Judgment T-579/11 12.02.2015 |
Parties |
Jurisdiction |
Formation |
Judge Rapporteur |
Advocate General |
Subject-matter |
Application for annulment |
Tarif Akhras
v. Council of the European Union |
General Court |
7th Ch. |
I. Ulloa Rubio |
/ |
Common foreign and security policy |
Key-words |
Common foreign and security policy — Freezing of funds — Rights of the defence — Obligation to state reasons — Manifest error of assessment — Right to life — Right to property — Right to respect for private life — Proportionality |
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Significant points |
With regard to the first reason, it must be stated that it merely describes the applicant’s status. The fact that he is the founder of an industrial group does not necessarily or automatically mean that the applicant satisfies the general criteria set out in paragraph 67 above. Therefore, the statement that the applicant is the founder of a Syrian industrial group cannot constitute a fact capable of being stated as an adequate and specific reason for the contested acts preceding 23 March 2012. With regard to the second reason, it must be held that, in the present case, the Council merely reproduced one of the criteria that would justify including the applicant’s name in the lists at issue, that is to say, the criterion relating to support for the incumbent regime, as introduced by Decision 2011/522 (see paragraph 5 above). The mere reproduction of the criterion, without any other information to support it, cannot serve as a sufficient statement of reasons on the part of the Council.
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Noteworthy |
Once again, the General Court has annulled in part a decision of freezing of funds for failure to state reasons. |
Monthly Archives: February 2015
VAT fraud – principles of effectiveness and equivalence
Judgment C-662/13 12.02.2015 |
Parties |
Jurisdiction |
Formation |
Judge Rapporteur |
Advocate General |
Subject-matter |
Reference for a preliminary ruling |
Surgicare — Unidades de Saúde SA v. Fazenda Pública
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CJEU |
9th Ch. |
K. Jürimäe |
P. Mengozzi |
VAT |
Key-words |
VAT — Directive 2006/112/EC — Deduction of input tax — Transactions constituting an abusive practice — National tax law — Special national procedure where the existence of abusive practices is suspected in the field of taxation — Principles of effectiveness and equivalence. |
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Significant points |
In the absence of any EU rules in the area, the means of preventing VAT fraud falls within the internal legal order of the Member States under the principle of procedural autonomy of the latter. In that regard, it is apparent from the Court’s settled case-law that it is for the domestic legal system of each Member State, in particular, to designate the authorities responsible for combatting VAT fraud and to lay down detailed procedural rules for safeguarding rights which individuals derive from EU law, provided that such rules are not less favourable than those governing similar domestic actions (principle of equivalence) and that they do not render impossible in practice or excessively difficult the exercise of rights conferred by the EU legal order (principle of effectiveness).
Consequently, Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that it does not preclude the mandatory preliminary application of a national administrative procedure, such as that laid down by Article 63 of the Code of Taxation Procedure and Proceedings (Código de Procedimento e de Processo Tributário), in the event that the revenue authorities suspect the existence of an abusive practice. |
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Noteworthy |
Excise duties – Concept of “formalities connected with the crossing of frontiers”
Judgment C-349/13 12.02.2015 |
Parties |
Jurisdiction |
Formation |
Judge Rapporteur |
Advocate General |
Subject-matter |
Reference for a preliminary ruling |
Minister Finansów v. Oil Trading Poland sp. Z.o.o |
CJEU |
10th Ch. |
M.C. Vajda |
N.Jääskinen |
Tax |
Key-words |
Excise duties — Directives 92/12/EEC and 2008/118/EC — Scope — Mineral oils and energy products — Lubricating oils used for purposes other than as motor fuels or as heating fuels — Not included — Excise duty levied on the consumption of energy products, imposed by a Member State pursuant to its own harmonised excise duty arrangements — Concept of ‘formalities connected with the crossing of frontiers’ — Article 110 TFEU — Shorter payment deadline in certain cases for intra-Community purchases than for products acquired on the domestic market |
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Significant points |
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Noteworthy |
