SPAR Österreichische Warenhandels AG is a joint-stock company undertaking commercial operations. It is involved in proceedings against the Finanzlandesdirektion für Salzburg concerning the imposition on that company of the Kammerumlage provided for in the Austrian law on chambers of commerce, referred to as the Kammerumlage 1 (hereinafter the 'KU 1'). The KU 1 is one of the levies aimed at financing chambers of commerce and the Federal Chamber of Commerce. It is payable by the members of chambers of commerce, that is to say by all the natural or legal persons and all limited partnerships and other profit-making associations which independently carry on craft, industrial or commercial businesses in the sectors of finance, credit, insurance, transport or tourism and whose turnover is in excess of AS 2 million.

Under the Austrian law the basis of assessment of the KU 1 is in principle constituted by the amounts 'payable by way of value added tax (hereinafter 'VAT') on supplies of goods or other supplies made by other traders to the Chamber member for his business'. At the material time the rate of the levy was set by the Federal Chamber of Commerce at 3.9%. The levy is collected by the tax authorities under the procedures laid down for collection of VAT.

SPAR brought proceedings before the Verwaltungsgerichtshof seeking the setting aside of the decision imposing that levy on it. The national court is querying the compatibility of the KU 1 with Sixth Directive 77/388/EEC which introduces a uniform basis of assessment for national turnover taxes. On the one hand, Article 17 of the directive essentially provides, at paragraph 2 thereof, that the taxable person is authorised to deduct from the tax for which he is liable the VAT payable or paid on goods and services

used for the purposes of his taxable transactions. Although the KU 1 is assessed on the VAT payable or paid on supplies of goods and services to the undertaking, it is not deductible from the VAT payable by the latter and, under those conditions, may be viewed as an increase in VAT input tax, which is not deductible from the VAT payable by the undertaking. On the other hand, under Article 33 of the directive, a Member State is not prevented from maintaining or introducing taxes, duties or charges which cannot be characterized as turnover taxes. Does the KU 1 come into that category? Those are the questions referred by the Austrian court to the Court of Justice.

After recalling the objectives pursued in establishing a common system of VAT, the Court once again set out the criteria for assessing whether a tax, duty or charge is in the nature of a turnover tax for the purposes of Article 33 of the Sixth Directive. In particular, it is necessary to determine whether such tax, duty or charge has the effect of compromising the functioning of the common system of VAT by imposing a charge on the movement of goods and services and affecting commercial transactions in a way comparable to VAT.

The Court found that a levy such as the KU 1 does not impose a charge on the movement of goods and services and does not affect commercial transactions in a way comparable to VAT.

The national levy at issue in the main proceedings is not calculated on supplies of goods services and imports by the taxable person but, on the contrary, on those made to him by his suppliers. The basis of imposition of a levy such as the KU 1 is not as a result constituted by the amount obtained or to be obtained from the transactions carried out by the taxable person. Nor is the levy proportional to the price of goods and services supplied by the taxable person. A levy such as the KU 1 is not charged at all stages of production and distribution. In particular, it does not affect the final stage of the sale to the consumer. Consequently, the KU 1 does not exhibit the essential characteristics of VAT and therefore is not precluded by the Sixth Directive.

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