2 March 2023 (*1)

(Reference for a preliminary ruling – Structural Funds – Regulation (EC) No 1685/2000 – Eligibility of expenditure – Requirement of proof of payment – Receipted invoices – Accounting documents of equivalent probative value – Construction undertaken directly by the final beneficiary)

In Case C‑31/21,

REQUEST for a preliminary ruling under Article 267 TFEU from the Corte suprema di cassazione (Supreme Court of Cassation, Italy), made by decision of 8 January 2021, received at the Court on 19 January 2021, in the proceedings

Regione Calabria,

THE COURT (First Chamber),

composed of A. Arabadjiev, President of the Chamber, P.G. Xuereb, T. von Danwitz (Rapporteur), A. Kumin and I. Ziemele, Judges,

Advocate General: M. Campos Sánchez-Bordona,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

–Eurocostruzioni Srl, by M. Sanino and S. Sticchi Damiani, avvocati,

–the Regione Calabria, by M. Manna and G. Naimo, avvocati,

–the Italian Government, by G. Palmieri, acting as Agent, and by A. Grumetto, avvocato dello Stato,

–the European Commission, by P. Carlin and P. Rossi, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 13 October 2022,

gives the following

Legal context

European Union law

Regulation (EC) No 1260/1999

‘(35) Whereas such decentralised implementation of the operations of the Structural Funds by the Member States should provide sufficient guarantees as to the details and quality of implementation, the results of operations and their evaluation and sound financial management and its supervision;

(41) Whereas, in accordance with the principle of subsidiarity, the rules on eligible expenditure should be the relevant national rules where there are no Community rules, although they may be laid down by the Commission where they are clearly needed for the uniform and equitable implementation of the Structural Funds across the Community; ...

(43) Whereas sound financial management should be assured by providing that expenditure is to be duly justified and certified, and by linking payments to compliance with essential responsibilities as to the monitoring of programming, financial controls and the application of Community law’.

Regulation No 1685/2000

Italian law

Law No 59 of 15 March 1997

Regional Law No 7 of 2 May 2001

Decision No 398 of 14 May 2002

The decree granting aid

The dispute in the main proceedings and the questions referred for a preliminary ruling

Eurocostruzioni therefore lodged an application with the Tribunale di Catanzaro (District Court, Catanzaro, Italy) for an order for payment, with a view to compelling the Region of Calabria to pay it the final balance of the aid. By judgment of 4 April 2012, the court hearing the matter granted the application and ordered that region to pay the sum requested by that undertaking.

The Region of Calabria appealed against that judgment before the Corte d’appello di Catanzaro (Court of Appeal, Catanzaro, Italy). By judgment of 27 October 2014, the latter court held that, since the contract notice referred to Regulation No 1685/2000, the payment of the final balance of the aid was contingent on the submission of receipted invoices or accounting documents of equivalent probative value, even if the works had been carried out by Eurocostruzioni, using its own resources. The undertaking was required to produce the appropriate accounting documentation in order to establish the disbursements made, inter alia, for the purchase of equipment, the leasing of vehicles and the remuneration of workers or subcontractors. In that regard, the documents provided by the undertaking, such as the measurement booklet and the accounting ledger, were necessary but not sufficient. Consequently, that court upheld the appeal brought by the Region of Calabria.

On 27 October 2015, Eurocostruzioni brought an appeal on a point of law before the Corte suprema di cassazione (Supreme Court of Cassation, Italy), the referring court. In support of its appeal, the undertaking maintained, inter alia, that point 2.1 of Rule No 1 of the annex to Regulation No 1685/2000, which begins with the words ‘as a general rule’, merely sets out a general principle, which may be subject to exceptions. In that regard, Eurocostruzioni also argued that it duly carried out the planned works and that it produced all the accounting documents required in the decree granting aid, with the result that the Region of Calabria’s refusal to grant the aid on the basis of Regulation No 1685/2000 is contrary to the principles of good faith, fair dealing and legitimate expectations.

