«(Failure of a Member State to fulfil obligations – Sixth VAT Directive – Article 12(3)(a) and (b) – Supplies of gas and electricity delivered by the public networks – Standing charge for supply networks – Reduced rate)»

Opinion of Advocate General Alber delivered on 10 October 2002

Judgment of the Court (Fifth Chamber), 8 May 2003

Summary of the Judgment

Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Member States' option to apply a reduced rate to certain supplies of goods and services – Supply of natural gas and electricity – Selective application of the reduced rate to a particular aspect of the supply – Whether permissible (Council Directive 77/388, Art. 12(3)(b))

There is nothing in the text of Article 12(3)(b) of the Sixth Directive 77/388, as amended by Directive 96/95, which permits the charging of a reduced rate of value added tax on supplies of natural gas and electricity, which requires that provision to be interpreted as requiring that the reduced rate can only be charged if it is applied to all supplies of natural gas and electricity. A selective application of the reduced rate to concrete and specific aspects, such as the standing charge conferring entitlement to a minimum quantity of electricity for account holders, cannot be excluded, provided that no risk of distortion of competition exists.see paras 24, 26-28

JUDGMENT OF 6. 3. 2025 – CASE C-41/24 WALTHAM ABBEY RESIDENTS ASSOCIATION

after considering the observations submitted on behalf of:

– Waltham Abbey Residents Association, by J. Devlin, Senior Counsel, J. Kenny, Barrister-at-Law, and D. Healy, Solicitor,

– An Bord Pleanála, by. B. Foley, Senior Counsel, A. Carroll, Barrister-at-Law, and P. Reilly, Solicitor,

– Ireland, by M. Browne, Chief State Solicitor, S. Finnegan, K. Hoare and A. Joyce, acting as Agents, and by D. McGrath, Senior Counsel, F. Valentine, Senior Counsel, and E. O’Callaghan, Barrister-at-Law,

– the European Commission, by M. Noll-Ehlers and N. Ruiz García, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

This request for a preliminary ruling concerns the interpretation of Directive 2011/92/EU of the European Parliament and of the Council of 13 December 2011 on the assessment of the effects of certain public and private projects on the environment (OJ 2012 L 26, p. 1), as amended by Directive 2014/52/EU of the European Parliament and of the Council of 16 April 2014 (OJ 2014 L 124, p. 1) (‘Directive 2011/92’).

The request has been made in proceedings between, on the one hand, Waltham Abbey Residents Association and, on the other hand, An Bord Pleanála (Planning Board, Ireland; ‘the Board’), Ireland and the Attorney General (Ireland), concerning authorisation granted by the Board for a strategic residential housing development.

Legal context

European Union law

Directive 2011/92

Recitals 7 to 9 of Directive 2011/92 state:

Development consent for public and private projects which are likely to have significant effects on the environment should be granted only after an assessment of the likely significant environmental effects of those projects has been carried out. …

Projects belonging to certain types have significant effects on the environment and those projects should, as a rule, be subject to a systematic assessment.

Projects of other types may not have significant effects on the environment in every case and those projects should be assessed where the Member States consider that they are likely to have significant effects on the environment.’

Article 2(1) of that directive provides:

‘Member States shall adopt all measures necessary to ensure that, before development consent is given, projects likely to have significant effects on the environment by virtue, inter alia, of their nature, size or location are made subject to a requirement for development consent and an assessment with regard to their effects on the environment. Those projects are defined in Article 4.’

Under Article 3(1) of that directive:

‘The environmental impact assessment shall identify, describe and assess in an appropriate manner, in the light of each individual case, the direct and indirect significant effects of a project on the following factors:

…

biodiversity, with particular attention to species and habitats protected under [Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora (OJ 1992 L 206, p. 7), as amended by Council Directive 2013/17/EU of 13 May 2013 (OJ 2013 L 158, p. 193) (“Directive 92/43”)] and Directive 2009/147/EC [of the European Parliament and of the Council of 30 November 2009 on the conservation of wild birds (OJ 2010 L 20, p. 7)];

…’

Article 4 of Directive 2011/92 provides:

Subject to Article 2(4), projects listed in Annex I shall be made subject to an assessment in accordance with Articles 5 to 10.

Subject to Article 2(4), for projects listed in Annex II, Member States shall determine whether the project shall be made subject to an assessment in accordance with Articles 5 to 10. Member States shall make that determination through:

a case-by-case examination;

thresholds or criteria set by the Member State.

Member States may decide to apply both procedures referred to in points (a) and (b).

Where a case-by-case examination is carried out or thresholds or criteria are set for the purpose of paragraph 2, the relevant selection criteria set out in Annex III shall be taken into account. Member States may set thresholds or criteria to determine when projects need not undergo either the determination under paragraphs 4 and 5 or an environmental impact assessment, and/or thresholds or criteria to determine when projects shall in any case be made subject to an environmental impact assessment without undergoing a determination set out under paragraphs 4 and 5.