Lack of jurisdiction of the court hearing the action by a consumer for a declaration of invalidity of a standard contract to hear the application for a declaration of unfairness of terms in the same contract
Judgment C-567/13 12.02.2015 |
Parties |
Jurisdiction |
Formation |
Judge Rapporteur |
Advocate General |
Subject-matter |
Reference for a preliminary ruling |
Nóra Baczó and János István Vizsnyiczaiv.Raiffeisen Bank Zrt |
CJEU |
3rd Ch. |
C. Toader |
J. Kokott |
Consumer Protection —Directive 93/12/EEC |
Keywords |
Reference for a preliminary ruling — Consumer protection — Directive 93/13/EEC — Article 7 — Mortgage loan agreement — Arbitration clause — Unfairness — Action by consumer — National procedural rule — Lack of jurisdiction of the court hearing the action by a consumer for a declaration of invalidity of a standard contract to hear the application for a declaration of unfairness of terms in the same contract — Principles of equivalence and effectiveness |
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Significant points |
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Noteworthy |
This judgment deals with the question of whether the fact that consumers in Hungary had to bring an action for the unfairness of a contract under Directive 93/13/EEC in front of a higher court and at greater cost than would have been the case for an action dealing with domestic law constituted breach of the principle of equivalence between EU and national law or of the principle of effectiveness. In this regard, the Court of Justice reiterated the case law according to which each Member State is able to designate the courts having jurisdiction for governing actions which safeguard the rights of individuals conferred under EU law. It then clarified that the fact that actions in front of the courts designated may cost more than in other courts is not necessarily unfavourable to potential applicants if those courts possess advantages for applicants. Therefore the procedure for actions relating to EU law does not need to be exactly the same as those dealing with national law in the same area of law. As regards effectiveness, the Court outlined certain factors which the referring court should bear in mind when deciding whether the procedure in Hungary adequately protected consumer rights. |
Fruit and vegetable sector – Aid declared unlawful and incompatible with the internal market
Judgment C-37/14 12.02.2015 |
Parties |
Jurisdiction |
Formation |
Judge Rapporteur |
Advocate General |
Subject-matter |
Appeal |
European Commission v. France |
CJEU |
8th Ch. |
M. A. Ó Caoimh |
M. Wathelet |
State aid – Recovery of unlawful aid |
Keywords |
Failure to act by a Member State – State aid – ‘Contingency plans’ – Fruit and vegetable sector – Aid declared unlawful and incompatible with the internal market – Recovery – Non implementation |
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Significant points |
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Noteworthy |
This judgment, concerning the recovery of unlawful aid granted to fruit and vegetable producers in France, underlines the efforts that a Member State must undertake in order to recover aid which the European Commission has declared unlawful. In this case, France had not done enough to recover the aid nor justify the lack of recovery to the Commission. The Court of Justice applied established case-law in stating that France could not use the excuse that many of the beneficiaries had been liquidated or merged with other entities. It still had the obligation to recover the aid from the successor companies or liquidators, as the case may be, of the beneficiaries concerned. |
Postal services – Quantity discounts – Application to intermediairies who consolidate postal items
Judgment C-340/13 11.02.2015 |
Parties |
Jurisdiction |
Formation |
Judge Rapporteur |
Advocate General |
Subject-matter |
Reference for a preliminary ruling |
bpost SA v Institut belge des services postaux et des télécommunications (IBPT) |
CJEU |
2nd Ch. |
J.L. da Cruz Vilaça |
/ |
Postal services non-discrimination |
Keywords |
Postal services — Directive 97/67/EC — Article 12 — Universal service provider — Quantity discounts — Application to intermediaries who consolidate postal items — Requirement of non‑discrimination |
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Significant points |
1. The dispute at hand concerns an action for annulment brought by bpost against the decision of the IBPT imposing a fine on bpost for infringement of the principle of non-discrimination because of the application of the quantity discount per sender. In that decision, IBPT complained that bpost had denied the highest reductions on the quantities of mail supplied to the consolidators, despite the fact that they gave volumes of consolidated mail comparable to the volumes supplied by the largest senders. In consequence, that system discriminated against the consolidators.