The referring court is uncertain as to the interpretation of point 2.1 of Rule No 1 of the annex to Regulation No 1685/2000 and notes, moreover, that that annex does not appear to provide for the scenario of direct construction of a building by a final beneficiary with its own materials, tools and labour.

In those circumstances, the Corte suprema di cassazione (Supreme Court of Cassation) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

(1)‘(1) Does [Regulation No 1685/2000], and in particular the provisions of point 2.1 of Rule No 1 of the annex thereto (“proof of expenditure”), require that proof of payment by final beneficiaries must necessarily be furnished by means of receipted invoices, even if the funding was granted to the beneficiary to construct a building using its own materials, tools and labour, or may there be a derogation, other than the one specifically provided for where this is not possible, which requires the presentation of “accounting documents of equivalent probative value”?

(2)What is the correct interpretation of the phrase “accounting documents of equivalent probative value”?

(3)Specifically, do the … provisions of [Regulation No 1685/2000] preclude national and regional law and consequent implementing measures which, in the event that funding has been granted to the beneficiary in order to construct a building using its own materials, tools and labour, provide for a system of auditing the publicly funded expenditure consisting of:

(a)prior quantification of the works on the basis of a regional price list for public works and, for items not provided for therein, the current market prices estimated by the architect;

(b)a subsequent report, with presentation of the accounts for the works, consisting of the measurement booklet and the accounting ledger, duly signed on each page by the director of works and the beneficiary undertaking, and the audit and confirmation of the works carried out, on the basis of the unit prices referred to in point (a), by an inspection committee appointed by the competent regional administrative authority?’

Consideration of the questions referred

The first question

By its first question, the referring court asks, in essence, whether point 2.1 of Rule No 1 of the annex to Regulation No 1685/2000 must be interpreted as allowing the final beneficiary of funding for the construction of a building, which carried out that construction using its own resources, to justify the expenditure incurred by producing documents other than those expressly mentioned in that provision.

Admissibility

The Region of Calabria maintains that the first question is inadmissible, on the ground that the interpretation of Regulation No 1685/2000 sought has no bearing on the main proceedings and that the referring court failed to set out the reasons that led it to inquire about that interpretation.

According to the Court’s settled case-law, questions on the interpretation of EU law referred by a national court in the factual and legislative context which that court is responsible for defining, and the accuracy of which is not a matter for the Court to determine, enjoy a presumption of relevance. The Court may refuse to give a ruling on a question referred by a national court only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to enable it to give a useful answer to the questions submitted to it (judgment of 27 October 2022, Proximus (Public electronic directories), C‑129/21, EU:C:2022:833, paragraph 38 and the case-law cited).

In the present case, it is apparent from the order for reference that the dispute in the main proceedings concerns, specifically, Eurocostruzioni’s obligations, as final beneficiary, under Regulation No 1685/2000 and, in particular, the requirements resulting from point 2.1 of Rule No 1 of the annex thereto, the applicability of which is not disputed by the Region of Calabria. Furthermore, as the Advocate General observed in point 33 of his Opinion, the referring court explained why it required an interpretation of that provision.

In those circumstances, the Region of Calabria’s objections to the admissibility of the first question must be rejected.

Substance

As a preliminary point, it should be recalled that the Structural Funds were governed, at the date on which the aid at issue in the main proceedings was granted, namely 20 April 2004, by Regulation No 1260/1999. Article 30(3) of that regulation, read in conjunction with recital 41 thereof, empowered the Commission to establish common rules on the eligibility of expenditure, where necessary, in order to ensure the uniform and fair application of the Structural Funds within the European Union. It is on that basis that Regulation No 1685/2000 was adopted.

As regards proof of expenditure incurred by a final beneficiary, Regulation No 1260/1999 and Regulation No 1685/2000 lay down different requirements for payments on account and for interim payments or payments of the final balance.

