(Reference for a preliminary ruling from the Tribunal Supremo)

(Sixth VAT Directive – Articles 11A(1) and 27 – Taxable amount – Extension of the rules on application for private use to transactions between connected parties where prices are patently lower than open market prices)

Summary of the Judgment

Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Taxable amount – National derogating measures

(Council Directive 77/388, Arts 5(6), 6(2), 11A(1)(a), and 27)

Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes must be interpreted as precluding a Member State from applying to transactions, effected between connected parties having agreed a price which is patently lower than the open market price, a rule for determining the taxable amount other than the general rule laid down in Article 11A(1)(a) of that directive, by extending the scope of the rules for determining the taxable amount on the application of goods and services for private use by a taxable person, within the meaning of Articles 5(6) and 6(2) of that directive, when the procedure provided for in Article 27 of that directive to obtain authorisation for such derogation from that general rule has not been followed by that Member State.

(see para. 40, operative part)

9 June 2011(*)

(Sixth VAT Directive – Articles 11A(1) and 27 – Taxable amount – Extension of the rules on application for private use to transactions between connected parties where prices are patently lower than open market prices)

In Case C‑285/10,

REFERENCE for a preliminary ruling under Article 267 TFEU from the Tribunal Supremo (Spain), made by decision of 26 April 2010, received at the Court on 7 June 2010, in the proceedings

Administración del Estado,

THE COURT (Eighth Chamber),

composed of K. Schiemann, President of the Chamber, A. Prechal and E. Jarašiūnas (Rapporteur), Judges,

Advocate General: J. Mazák,

Registrar: C. Strömholm, Administrator,

having regard to the written procedure and further to the hearing on 31 March 2011,

after considering the observations submitted on behalf of:

–Campsa Estaciones de Servicio SA, by F. Bonastre Capell, abogado,

–the Spanish Government, initially by B. Plaza Cruz, and subsequently by S. Centeno Huerta, acting as Agents,

–the European Commission, by I. Martínez del Peral and R. Lyal, acting as Agents,

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

gives the following

1This reference for a preliminary ruling concerns the interpretation of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1; ‘the Sixth Directive’).

2The reference has been made in proceedings between Campsa Estaciones de Servicio SA (‘Campsa’) and the Administración del Estado concerning a notice of assessment issued by the Oficina Nacional de Inspección (National Inspection Office), on the value added tax (‘VAT’) for the year 1993.

Legal context

European Union legislation

Directive 2011/92

Recitals 7 to 9 of Directive 2011/92 state:

‘(7) 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. …

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

(9) 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:

…

(b) 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:

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

(a) a case-by-case examination;

(b) 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:

(a) 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

(b) 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:

‘1. A description of the project, including in particular:

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

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

3. 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:

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

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

4. 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:

‘(11) 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)]

…

(29) 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:

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

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

(c) deliberate destruction or taking of eggs from the wild;

(d) 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

14Article 79 of Law 37/1992 established, in paragraphs (3) and (4) thereof, specific rules for determining the taxable amount in cases of application of goods and services for the private use of a taxable person. Those cases corresponded to the situations envisaged in Articles 5(6) and 6(2) of the Sixth Directive.

15Following the adoption of Directive 2006/69, Law 36/2006 on measures for the prevention of tax evasion (Ley 36/2006 de medidas para la prevención del fraude fiscal) of 29 November 2006 (BOE No 286 of 30 November 2006, p. 42087) amended Article 79(5) of Law 37/1992. The wording of that provision was adapted in order to reflect the amendments made by Directive 2006/69 to Article 11A of the Sixth Directive, in particular the new paragraph 6 of that article.

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

16On 31 December 1993, Campsa sold Repsol Combustibles Petrolíferos SA a number of service stations located in Spain for a total of ESP 1 732 419 313. It is not disputed that that sale was a transaction between connected parties within the meaning of Article 79(5) of Law 37/1992.

17On 7 July 1998, the Spanish Finance Inspectorate notified Campsa that it disputed Campsa’s VAT return for the year 1993, as it took the view that the rule for determining the taxable amount laid down in Article 79(5) of Law 37/1992 should have been applied to that sale, since it was characterised by a connection between the parties concerned and as those parties had agreed prices which were patently lower than market prices. The Finance Inspectorate thus assessed the correct taxable amount at ESP 4 076 112 060. A notice of assessment relating to the VAT for the year 1993, based on that estimated taxable amount, was issued on 11 December 1998.

