(Protocol on the Privileges and Immunities of the European Communities – Agreement on the seat of the European Central Bank – Arbitration clause – Immovable property leased by the ECB – Indirect taxes passed on in leasing or letting charges)

Summary of the Judgment

1. Privileges and immunities of the European Communities – Fiscal immunity of the Communities – Agreement on the seat of the European Central Bank – Refund of turnover tax in respect of various supplies of goods and services in the context of supplies intended for official use by the Bank – Condition – Separate invoicing – Clear and precise condition

(Protocol on the Privileges and Immunities of the European Communities, Art. 3, second para.)

(Protocol on the Privileges and Immunities of the European Communities, Art. 3, second para.)

1.Article 8(1) of the Agreement of 18 September 1998 concluded between the Government of the Federal Republic of Germany and the European Central Bank on the seat of that institution makes the refund of turnover tax in respect of various supplies of goods and services in the context of supplies intended for official use by the Bank expressly and unambiguously subject to the condition that that tax be ‘invoiced separately’ to the Bank. Although an interpretation of a provision of an agreement ‘in the light’ of its legal context is possible in principle to resolve a drafting ambiguity, such an interpretation cannot have the result of depriving the clear and precise wording of that provision of all effectiveness.

(see para. 31)

2.The condition, laid down in Article 8(1) of the Agreement of 18 September 1998 concluded between the Government of the Federal Republic of Germany and the European Central Bank on the seat of that institution which makes the refund of turnover tax in respect of various supplies of goods and services in the context of supplies intended for official use by the Bank subject to the requirement that that tax be ‘invoiced separately’ in order for it to be reimbursed by the Member State is contrary neither to the aims nor to the wording of the second paragraph of Article 3 of the Protocol on the Privileges and Immunities of the European Communities, which provides that Member States are to remit or refund the amount of indirect taxes or sales taxes included in the price of substantial purchases made by the Communities for their official use. That provision merely provides for the adoption of ‘appropriate measures’ with a view to tax refunds only with regard to ‘substantial purchases’ and only ‘wherever possible’. A margin of discretion is thus granted to the Community institutions and the Member States in the conclusion of agreements concerning the implementation of the second paragraph of Article 3 of the Protocol.

(see para. 32)

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8 December 2005 (*)

(Protocol on the Privileges and Immunities of the European Communities – Agreement on the seat of the European Central Bank – Arbitration clause – Immovable property leased by the ECB – Indirect taxes passed on in leasing or letting charges)

In Case C‑220/03,

ACTION under Article 238 EC, brought on 21 May 2003,

European Central Bank, represented by C. Zilioli and M. Benisch, acting as Agents, assisted by H.‑G. Kamann and M. Selmayr, Rechtsanwälte, with an address for service in Luxembourg,

applicant,

Federal Republic of Germany, represented by U. Forsthoff, acting as Agent, assisted by W. Hölters, Rechtsanwalt,

defendant,

THE COURT (First Chamber),

composed of P. Jann, President of the Chamber, K. Schiemann (Rapporteur), K. Lenaerts, E. Juhász and M. Ilešič, Judges,

Advocate General: C. Stix‑Hackl,

Registrar: K. Sztranc, Administrator,

having regard to the written procedure and further to the hearing on 9 June 2005,

after hearing the Opinion of the Advocate General at the sitting on 13 September 2005,

gives the following

1.1 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’).

2.2 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

3 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.

ECLI:EU:C:2025:140

(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.’

4 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.

(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

ECLI:EU:C:2025:140

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:

‘(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

The lessors are themselves subject to turnover tax in respect of all ancillary services supplied in connection with the buildings which they lease (building work, alterations, maintenance and electricity, water and insurance expenditure, etc.; ‘the input transactions’). If the lease granted by a lessor were subject to such a tax, it is common ground that the lessor could, pursuant to Paragraph 15(1) of the UStG, deduct, from the tax payable in respect of his taxable transactions, that tax which he himself has paid on the input operations (‘the input tax’). He would thus be able to recover that amount.