The objective of the quantity discounts is to stimulate demand in the area of postal services, which are currently faced with a growing choice of competing methods of sending, particularly that of electronic mail. In this respect, when the consolidators hand on to bpost the mail which they have already collected from different senders, that does not have the effect of increasing the overall volume of mail in bpost’s favour. It follows therefrom that, except to the limited extent that those consolidators are themselves senders, their activity does not, of itself, contribute to the increase in the volume of mailings handed on to bpost. Therefore, bulk mailers and consolidators are not in comparable situations as regards the objective pursued by the system of quantity discounts per sender since only bulk mailers are in a position to be encouraged, by the effect of that system, to increase the volume of their mail handed on to bpost and, accordingly, the turnover of that operator. Consequently, the different treatment as between those two categories of clients which follows from the application of the system of quantity discounts per sender does not constitute discrimination prohibited under Article 12 of Directive 97/67. In addition, the judgment in Deutsche Post and Others, when the Court held that Article 12 of Directive 97/67 precludes refusal to apply to consolidators of postal items from various senders the special tariffs which the national universal postal service provider grants to the senders themselves is not applicable to the present. Indeed, this case law did not involve quantity discounts, but operational discounts (that is to say discounts based on the costs actually avoided in relation with a given client) in respect with which consolidators and bulk mailers may be in the same situation. |
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Noteworthy |
This is a classic and orthodox application of the principle of non-discrimination, according to which, as a general rule, different situations must not be treated in the same way. For once, the application of this principle has actually benefitted a universal service provider against an overly zealous national regulator. Above these peculiarities of the case at hand, this principle means that a universal service provider in the postal sector may apply different conditions to users which are in objectively different situations. |
Civil service – Officials – Psychological harrassment
Judgment T-7/14 06.02.2014 |
Parties |
Jurisdiction |
Formation |
Judge Rapporteur |
Advocate General |
Subject-matter |
Appeals |
BQ V Court of Auditors of the European Union |
General Court |
Appeal Ch. |
M. van der Woude |
/ |
Responsibility of the institution towards its staff |
Keywords |
Civil service – Officials – Staff report – Psychological harassment – Partial dismissal of the claim for damages at first instance – Distortion of the clear sense of the facts – Obligation to state reasons on the part of the Civil Service Tribunal – Proportionality – Apportioning costs |
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Significant points |
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Noteworthy |
Irish tax on air passengers – Decision declaring the aid incompatible with the internal market and ordering its recovery
Judgments in T-473/12 05.02.2015 and T-500/12 05.02.2015 |
Parties |
Jurisdiction |
Formation |
Judge Rapporteur |
Advocate General |
Subject-matter |
Actions for annulmemt |
Aer Lingus Ltd v. European Commission And Ryanair Ltd v. European Commission |
CJEU |
9th Ch. |
G. Berardis |
/ |
State aid |
Keywords |
Irish tax on air passengers — Lower rate for destinations no more than 300 km from Dublin — Decision declaring the aid incompatible with the internal market and ordering its recovery — Advantage — Selective nature — Identification of the beneficiaries of the aid — Article 14 of Regulation (EC) No 659/1999 — Obligation to state reasons |
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Significant points |
By Section 55 of the Finance Act (No. 2) 2008 (‘the Finance Act’), Ireland introduced an excise duty, known as the air travel tax (‘ATT’). When it was introduced, the ATT was levied on the basis of the distance between the airport of departure and the airport of arrival, at the rate of EUR 2 in the case of a flight from an airport to a destination no more than 300 km from Dublin airport (“national flight”) and EUR 10 in all other cases (“international flight”). The Commission adopted a decision according to which the form of a lower air travel tax rate was incompatible with the internal market pursuant to article 107(3) TFEU. Subsequently, Ryanair and Aer Lingus Ltd introduced actions for annulments.In order to establish the selective nature of the measure, it was necessary, first of all, to determine the reference system. The Commission defined the reference system as the taxation of air passengers departing on an aircraft from an airport in Ireland. The higher rate of EUR 10 applies to 85 to 90 % of all flights which were subject to the tax. Accordingly, the higher rate of EUR 10 had to be considered the normal rate of the reference system, while the reduced rate of EUR 2, which was applicable to a well delimited category of flights, was an exception from that reference system, and as a result constituted a State aid.However, the advantage actually obtained by the airlines does not necessarily consist in the difference between the two rates (i.e. 8 euros), but rather in the possibility of offering
