim the tax in question when such a tax has already been paid in the Member State of establishment and registration.

Unofficial document for media use only; not binding on the Court of Justice. Available in English, French and German. For the full text of the judgment, please consult our Internet page www.curia.eu.int  at approximately 3pm today. For further information please contact Reinier Van Winden: Tel: (00 352) 4303 3355; Fax: (00 352) 4303 2731