Where Member States decide to require a determination for projects listed in Annex II, the developer shall provide information on the characteristics of the project and its likely significant effects on the environment. The detailed list of information to be provided is specified in Annex IIA. The developer shall take into account, where relevant, the available results of other relevant assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The developer may also provide a description of any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

The competent authority shall make its determination, on the basis of the information provided by the developer in accordance with paragraph 4 taking into account, where relevant, the results of preliminary verifications or assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The determination shall made available to the public and:

where it is decided that an environmental impact assessment is required, state the main reasons for requiring such assessment with reference to the relevant criteria listed in Annex III; or

where it is decided that an environmental impact assessment is not required, state the main reasons for not requiring such assessment with reference to the relevant criteria listed in Annex III, and, where proposed by the developer, state any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

Member States shall ensure that the competent authority makes its determination as soon as possible and within a period of time not exceeding 90 days from the date on which the developer has submitted all the information required pursuant to paragraph 4. In exceptional cases, for instance relating to the nature, complexity, location or size of the project, the competent authority may extend that deadline to make its determination; in that event, the competent authority shall inform the developer in writing of the reasons justifying the extension and of the date when its determination is expected.’

Annex II.A of that directive contains the list of ‘information to be provided by the developer on the projects listed in Annex II’. That list reads as follows:

A description of the project, including in particular:

a description of the physical characteristics of the whole project and, where relevant, of demolition works;

a description of the location of the project, with particular regard to the environmental sensitivity of geographical areas likely to be affected.

A description of the aspects of the environment likely to be significantly affected by the project.

A description of any likely significant effects, to the extent of the information available on such effects, of the project on the environment resulting from:

the expected residues and emissions and the production of waste, where relevant;

the use of natural resources, in particular soil, land, water and biodiversity.

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JUDGMENT OF 6. 3. 2025 – CASE C-41/24 WALTHAM ABBEY RESIDENTS ASSOCIATION

The criteria of Annex III shall be taken into account, where relevant, when compiling the information in accordance with points 1 to 3.’

Annex III to that directive sets out the ‘criteria to determine whether the projects listed in Annex II should be subject to an environmental impact assessment’.

Directive 2014/52

Recitals 11 and 29 of Directive 2014/52 state:

The measures taken to avoid, prevent, reduce and, if possible, offset significant adverse effects on the environment, in particular on species and habitats protected under [Directive 92/43] and Directive 2009/147 …, should contribute to avoiding any deterioration in the quality of the environment and any net loss of biodiversity, in accordance with the [European] Union’s commitments in the context of the [United Nations Convention on Biological Diversity, signed in Rio de Janeiro on 5 June 1992,] and the objectives and actions of the Union Biodiversity Strategy up to 2020 laid down in the [Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions] of 3 May 2011 entitled ‘Our life insurance, our natural capital: an EU biodiversity strategy to 2020’ [(COM(2011) 244 final)]

When determining whether significant effects on the environment are likely to be caused by a project, the competent authorities should identify the most relevant criteria to be considered and should take into account information that could be available following other assessments required by Union legislation in order to apply the screening procedure effectively and transparently. In this regard, it is appropriate to specify the content of the screening determination, in particular where no environmental impact assessment is required. Moreover, taking into account unsolicited comments that might have been received from other sources, such as members of the public or public authorities, even though no formal consultation is required at the screening stage, constitutes good administrative practice.’

Directive 92/43

Article 6(3) of Directive 92/43 provides:

‘Any plan or project not directly connected with or necessary to the management of the site but likely to have a significant effect thereon, either individually or in combination with other plans or projects, shall be subject to appropriate assessment of its implications for the site in view of the site’s conservation objectives. In the light of the conclusions of the assessment of the implications for the site and subject to the provisions of paragraph 4, the competent national authorities shall agree to the plan or project only after having ascertained that it will not adversely affect the integrity of the site concerned and, if appropriate, after having obtained the opinion of the general public.’

Article 12(1) of that directive provides:

‘Member States shall take the requisite measures to establish a system of strict protection for the animal species listed in Annex IV(a) in their natural range, prohibiting:

all forms of deliberate capture or killing of specimens of these species in the wild;

deliberate disturbance of these species, particularly during the period of breeding, rearing, hibernation and migration;

deliberate destruction or taking of eggs from the wild;

deterioration or destruction of breeding sites or resting places.’

Point (a) of Annex IV to that directive mentions ‘all species’ of bats belonging to the suborder of ‘microchiroptera’.

Irish law

13

On 7 August 2000 the French authorities replied to that reasoned opinion by challenging the Commission's position, whereupon the Commission decided to bring the present action.

The application

14

By its application the Commission complains that the French Republic has brought into force a reduced rate of VAT for standing charges for energy networks and a standard rate for the consumption of energy, in breach of Article 12(3)(a) and (b) of the Sixth Directive.

15

The application essentially raises three issues.

16

First, the Commission harbours doubts as to the classification of standing charges for the supply of electricity and natural gas delivered by public networks as supplies of natural gas and electricity within the meaning of Article 12(3)(b) of the Sixth Directive. It wonders whether standing charges ought not to be classified instead as consideration for a specific service representative of fixed costs which is distinct from the supply of energy.