18For that reason, the lessors have an incentive to exercise the option conferred on them by Paragraph 9(1) of the UStG to treat as a transaction subject to turnover tax a lease that would normally be exempt from that tax. Where that option is available to the lessor, that is to say when leases are entered into for the benefit of lessees who are themselves traders carrying out taxable transactions, the lessee may then himself deduct the amount of the turnover tax levied on the lease from the tax paid by him on the transactions which he concludes. The lessee can thus, in principle, recover the amount of the tax paid on the amount of the rent and the fact that the lessor has opted to be subject to the tax has no negative financial consequences for the lessee.

19According to the ECB, that system of exemptions has the result of forcing it to pay to its lessors the amounts of turnover tax which they have paid on their input transactions. In effect, the lessors calculate the rents on the basis of their profit margin and, consequently, impose higher rents on tenants such as the ECB, to whom the input tax cannot be re-invoiced. Although those amounts do not appear separately on the invoices, according to the ECB, it is possible to show that they are included in the rent and the charges for which it is invoiced. The ECB deduces from this that it is paying hidden turnover tax.

20The Federal Republic of Germany disputes the contention that amounts of turnover tax are included in the rent and charges paid by the ECB. It submits that a large number of other lessees, including banks and insurance companies in the private sector, are in the same tax position as the ECB. The rent and charges are fixed by the market and the ECB has not any adduced evidence that the rent and charges which it pays are increased by amounts corresponding substantially to those of the input tax paid by the lessors on their taxable transactions connected with the lease.

21By letter of 9 April 2001, the Finanzamt Wiesbaden, which is the local tax office concerned, refused to grant the ECB’s application for a refund of the turnover tax which, according to the ECB, was included in the invoices for rent and charges sent to it by its lessors. The ECB has contested that refusal, relying on Article 8(1) of the Agreement and on the second paragraph of Article 3 of the Protocol. Since the dispute between the German tax authorities and the ECB has not been resolved, the latter has brought the present action.

Admissibility of the action

22The Federal Republic of Germany disputes the admissibility of the action in the light both of the Protocol and of the Agreement.

23Firstly, according to the Federal Republic of Germany, the arbitration clause set out in Article 21 of the Agreement applies expressly and solely to disputes concerning the interpretation or the application ‘of this Agreement’. On that basis, it takes the view that the Court does not have jurisdiction in matters concerning the interpretation and application of the Protocol, in particular with regard to the direct application of the second paragraph of Article 3 thereof, and that the action is, in that regard, inadmissible.

24On that point, it is sufficient to note, as the ECB submitted at the hearing, that the application does not seek an interpretation or direct application of the second paragraph of Article 3 of the Protocol, but concerns only the application of Article 8(1) of the Agreement, which must be interpreted in the light of the second paragraph of Article 3 of the Protocol, of which Article 8(1) constitutes the specific implementation in the present context. The Court has jurisdiction, pursuant to the arbitration clause set out in Article 21 of the Agreement, to interpret and apply Article 8(1) of that Agreement in the light of the legal context of which that provision forms part.

25Secondly, the Federal Republic of Germany contends that the arbitration clause, which is, in accordance with the Court’s established case-law, to be interpreted strictly, is not applicable to the present dispute, because there are no ‘disputes on the interpretation or the application of the Agreement’. It is common ground between the Federal Republic of Germany and the ECB that Article 8(1) of the Agreement provides, on its wording, only for the refund of turnover tax invoiced separately and therefore that provision is not applicable, since the present case does not involve a refund of such a tax.