Under the second sentence of the third subparagraph of Article 32(1) of Regulation No 1260/1999, ‘interim payments and payments of the balance shall relate to expenditure actually paid out, which must correspond to payments effected by the final beneficiaries, supported by receipted invoices or accounting documents of equivalent probative value’.

Point 2.1 of Rule No 1 of the annex to Regulation No 1685/2000 reflects that requirement by providing that, ‘as a general rule, payments by final beneficiaries, declared as interim payments and payments of the final balance, shall be supported by receipted invoices. Where this cannot be done, payments shall be supported by accounting documents of equivalent probative value’.

As is clear from settled case-law, in interpreting a provision of EU law, it is necessary to consider not only its wording, by considering the latter’s usual meaning in everyday language, but also the context in which the provision occurs and the objectives pursued by the rules of which it is part (judgment of 22 June 2022, Leistritz, C‑534/20, EU:C:2022:495, paragraph 18 and the case-law cited).

It is apparent from the wording of point 2.1 of Rule No 1 of the annex to Regulation No 1685/2000 that, in order to be eligible, within the meaning of Regulation No 1685/2000, expenditure incurred by final beneficiaries must, ‘as a general rule’, be supported by receipted invoices or, where that is not possible, by accounting documents of equivalent probative value. Contrary to what the applicant in the main proceedings claims, the words ‘as a general rule’ clearly refer to the obligation to produce receipted invoices, referred to in the first sentence of that point, whereas the production of accounting documents of equivalent probative value, referred to in the second sentence of that point, is the exception to that general rule.

Therefore, the wording of point 2.1 of Rule No 1 of the annex to Regulation No 1685/2000 does not allow for any exception other than that expressly provided for in that provision.

That interpretation is borne out by the context of that provision. Thus, it is clear from recital 43 of Regulation No 1260/1999 that expenditure must be ‘justified and certified’, which militates in favour of a restrictive reading of the second sentence of point 2.1 of Rule No 1 of the annex to Regulation No 1685/2000, since receipted invoices and accounting documents of equivalent probative value are the only documents capable of meeting that requirement. That is a fortiori the case given that the Commission intended to lay down uniform rules on eligible expenditure, subject to the possibility for the Member States to apply stricter national provisions, as evidenced by recital 5 of Regulation No 1685/2000.

Last, that interpretation is also consistent with the objective of sound financial management, referred to in recitals 35 and 43, and in Article 38(1)(c) and (d) of Regulation No 1260/1999. Under the latter provisions, the Member States are to ensure in particular that the funds made available to them are used in accordance with the principles of sound financial management and that the declarations of expenditure result from accounting systems based on verifiable supporting documents.

In that regard, it should be noted that, in accordance with the Court’s case-law, the system introduced by Article 32 of Regulation 1260/1999 and by Rule No 1 of the annex to Regulation No 1685/2000 is based on the principle of reimbursement of expenses (judgment of 24 November 2005, Italy v Commission, C‑138/03, C‑324/03 and C‑431/03, EU:C:2005:714, paragraph 45).

Such reimbursement can only relate to expenditure that is actually incurred and duly justified. Any other interpretation of the requirement to justify such expenditure could jeopardise the sound financial management of the Structural Funds. In particular, the interpretation proposed by the applicant in the main proceedings, according to which point 2.1 of Rule No 1 of the annex to Regulation No 1685/2000 merely reflects a general guideline, which may be subject to exceptions other than that expressly laid down by that provision, cannot be accepted.

In the present case, in the dispute in the main proceedings, Eurocostruzioni seeks ‘[payment] of the final balance’, within the meaning of the third subparagraph of Article 32(1) of Regulation No 1260/1999 and point 2.1 of Rule No 1 of the annex to Regulation No 1685/2000. In order to be eligible, within the meaning of those regulations, expenditure relied on in support of the application must therefore be capable of being supported by receipted invoices or, where that is not possible, by accounting documents of equivalent probative value.