18The Tribunal Económico-Administrativo Central (Central Economic and Administrative Court) upheld that notice of assessment by a decision of 21 February 2001. Campsa brought an appeal against that decision before the Sala de lo Contencioso-Administrativo de la Audiencia Nacional (Contentious Administrative Chamber of the National High Court), which dismissed it by a judgment of 30 April 2004. Campsa lodged an appeal in cassation against that judgment before the referring court.

19The Tribunal Supremo (Supreme Court) considers that, in order to resolve the dispute before it, it is required, inter alia, to establish whether the general rule for determining the taxable amount laid down in Article 11A(1)(a) of the Sixth Directive must be applied to transactions between connected parties, as that directive does not contain any specific rule for determining the applicable taxable amount in such cases.

20The Tribunal Supremo takes the view that the interpretation of European Union law gives rise to reasonable doubts. It notes that the case-law of the Court appears to support the application of that general rule and that it was only following the assessment in question that the Kingdom of Spain obtained authorisation to derogate from it. It states, however, that since the entry into force of Directive 2006/69, Member States have the option, without requesting prior authorisation, of implementing specific derogating measures determining the taxable amount, such as that which was authorised by Decision 2006/387, and that option remains open under Directive 2006/112. Moreover, the Abogado del Estado (State Legal Counsel) submits before the Tribunal Supremo that the application of Article 79(5) of Law 37/1992 was not contrary to European Union law, even before the adoption of Decision 2006/387, in particular because the Sixth Directive allowed for the choice of the open market value in cases of application of goods and services for the private use of a taxable person within the meaning of Articles 5(6) and 6(2) of the Sixth Directive, including for transactions between connected parties.

21In those circumstances, the Tribunal Supremo decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘Did the [Sixth Directive] permit Member States to enact legislation whereby, for transactions between connected parties where the price was patently lower than the open market value, the taxable amount was other than that determined by Article 11A(1)(a) to be generally applicable – namely, the consideration – by extending the scope of the rules on application of goods and services for private use (as was done by Article 79(5) of [Law 37/1992], before its amendment by Law 36/2006 ... ), when the specific procedure provided for in Article 27 of the Sixth Directive to obtain authorisation for derogation from the general rule was not followed, such derogation being obtained by [the Kingdom of] Spain only after [Decision 2006/387]?’

Consideration of the question referred

22By its question the referring court asks whether the Sixth Directive must be interpreted as not precluding a Member State from applying, to transactions between connected parties having agreed a price which is patently lower than the open market value, a rule for determining the taxable amount other than the general rule laid down in Article 11A(1)(a) of the Sixth Directive by extending the scope of the rules for determining the taxable amount on the application of goods and services for the private use of a taxable person within the meaning of Articles 5(6) and 6(2) of the Sixth Directive, when the procedure provided for in Article 27 of the Sixth Directive to obtain authorisation to introduce a measure thus derogating from the general rule has not been followed by that Member State.

23The Spanish Government submits that it was legitimate, in circumstances such as those provided for in Article 79(5) of Law 37/1992, for a Member State to establish a different taxable amount from the general taxable amount laid down in Article 11A(1)(a) of the Sixth Directive. That national provision observed the principles of tax neutrality and of equal treatment and was compliant with the Sixth Directive, since it was intended to combat tax evasion. The Spanish Government indicates furthermore that the option open to Member States of introducing derogating measures of that type was granted to them by Directive 2006/69 and remains open under Directive 2006/112.

24On the other hand, Campsa and the European Commission submit that the Sixth Directive, prior to the amendment made by Directive 2006/69, did not permit Member States, in circumstances such as those provided for in Article 79(5) of Law 37/1992, to establish a rule for determining the taxable amount other than that laid down in Article 11A(1)(a) of the Sixth Directive without having obtained the authorisation provided for in Article 27 of that directive to introduce such a derogating measure.

25In that regard, it should be borne in mind, first, that the possibility of classifying a transaction as ‘a transaction for consideration’ within the meaning of Article 2 of the Sixth Directive requires only that there be a direct link between the supply of goods or the provision of services and the consideration actually received by the taxable person. Thus, the fact that the price paid for an economic transaction is higher or lower than the cost price, and, therefore, higher or lower than the open market value, is irrelevant as regards that classification (see, to that effect, Case C‑412/03 Hotel Scandic Gåsabäck [2005] ECR I‑743, paragraph 22). The same applies to the connection which might exist between the parties to the transaction.