It is only if the airlines had systematically increased the price of its tickets excluding tax by EUR 8 per ticket for flights subject to the ATT at the rate of EUR 2 that it would have been possible to consider that the economic advantage resulting from the application of the differentiated rates amounted to EUR 8 per passenger for the airlines, since that advantage could not have been passed on, even partially, to the passengers. The recovery of an amount of EUR 8 per passenger from the airlines is therefore not necessary in order to eliminate the distortion of competition caused by the competitive advantage which such aid affords. On the contrary, the recovery of such an amount would be liable to create additional distortions of competition since it could lead to the recovery of more from the airlines than the advantage they actually enjoyed. The Commission should, therefore, have taken into account the particular features of the ATT as an excise duty intended to be passed on to passengers by the airlines as regards all flights subject to the rate of EUR 2 during the period concerned. Inasmuch as the economic advantage resulting from the application of that reduced rate could have been, even only partially, passed on to the passengers, the Commission was not entitled to consider that the advantage enjoyed by the airlines amounted automatically, in all cases, to EUR 8 per passenger. Specific developments in T-500/12 The differences between operators and the different economic impact of the measure on them is a more relevant argument in order to determine whether the Commission was entitled to quantify the State aid at EUR 8 per passenger for all of the airlines, rather than considering that certain airlines whose flights were subject to the lower rate of EUR 2 obtained a proportionally greater advantage than others under the ATT, and that those which benefited less from the ATT therefore did not obtain any advantage. It must be considered that, even though the intervener does not support one specific applicant’s claims such as the one here above, it supports the form of order sought by the applicant, seeking the annulment of the contested decision, and that its arguments relating to the quantification of the advantage having regards to the relative extent of the advantage conferred on the various beneficiaries, are not entirely unconnected with the issues underlying the dispute as established by the main parties.
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Noteworthy |
We understand that the General Court states that the undertakings which are forced to apply the lower rate, may adopt two possible behaviours that would result in any case in advantages that are inversely proportional. Indeed, if the air carrier decide to keep the economic advantage resulting in the application of the lower rate, it will benefit from an operating aid, which will amount to EUR 8 by flight by passenger. If, by contrast, the air carriers decide to pass on the advantage to the passenger, it will be able to offer more attractive price to them and therefore increase their turnover. In such case, the amount of the aid granted will depend on the resulting turnover increase. This last statement is quiet surprising and seems to be in contradiction with the settled opinion of the Commission in another area of State aid. Indeed, in the new guidelines on State aid to promote risk finance investments (see § 43), increasing turnover is considered as a “secondary economic effect of the aid measure” and cannot, therefore, be considered as an aid. In our opinion, only the tax reduction of EUR 8 by flight by passenger is attributable to the Irish State and constitutes a State aid. We also have reasonable doubts concerning the real impact of this tax differentiation on the turnover of an undertaking when the two rates apply on two different markets in the meaning of EU competition law. Indeed, we consider that, by essence, international flights and national flights are not substitutable on the demand-side. The lower tax rate applied to national flights would not, therefore, reduce the number of passengers who need to travel outside the 300 Km radius around Dublin and be, by itself, the origin of a hypothetic turnover increase. In addition, we can deplore the difficulties of the Commission or, more probably, the Irish authorities to determine first, for each ticket sold at the lower rate by the air carriers whether the economic advantage arising from the application of the reduced tax have been or not passed on to the passenger and in which proportion then, the impact of this operation on the general turnover of the concerned air carriers. In this respect, the judgment of the General Court is apt to undermine the effectivity of State aid rules and the recovery of unlawful State aids. For all these reasons, we take the view that this judgment could be withheld by the CJUE on the grounds of infringement of the notion of State aid and infringement of the duty of loyal cooperation of the EU Institution towards national authorities in the view of the proper application of State aid rules. |
