EU spells end to taxes for third parties
The European Court of Justice yesterday struck down provisions in a Greek law on taxes and levies in favor of third parties, putting into question the widespread practice of such levies raised in favor of several professional funds. The court decided that such levies are illegal, because they are arbitrary. Article 10 of Directive 69/335 states that «apart from capital duty, Member States shall not charge, with regard to companies, firms, associations or legal persons operating for profit, any taxes whatsoever.» The case, brought before the court by the European Commission on November 26, 1998, rested on a Greek law passed in 1960 which provided that the Lawyers Fund would be financed by, among other sources, the «payment of an amount of 1 per cent on the value of any agreement drawn up by notarial act,» the «payment of an amount of five per thousand (0.5 percent) on the capital of each commercial company formed,» and a «duty on the concentration of capital» and imposed on commercial companies, professional organizations, all legal entities operating for profit and branches of foreign companies. In addition, a royal decree dating from 1956 said that partnerships and private limited liability companies would pay a duty of 1 percent of their capital to the Lawyers Welfare Fund on the publication of their status by the courts and a 0.5 percent duty upon publication of the acts extending their period of existence. The European Court declared that «by imposing, in addition to capital duty, other special charges on the capital of public and private limited liability companies on their formation, on the publication and alteration of their statutes and on the increase in their capital, the Hellenic Republic has failed to fulfill its obligations» under Directive 69/335 concerning indirect taxes on the raising of capital. Other levies in Greece in favor of professional funds include one on newspaper ads, which benefits the journalists’ fund, and levies in favor of the civil engineers’ fund. They are an important part of these funds’ income. Declaring them illegal would be a big loss for professional associations.