26Second, under the terms of Articles 5(6) and (7) and 6(2) and (3) of the Sixth Directive, which treat certain transactions for which no consideration is actually received by the taxable person as transactions effected for consideration, there is no reason to apply the rules determining the taxable amount laid down in Article 11A(1)(b), (c) and (d) of the Sixth Directive except to transactions effected free of charge (see, to that effect, Hotel Scandic Gåsabäck, paragraph 24).

27It follows that, where consideration has been agreed and actually paid to the taxable person in direct exchange for the goods he has delivered or the service he has provided, that transaction must be classified as a transaction for consideration, regardless of whether it is effected between connected parties and the price agreed and actually paid is patently lower than the open market price. The taxable amount of such a transaction must, therefore, be determined in accordance with the general rule stated in Article 11A(1)(a) of the Sixth Directive.

28According to settled case-law, in accordance with that general rule, the taxable amount for the supply of goods or services for consideration is the consideration actually received for them by the taxable person. That consideration is thus the subjective value, that is to say, the value actually received, and not a value estimated according to objective criteria. Moreover, that consideration must be capable of being expressed in money (Hotel Scandic Gåsabäck, paragraph 21 and case-law cited).

29In that regard it is true, as the Spanish Government pointed out, that the principle of equal treatment, of which the principle of tax neutrality is a specific expression at the level of secondary European Union law and in the specific area of taxation, requires similar situations not to be treated differently unless differentiation is objectively justified (Case C‑309/06 Marks & Spencer [2008] ECR I‑2283, paragraphs 49 and 51, and Case C‑174/08 NCC Construction Danmark [2009] ECR I‑10567, paragraph 44).

30However, in so far as transactions, such as those in the main proceedings, in which a price patently lower than the open market price has been agreed are none the less transactions for consideration in which an actual consideration able to serve as the taxable amount has been received, the principle of equal treatment is not, in itself, such as to necessitate applying to them the rules for determining the taxable amount which were laid down for transactions effected free of charge for the estimation, in the absence of any actual consideration, of such a taxable amount according to objective criteria, as those two types of transaction are not comparable.

31Moreover, it should also be borne in mind in that regard that the European Union legislature provided that, in accordance with the provisions of Article 27 of the Sixth Directive, Member States may, if required, be authorised to derogate from the rules in that directive and in particular from that in Article 11A(1)(a) thereof (see, inter alia, Hotel Scandic Gåsabäck, paragraph 26).

32However, the Court has already held that new specific measures, derogating from the Sixth Directive, do not accord with European Union law unless they remain within the limits of the objectives referred to in Article 27(1) of that directive and have also been notified to the Commission and impliedly or expressly authorised by the Council in the circumstances specified in subparagraphs (1), (2), (3) and (4) of Article 27 (Case C‑5/84 Direct Cosmetics [1985] ECR I‑617, paragraph 24, and Case C‑62/93 BP Soupergaz [1995] ECR I‑1883, paragraph 22). Moreover, a Member State may not rely, as against a taxable person, on a provision derogating from the scheme of the Sixth Directive and enacted in breach of the duty of notification imposed by Article 27(2) of that directive without infringing the Treaty establishing the European Community (now the Treaty on the Functioning of the European Union) (see, to that effect, Direct Cosmetics, paragraph 37, and Case C‑494/04 Heintz van Landewijck [2006] ECR I‑5381, paragraph 48).

33Clearly, a provision such as Article 79(5) of Law 37/1992 constitutes a new derogating measure within the meaning of Article 27(1) of the Sixth Directive. Regardless of the fact that, as the Spanish Government maintained at the hearing, Article 79(5) corresponds to a provision which was transposed into Spanish law by Law 30/1985 on Value Added Tax (Ley 30/1985 del Impuesto sobre el Valor Añadido) of 2 August 1985 (BOE No 190 of 9 August 1985, p. 25214), by which the Kingdom of Spain, in view of its accession to the European Communities, transposed, inter alia, the Sixth Directive into national law, that provision was none the less adopted after 1 January 1977.

