Case C-82/12, Transportes Jordi Besora SL

Court finds that Spanish tax on retail sales of diesel and petrol is contrary to EU law

>> The Excise Duty Directive (Directive 92/12) which concerns, inter alia, mineral oils such as petrol, diesel, heavy fuel oil and kerosene, lays down the rules relating to the levying of excise duties in the EU in such a way as to prevent additional indirect taxes from improperly obstructing trade. However, Article 3(2) of the directive provides that mineral oils may be subject to indirect taxation other than the harmonised excise duty established by the directive where two conditions are both satisfied. Spain thus established a tax on the retail sale of certain hydrocarbons (namely petrol, diesel, fuel oil and paraffin) (‘the IVMDH’).  

Transportes Jordi Besora SL was a haulage company established in the Autonomous Community of Catalonia. For the tax years 2005 to 2008, it paid, as final consumer, a total of €45 632.38 in respect of the IVMDH. Taking the view that the IVMDH was incompatible with the directive, the company sought a refund of the amount paid.  The Tribunal Superior de Justicia de Cataluña (High Court of Justice of Catalonia, Spain) asked whether Article 3(2) of Directive 92/12 must be interpreted as precluding national legislation that establishes a tax on the retail sale of mineral oils such as the IVMDH.

The Court first of all held that Article 3(2) of Directive 92/12 provides that mineral oils might be subject to indirect taxation other than the excise duty established by that directive if, first, the tax pursued one or more specific purposes and if, secondly, it complied with the tax rules applicable for excise duty or VAT purposes as far as determination of the tax base, calculation of the tax, chargeability and monitoring of the tax are concerned.

The Court added that hose two conditions, which were intended to prevent additional indirect taxes from improperly obstructing trade (Case C‑434/97 Commission v France [2000] ECR I‑1129, paragraph 26, and EKW and Wein & Co, paragraph 46), were cumulative, as was apparent from the very wording of that provision.

As regards the first of those conditions, it was apparent from the case-law of the Court that a specific purpose within the meaning of Article 3(2) of Directive 92/12 was a purpose other than a purely budgetary purpose (see Case C‑491/03 Hermann [2005]).

The Generalitat de Catalunya and the Spanish Government, supported by the Greek and French Governments, emphasize held that the revenue from the IVMDH was allocated to the Autonomous Communities not in a general manner with the purely budgetary objective of strengthening their financial capacity, but with the aim of offsetting the burden entailed by the exercise of the powers transferred to them in the fields of health and the environment.  The Court however held that, since every tax necessarily pursued a budgetary purpose, the mere fact that a tax such as the IVMDH was intended to achieve a budgetary objective could not, in itself, suffice – if Article 3(2) of Directive 92/12 was not to be rendered meaningless – to preclude that tax from being regarded as having, in addition, a specific purpose within the meaning of that provision.

Moreover, the predetermined allocation of the proceeds of a tax such as the IVMDH to the financing by regional authorities, such as the Autonomous Communities, of powers transferred to them by the State in the fields of health and the environment could  constitute a factor to be taken into account for the purpose of establishing the existence of a specific purpose within the meaning of Article 3(2) of Directive 92/12. However, such an allocation, which was merely a matter of internal organisation of the budget of a Member State, could not, in itself, constitute a sufficient condition in that regard, since any Member State may decide to lay down, irrespective of the purpose pursued, that the proceeds of a tax be allocated to financing particular expenditure. Otherwise, any purpose could be considered to be specific within the meaning of Article 3(2) of Directive 92/12, which would deprive the harmonised excise duty established by that directive of all practical effect and be contrary to the principle that a derogating provision such as Article 3(2) must be interpreted strictly.

The Court held in order to be regarded as pursuing a specific purpose within the meaning of that provision, a tax such as the IVMDH must, by contrast, itself be directed at protecting health and the environment. This would, in particular, be the case where the proceeds of that tax had to be used for the purpose of reducing the social and environmental costs specifically linked to the consumption of the mineral oils on which that tax was imposed, so that there was a direct link between the use of the revenue and the purpose of the tax in question. However, in the main proceedings, it was not contested that the revenue from the IVMDH had to be allocated by the Autonomous Communities to health expenditure in general and not to health expenditure which was specifically linked to the consumption of the taxed hydrocarbons. Such general expenditure might be financed by the proceeds of all kinds of taxes.
  
It followed that a tax such as the IVMDH at issue in the main proceedings, which according to the information available to the Court was now integrated in the harmonised excise duty rate, could not be regarded as pursuing a specific purpose within the meaning of Article 3(2) of Directive 92/12.

The Court thus found that Article 3(2) precluded a tax such as the IVMDH from being regarded as meeting the conditions in that provision, without there being a need to examine whether the second condition set out in Article 3(2), relating to compliance with the tax rules applicable to excise duty or VAT, was satisfied. The Court found that it was not appropriate to limit the temporal effects of the judgment, since the Spanish Government and the Generalitat de Catalunya did not act in good faith in maintaining that tax in force for a period of more than 10 years.

Text of Judgment