Article 49 TFEU – Transfer of losses sustained by a non-resident subsidiary
Judgment C-172/13 03.02.2015 |
Parties |
Jurisdiction |
Formation |
Judge Rapporteur |
Advocate General |
Subject-matter |
Infingement proceedings – Failure to fulfil obligations |
European Commission v United kingdom of Great Britain and Northern Ireland |
CJEU |
Grand Chamber |
M. K. Lenaerts |
J. Kokott |
Freedom of establishment |
Keywords |
Article 49 TFEU — Article 31 of the EEA Agreement — Corporation tax — Groups of companies — Group relief — Transfer of losses sustained by a non-resident subsidiary — Conditions — Date to be used for determining whether the losses of the non-resident subsidiary are definitive. |
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Significant points |
The Commission submits that Section 119(4) of the Corporation Tax Act 2010 (CTA 2010), as amended after the Mark & Spencer CJEU’s judgment, does not meet the requirements entailed for the Member State concerned by paragraphs 55 and 56 of this judgment in so far as, under that provision, the determination that it is impossible for losses sustained by a subsidiary established in another Member State, or in a non-member State party to the EEA Agreement, to be taken into account in the future must be made ‘as at the time immediately after the end’ of the accounting period in which the losses were sustained. According to the Commission, that provision has the effect of making it virtually impossible for a resident parent company to obtain cross-border group relief and as a result constitutes a disproportionate obstacle to the freedom of establishment.According to the Commission, Section 119(4) allows the resident parent company to take such losses into account in only two situations: (i) where the legislation of the Member State of residence of the subsidiary concerned makes no provision for losses to be carried forward and (ii) where the subsidiary is put into liquidation before the end of the accounting period in which the loss was sustained.The Court stated that the first of those situations referred to by the Commission is irrelevant for the purposes of assessing the proportionality of Section 119(4) of the CTA 2010. It is settled law that losses sustained by a non-resident subsidiary cannot be characterised as definitive, as described in paragraph 55 of the judgment in Marks & Spencer, by dint of the fact that the Member State in which the subsidiary is resident precludes all possibility of losses being carried forward. In such a situation, the Member State in which the parent company is resident may not allow cross-border group relief without thereby infringing Article 49 TFEU.As regards the second situation referred to, the Court stated that the Commission has not established the truth of its assertion that Section 119(4) of the CTA 2010 requires the non-resident subsidiary to be put into liquidation before the end of the accounting period in which the losses are sustained in order for its resident parent company to be able to obtain cross-border group relief. In addition, it is clear from the wording of that provision that it does not, on any view, impose any requirement for the subsidiary concerned to be wound up before the end of the accounting period in which the losses are sustained.The Commission submits that losses sustained before 1 April 2006 are excluded from cross-border group relief, contrary to Article 49 TFEU and Article 31 of the EEA Agreement, inasmuch as the provisions laid down in the CTA 2010 concerning that relief apply only to losses sustained after 1 April 2006, the date on which the Finance Act 2006 entered into force.
Again, the Court stated that the Commission has not established the existence of situations in which cross-border group relief for losses sustained before 1 April 2006 was not granted. Consequently, the Court dismissed the action in its entirety. |
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Noteworthy |
According to the judgment in Marks & Spencer, cross-border group relief is not required in principle by European Union law. Nevertheless, an exception applies in the case where losses incurred by a foreign subsidiary within the framework of foreign taxation cannot be taken into account either for past or for future tax years.
The Advocate General seems to plead for the abandonment of the Marks & Spencer exception due to its contradictions in relation to the Court’s other case-law on tax matters, which provides for a clear demarcation of the fiscal powers of the Member States. The Marks & Spencer exception does not either satisfy the requirement of legal certainty, but makes investment conditions unforeseeable and liable to give rise to disputes |