17

Second, according to the Commission, even if a supply is involved, the same rate must apply to the standing charge and to any other consumption of electricity, in accordance with the principle of neutrality.

18

Third, in adopting the contested provision, the French Republic is said to have infringed the procedure laid down by Article 12(3)(b) of the Sixth Directive. Those complaints will be examined in turn.

Classification of the standing charge as a supply

19

It should be noted that, as stated in paragraphs 7 to 9 of the present judgment, the Commission had initially accepted that the reduced rate will apply in so far as the standing charge is the consideration for the supply of energy. The French authorities explained that the standing charge was in effect the consideration for the supply of gas and electricity. In its letter of 7 December 1998 the Commission merely wondered about that classification inasmuch as the fixed part of the price of the energy which the standing charge constitutes does not include any actual consumption of energy.

The Commission has advanced no argument before the Court to the effect that the standing charge cannot in any circumstances be considered as a supply and must therefore be regarded as a provision of services. It has merely expressed doubts, made assumptions or raised queries in that regard.

The principle of neutrality

21

The Commission contends that if the standing charge is considered to be a supply, the charging of a reduced rate of VAT on standing charges for energy networks and a standard rate on any other supply of energy would infringe the principle of neutrality inherent in the Sixth Directive.

22

In that regard, it should be noted that Article 12(3)(a) of the Sixth Directive presupposes that the same rate of VAT, the standard rate, is charged on the supply of goods and the supply of services.

23

That same provision goes on to provide that either one or two reduced rates may be charged but only in respect of supplies of the goods and services specified in Annex H.

24

Article 12(3)(b) of the Sixth Directive permits the charging of a reduced rate on supplies of natural gas and electricity.

25

The Court has already held that the introduction and maintenance of reduced rates of VAT below the standard rate laid down in Article 12(3)(a) of the Sixth Directive are permissible only in so far as they are consistent with the principle of fiscal neutrality inherent in the common system of VAT which precludes treating similar goods, which are thus in competition with each other, differently for VAT purposes (Case C-481/98 Commission v France [2001] ECR I-3369, paragraphs 21 and 22).

26

The Commission has adduced no evidence to show that, in the present case, that principle would be infringed by the selective application of the reduced rate of VAT to one part only of the supply of gas and electricity.

27

In any event, there is nothing in the text of Article 12(3)(b) of the Sixth Directive which requires that provision to be interpreted as requiring that the reduced rate can be charged only if it is applied to all supplies of natural gas and electricity. It is true that the French text of that provision uses the definite article aux before the term fournitures, but a comparison of the different language versions, some of which do not use the definite article, argues in favour of an interpretation that a selective application of the reduced rate cannot be excluded, provided that no risk of distortion of competition exists.

28

Moreover, since the reduced rate is the exception, the restriction of its application to concrete and specific aspects, such as the standing charge conferring entitlement to a minimum quantity of electricity on the account holders, is consistent with the principle that exemptions or derogations must be interpreted restrictively.

29

It must therefore be concluded that the Commission has failed to demonstrate that the charging of a reduced rate solely on the standing charge conferring entitlement to a minimum supply of energy necessarily requires that the same reduced rate be charged on all other supplies of energy.

30

The requirement that the charging of a reduced rate must not give rise to any risk of distortion of competition will be considered in the context of the question concerning the procedure laid down by Article 12(3)(b) of the Sixth Directive.

The procedure laid down by Article 12(3)(b) of the Sixth Directive

31

The Commission contends that, in order to bring into force the reduced rate of VAT chargeable on standing charges, the French authorities ought to have waited until the end of the procedure laid down by Article 12(3)(b) of the Sixth Directive.

32

According to that provision, a Member State intending to apply a reduced rate must, before doing so, inform the Commission of that intention. If the Commission has not taken a decision on the existence of a risk of distortion of competition within three months of the receipt of that information, such a risk is deemed not to exist.

33

No provision is made in Article 12(3)(b) for extension or suspension of the period of three months.

34

Even supposing that the Commission could suspend the period of three months by requesting further information, in the present case the Commission waited until the last moment, two days before the expiry of the time-limit set by it, before replying to the letter of 7 September 1998 from the French authorities.

35

In the present case, in its letter of 7 December 1998 the Commission did not ask the French authorities any specific question or seek any specific information with regard to a potential risk of distortion of competition. Nor does it make any finding as to the categorisation of the facts in that regard.

36

In those circumstances, since the Commission did not find, within the period of three months granted to it under Article 12(3)(b) of the Sixth Directive, that there was any risk of distortion of competition, the charging of the reduced rate is deemed not to produce any such risk.

37

Accordingly, the French authorities cannot be criticised for having implemented the proposed measures.

Since the Commission has failed in its three complaints, the application must be dismissed.

Costs

Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the French Republic has applied for costs and the Commission has been unsuccessful, the Commission must be ordered to pay the costs.

On those grounds,

hereby:

Delivered in open court in Luxembourg on 8 May 2003.

Registrar

President of the Fifth Chamber

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Language of the case: French.