26In that regard, the ECB submits, rightly, that there is a manifest dispute between it and the Federal Republic of Germany concerning the interpretation and application of Article 8(1) of the Agreement, in particular with regard to whether a wider interpretation of that provision is necessary in the light of the second paragraph of Article 3 of the Protocol, such that that Member State would be required to refund turnover tax to the ECB not only when that tax is invoiced separately, as the wording of Article 8(1) provides, but also where it is possible to establish, even in the absence of separate invoicing, that such a tax has actually been paid by the ECB.

27Having regard to those considerations, the objections of inadmissibility raised by the Federal Republic of Germany must be dismissed and the Court must be held to have jurisdiction pursuant to Article 21 of the Agreement, read in conjunction with Articles 238 EC and 35.4 of the Statutes of the ESCB, to rule on the ECB’s action.

Substance

28It is common ground that Article 8(1) of the Agreement provides, according to the actual terms of that provision, only for a refund of turnover tax ‘invoiced separately … for the various supplies of goods and services’ made to the ECB. It is also common ground that no turnover tax is levied on those supplies and services and that, therefore, no tax can be invoiced separately ‘for’ those supplies and services.

29Nevertheless, the ECB submits that, read in the light of the second paragraph of Article 3 of the Protocol, Article 8(1) of the Agreement provides not only for a refund of turnover tax invoiced separately, but also for a refund of any turnover tax included in the prices paid by the ECB and, therefore, of the turnover tax indirectly paid by that institution because of the passing on of that tax in the rent invoiced by its lessors, regardless of whether that invoicing was made separately or not. That, the ECB argues, follows from the fact that the second paragraph of Article 3 of the Protocol expressly provides for a refund of turnover tax by Member States ‘wherever possible’ and, moreover, requires them generally to refund ‘the amount of indirect taxes … included in the price of movable or immovable property’.

30That argument cannot be accepted.

31Article 8(1) of the Agreement expressly and unambiguously makes the refund of turnover tax subject to the condition, not fulfilled in the present case, that that tax be ‘invoiced separately’. Although an interpretation of a provision of an Agreement ‘in the light’ of its legal context is possible in principle to resolve a drafting ambiguity, such an interpretation cannot have the result of depriving the clear and precise wording of that provision of all effectiveness.

32Furthermore, the condition that the tax be ‘invoiced separately’ is contrary neither to the aims nor to the wording of the second paragraph of Article 3 of the Protocol. That provision merely provides for the adoption of ‘appropriate measures’ with a view to tax refunds only with regard to ‘substantial purchases’ and only ‘wherever possible’. A margin of discretion is thus granted to the Community institutions and the Member States in the conclusion of agreements concerning the implementation of the second paragraph of Article 3 of the Protocol.

33The exclusion of a refund of tax which is not invoiced to the ECB but which is paid as input tax by the other parties to its agreements and which may therefore affect the prices invoiced to it does not go beyond that margin of discretion. The same is true of the limit of DEM 50 fixed by the Agreement for the refund of tax. Those requirements therefore comply with the Protocol.

34Moreover, the abovementioned condition safeguards the financial interests of both the European Community and the host Member State, since it avoids public funds being used for the implementation of detailed and complex refund procedures intended to prove that part of the expenditure borne by the ECB corresponds, in reality, to an input tax paid by a party to its agreements.

35Finally, it should be added that the order in Case 2/68 Ufficio Imposte di Consumo di Ispra v Commission [1968] ECR 435, relied upon by the ECB, is entirely irrelevant to the present case, since that order was made with regard to a situation in which the Commission of the European Communities had, in an agreement concluded with the Italian Government, attempted to restrict the rights and guarantees benefiting third parties not party to that agreement, pursuant to the Protocol.

36Having regard to those considerations, the ECB’s action must be dismissed.

Costs

37Under 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 Federal Republic of Germany has applied for the ECB to be ordered to pay the costs and the latter has been unsuccessful, the ECB must be ordered to pay the costs.

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

Dismisses the action;

Orders the European Central Bank to pay the costs.

[Signatures]

*

Language of the case: German.