A refresher on the rules applicable to charges having the equivalent effect of a custom duty (C-254/13)

In its Judgment in Orgacom, C-254/13, EU:C:2014:2251, the Court of Justice of the EU has revisited the 'classical issue' of financial barriers to free movement of goods and their treatment under either article 30 or 110 TFEU, depending on whether they are classed as (a) charges having an equivalent effect to custom duties (art 30 TFEU) [see LW Gormley, EU Law of Free Movement of Goods and Customs Union (Oxford, OUP, 2009), chapter 11] or (b) measures of internal taxation (art 110 TFEU) [for discussion, see J Snell, ‘Non-Discriminatory Tax Obstacles in Community Law’ (2007) The International and Comparative Law Quarterly 56(2): 339-370 and S Douma, ‘Non-discriminatory tax obstacles’ (2012) EC Tax Review 21(2): 67-83]. 

In Orgacom, the dispute concerned a Belgian tax on the production and importation of livestock manure into the Flanders region. Given the structure of the applicable levies, the Belgian Constitutional Court found that they affected fertiliser imported into the Flanders region more heavily than fertiliser produced in that region. Orgacom challenged those levies on the basis of articles 30 and 110 on the basis that the restriction to inter-regional movement of the goods are contrary to EU law.

First of all, the CJEU reiterated the impossibility to proceed to the joint application of articles 30 and 110 TFEU and clearly classed the measure as a charge having an equivalent effect to customs duties (paras 18-26). In doing so, the CJEU reiterated its classic definition of charge of equivalent effect, whereby
any pecuniary charge, however small and whatever its designation and mode of application, which is imposed unilaterally on goods by reason of the fact that they cross a frontier, and which is not a customs duty in the strict sense, constitutes a charge having equivalent effect within the meaning of Articles 28 TFEU and 30 TFEU (see, to that effect, judgment in Stadtgemeinde Frohnleiten and Gemeindebetriebe Frohnleiten, EU:C:2007:657, paragraph 27) (C-254/13 para 23).

It also indicated that
customs duties and charges having equivalent effect thereto are prohibited regardless of the purpose for which they were introduced and the destination of the revenue from them (see, to that effect, judgments in Brachfeld and Chougol Diamond, 2/69 and 3/69, EU:C:1969:30, paragraph 19, and Carbonati Apuani, EU:C:2004:506, paragraph 31) (C-254/13 para 35).

Hence, the CJEU has stuck very clearly to its traditional approach to the assessment of charges having an equivalent effect to customs duties and has shown no willingness to explore any possibility of declaring them compatible with the internal market, even if the reasons argued by the Belgian government concerned the protection of the environment (para 34)--which is an area where the CJEU is showing increased deference towards Member States regulatory intervention (see comment here).

Secondly, it is interesting to stress that the case affects trade between regions of the same Member State rather than 'proper' cross-border trade., which creates the difficulty of assessing the link with the crossing of a frontier of the controversial measure. However, as the CJEU had already clarified in Legros, C-163/90, EU:C:1992:326 (paras 16 to 18), the provisions on free movement prohibiting charges of an equivalent effect (art 30 TFEU) also apply when the restriction affects movement of goods between regions of the same Member State. This has now been reiterated in clear terms
it is settled case-law that a charge imposed when goods cross a territorial boundary within a Member State constitutes a charge having effect equivalent to a customs duty (see judgment in Carbonati Apuani, C-72/03, EU:C:2004:506, paragraph 25 and the case-law cited) (C-254/13 para 24). 
It is also interesting to highlight the arguments that the CJEU rejected when the classification of the measures as charges of equivalent effect was challenged
27 The classification of the levy provided for by that provision of the Fertiliser Decree as a charge having equivalent effect to a customs duty cannot be called into question by the argument advanced by the Kingdom of Belgium that that levy, because there is a similar levy imposed on fertilisers produced in the Flanders Region, forms an integral part of a general system of internal taxation applied systematically, in accordance with the same criteria, to national products and imported and exported products and should, in consequence, be assessed in the light of Article 110 TFEU.
28 In that regard, it must be noted, firstly, that the essential feature of a charge having equivalent effect to a customs duty which distinguishes it from an internal tax is that the former is borne solely by a product which crosses a frontier, as such, whilst the latter is borne by imported, exported and domestic products (see, to that effect, judgment in Michaïlidis, C‑441/98 and C‑442/98, EU:C:2000:479, paragraph 22).
29 Secondly, it must be borne in mind that, in order to relate to a general system of internal taxation, the tax charge in question must impose the same duty on both domestic products and identical exported products at the same marketing stage and the chargeable event triggering the duty must also be identical in the case of both products (see, to that effect, judgment in Michaïlidis, EU:C:2000:479, paragraph 23) (C-254/13 paras 27-29, emphasis added).
Overall, then, Orgacom is a short and clear reminder of the rules applicable to charges having an equivalent effect to customs duties--and an indication that even in the area of the protection of the environment, the CJEU is not willing to create additional regulatory space for the Member States than that already existing, or at least not without limits.