As the Advocate General observed, in essence, in points 48 to 50 of his Opinion, the fact that the final beneficiary constructed the building using its own resources cannot have the effect of exempting it from the justification requirements laid down in Regulations No 1260/1999 and No 1685/2000.

In the light of all the foregoing considerations, the answer to the first question is that point 2.1 of Rule No 1 of the annex to Regulation No 1685/2000 must be interpreted as not allowing the final beneficiary of funding for the construction of a building, which carried out that construction using its own resources, to justify the expenditure incurred by producing documents other than those expressly mentioned in that provision.

The second and third questions

By the second and third questions, which it is appropriate to examine together, the referring court asks, in essence, whether point 2.1 of Rule No 1 of the annex to Regulation No 1685/2000 must be interpreted as meaning that, as regards the final beneficiary of funding for the construction of a building, which carried out that construction using its own resources, a measurement booklet and an accounting ledger may be classified as ‘accounting documents of equivalent probative value’, within the meaning of that provision.

Admissibility

By the second and third questions, which it is appropriate to examine together, the referring court asks, in essence, whether point 2.1 of Rule No 1 of the annex to Regulation No 1685/2000 must be interpreted as meaning that, as regards the final beneficiary of funding for the construction of a building, which carried out that construction using its own resources, a measurement booklet and an accounting ledger may be classified as ‘accounting documents of equivalent probative value’, within the meaning of that provision.

The Region of Calabria maintains that the third question is inadmissible, on the ground that the referring court failed to state what connection exists between Regulation No 1685/2000 and the national and regional legislation mentioned in the order for reference, which were, moreover, inadequately explained.

Under Article 94(b) and (c) of the Rules of Procedure of the Court of Justice, it is for the referring court to set out, inter alia, the tenor of any relevant national provisions, and the relationship between EU law and those provisions.

In the present case, it should be noted that the referring court complied with that obligation, by referring to the content of national and regional laws, the contract notice and the decree granting aid at issue in the main proceedings. As regards the relationship between the relevant national provisions and EU law, the Region of Calabria itself acknowledged, in its written observations, that the contract notice included a reference to Regulation No 1685/2000.

In those circumstances, the Region of Calabria’s objections to the admissibility of the third question must be rejected.

Substance

As a preliminary point, it should be noted that neither Regulation No 1260/1999 nor Regulation No 1685/2000 contains a definition of the concept of ‘accounting documents of equivalent probative value’.

As is clear from paragraph 35 above, in interpreting a provision of EU law, it is necessary to consider not only its wording, by considering the latter’s usual meaning in everyday language, but also the context in which the provision occurs and the objectives pursued by the rules of which it is part.

As regards the usual meaning in everyday language of the words ‘accounting documents of equivalent probative value’, it should be noted that they refer to all accounting documents which, like receipted invoices, are capable of proving that the expenditure incurred by the final beneficiary was actually made, and that are therefore recognised as having a probative value comparable to that of receipted invoices.

With regard to the context of that concept, it should be borne in mind that the right to produce accounting documents of equivalent probative value is an exception to the general rule laying down the obligation to produce receipted invoices in order to justify the expenditure incurred by a final beneficiary. According to settled case-law, an exception to a general rule must be the subject of a strict interpretation (see, to that effect, judgment of 5 April 2022, Commissioner of An Garda Síochána and Others, C‑140/20, EU:C:2022:258, paragraph 40 and the case-law cited).

In that regard, account must be taken, in particular, of the requirement referred to in the second sentence of the third subparagraph of Article 32(1) of Regulation No 1260/1999, according to which interim payments and payments of the final balance relate to ‘expenditure actually paid out, which must correspond to payments effected’ by the final beneficiaries. In order to meet that requirement, the scope of the concept of ‘accounting documents of equivalent probative value’ must be restricted to accounting documents that are capable of proving that the expenditure incurred was actually made and are of such a nature as to give a true and accurate picture of that expenditure, corresponding to the payments made by the final beneficiary concerned.