34In the case of accession, a reference to a date laid down in European Union law, in the absence of a provision to the contrary in the Act of Accession or some other European Union document, also applies to the acceding State, even if that date is prior to the date of its accession (Case C‑366/05 Optimus – Telecomunicações [2007] ECR I‑4985, paragraph 32). As regards the Kingdom of Spain, the date of 1 January 1977 has not been amended either by the Act concerning the conditions of accession of the Kingdom of Spain and the Portuguese Republic and the adjustments to the Treaties (OJ 1985 L 302, p. 23) or by any other document. It may not therefore be considered that a provision such as Article 79(5) of Law 37/1992 could fall within the scope of Article 27(5) of the Sixth Directive.

35It follows that the adoption of Article 79(5) of Law 37/1992 by the Kingdom of Spain fell within the scope of the procedure laid down in Article 27(1) to (4) of the Sixth Directive and should therefore have been notified and authorised in accordance with that procedure. It is not in dispute that, at the time of the events in the main proceedings, that national provision had not been the object of such a notification and authorisation and it has not been established that the position was any different as regards the corresponding provision which featured in Law 30/1985. Consequently, the fact that such a derogating measure had not, at that time, been notified and authorised in accordance with the procedure laid down in Article 27(1), (2), (3) and (4) of the Sixth Directive is sufficient to support a finding that it may not be applied by a Member State and enforced against a taxable person.

36It is true, as the Spanish Government indicated at the hearing, that the Court held, in paragraph 50 of Heintz van Landewijck

that late notification of a derogating measure cannot entail the same consequences, in respect of enforceability, as a failure to notify. However, that assertion, first, concerned a situation in which the derogating measure in question fell within the scope of Article 27(5) of the Sixth Directive, a situation which the Court distinguished from that of a measure falling within Article 27(1), and had been notified in breach of the deadline for notification established in Article 27(5) of the Sixth Directive but prior to the facts giving rise to the dispute brought before the national court, and secondly was responding to the question whether such a derogating measure should remain inapplicable even after that late notification (see Heintz van Landewijck, paragraphs 47 to 51).

37Those circumstances are not comparable to those in the main proceedings. Therefore, it cannot be inferred from that judgment that, because a national measure falling within Article 27(1) of the Sixth Directive has been the subject of a notification to the Commission and of an authorisation by the Council following the events in the main proceedings, it must be possible to apply that national provision to events which took place prior to its notification.

38It should also be borne in mind that the risk of tax evasion, which, according to the Spanish Government, Article 79(5) of Law 37/1992 aimed to combat, may be dealt with only by a request by the Member State concerned under Article 27 of the Sixth Directive to introduce measures derogating from that directive in order to prevent certain types of tax evasion or avoidance (see, to that effect, Hotel Scandic Gåsabäck, paragraph 26), a request which was only made following the events in the main proceedings.

39Finally, the fact, noted inter alia by the referring court and the Spanish Government, that, since the entry into force of Directive 2006/69, Member States have the option, without having to seek prior authorisation, and in order to prevent tax evasion or avoidance, of taking measures to ensure that the taxable amount is the open market value of the transaction in certain cases where there is a connection between the parties to the transaction has no effect on the fact that, at the time of the events in the main proceedings, the Sixth Directive did not grant them any such option beyond the procedure laid down in Article 27(1), (2), (3) and (4) of that directive.

40It follows from all the foregoing that the Sixth Directive must be interpreted as precluding a Member State from applying to transactions, such as those in the main proceedings, effected between connected parties having agreed a price which is patently lower than the open market price, a rule for determining the taxable amount other than the general rule laid down in Article 11A(1)(a) of that directive, by extending the scope of the rules for determining the taxable amount on the application of goods and services for private use by a taxable person, within the meaning of Articles 5(6) and 6(2) of that directive, when the procedure provided for in Article 27 of that directive to obtain authorisation for such derogation from that general rule has not been followed by that Member State.

Costs

41Since 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 (Eighth Chamber) hereby rules:

Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, must be interpreted as precluding a Member State from applying to transactions, such as those in the main proceedings, effected between connected parties having agreed a price which is patently lower than the open market price, a rule for determining the taxable amount other than the general rule laid down in Article 11A(1)(a) of that directive, by extending the scope of the rules for determining the taxable amount on the application of goods and services for private use by a taxable person, within the meaning of Articles 5(6) and 6(2) of that directive, when the procedure provided for in Article 27 of that directive to obtain authorisation for such derogation from that general rule has not been followed by that Member State.

[Signatures]

*

Language of the case: Spanish.