In that respect, the broad interpretation proposed by the Italian Government in its written observations, which would have the effect of allowing a valuation of works not directly linked to payments carried out, on the sole basis of an assessment from an independent professional and/or an approved official body, cannot be accepted without infringing Article 32 of Regulation No 1260/1999.

That strict interpretation is also consistent with the objective of sound financial management and the principle of reimbursement of expenses, referred to in paragraphs 39 and 40 above, in so far as it seeks to avoid any risk of double counting of expenditure or of fraud to the detriment of EU Structural Funds.

Consequently, as the Commission stated, in essence, in its written observations, it should be noted that accounting documents that are authorised by the national law of a Member State, in particular where the issuing of an invoice is not relevant according to national tax and accounting standards, and that are capable of proving that the expenditure incurred was actually made, giving a true and accurate picture of that expenditure, may constitute ‘accounting documents of equivalent probative value’.

In the present case, as regards a final beneficiary which has constructed a building using its own resources, the national legislation at issue in the main proceedings provides for a system of checks on expenditure that requires prior quantification of the works to be carried out on the basis of a standard price list, and subsequent verification based on the confirmation of those works and on the mere presentation of a measurement booklet and an accounting register. The contract notice expressly mentions Regulation No 1685/2000 as regards the definition of eligible expenditure. Although the decree granting aid does not refer to the obligation to produce receipted invoices and/or accounting documents of equivalent probative value in order to justify the expenditure incurred in connection with construction works, that fact has no bearing on the applicability of that regulation.

In those circumstances, as the Advocate General observed, in essence, in points 71 and 76 of his Opinion, it is for the referring court to verify whether it was not possible for the applicant in the main proceedings to justify the expenditure incurred with receipted invoices and, if that is established, to assess whether that measurement booklet and that accounting ledger may be classified, in the light of their content and the relevant national rules, as ‘accounting documents of equivalent probative value’.

As is apparent from paragraph 54 above, that would be the case if those documents proved, in the light of all the relevant circumstances of the case in the main proceedings, that the expenditure incurred, corresponding to the payments made by Eurocostruzioni, was actually made, giving a true and accurate picture of that expenditure.

By contrast, if, for example, that measurement booklet and that accounting ledger merely had to report on the progress of the works by referring only to a prior quantification, based on a standard price list, which is abstract in nature and without any objective correlation with the expenditure actually incurred, those documents cannot be classified as ‘accounting documents of equivalent probative value’, within the meaning of point 2.1 of Rule No 1 of the annex to Regulation No 1685/2000.

In the light of the above, the answer to the second and third questions is that point 2.1 of Rule No 1 of the annex to Regulation No 1685/2000 must be interpreted as meaning that, as regards the final beneficiary of funding for the construction of a building, which carried out that construction using its own resources, a measurement booklet and an accounting ledger may not be classified as ‘accounting documents of equivalent probative value’, within the meaning of that provision, except where, in the light of their specific content and the relevant national rules, those documents are capable of proving that the expenditure incurred by that final beneficiary was actually made, giving a true and accurate picture of that expenditure.

Costs

Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (First Chamber) hereby rules:

must be interpreted as not allowing the final beneficiary of funding for the construction of a building, which carried out that construction using its own resources, to justify the expenditure incurred by producing documents other than those expressly mentioned in that provision.

must be interpreted as meaning that, as regards the final beneficiary of funding for the construction of a building, which carried out that construction using its own resources, a measurement booklet and an accounting ledger may not be classified as ‘accounting documents of equivalent probative value’, within the meaning of that provision, except where, in the light of their specific content and the relevant national rules, those documents are capable of proving that the expenditure incurred by that final beneficiary was actually made, giving a true and accurate picture of that expenditure.

[Signatures]

*1 Language of the case: Italian.