Opinion of the Advocate-General
1 In these joined cases, the Tribunale di Genova (District Court, Genoa), Italy, has submitted two questions concerning the impact of Community law, as interpreted in the case-law of the Court of Justice, on certain conditions for the exercise of the right to secure a refund of taxes unduly levied by the Italian administration. Specifically, the reimbursement is sought of sums paid by a number of undertakings in respect of a national levy incompatible with Community legislation.
Facts, main proceedings and preliminary questions
2 In Cases C-279/96 and C-281/96 the plaintiffs are companies which, pursuant to Decree No 641 of the President of the Republic of 26 October 1972 (hereinafter `DPR 641/1972'), paid to the Italian revenue authorities, over a period of several years, various sums in respect of an annual administrative charge for entering companies on the register of companies. In Case C-280/96 the action is by the Italian Tax Administration, which was ordered to repay such sums to another undertaking.
3 Following the judgment of the Court of Justice of 20 April 1993 in Ponente Carni and Cispadana Costruzioni (1) (hereinafter `Ponente Carni'), giving a ruling on a number of questions concerning the interpretation of Council Directive 69/335/EEC of 17 July 1969 concerning indirect taxes on the raising of capital, (2) the Italian legislature abolished the annual charge and reduced to LIT 500 000 the amount of the charge for first registration on the register of companies. (3)
4 For their part, the Italian courts also declared the annual charge to be incompatible with Community law (4) and, consequently, that the taxes paid in respect of it had been improperly levied.
5 After unsuccessfully seeking reimbursement of charges improperly paid from the Italian administration, the plaintiffs asked the Tribunale di Genova to order their reimbursement by the Ministero delle Finanze. In the case of Marine Insurance Consultants Srl, the President of the Tribunale granted that request by order of 21 July 1995, against which the Tax Administration appealed.
6 Before giving a final judgment, the Tribunale di Genova decided to refer the following two questions to the Court of Justice for a preliminary ruling:
`(1) Is national legislation which sets, in respect of the initiation of proceedings to safeguard a right arising under Community law, a time-limit which starts to run before the correct and complete transposition into national law of the directive conferring that right compatible with Community law?
(2) Is it compatible with Community law to provide a party whose rights are recognised as having been infringed, and to whom repayment of the sums claimed is granted, with a remedial procedure under which the rules as to quantum differ from, and compare unfavourably with, those laid down in respect of actions for repayment between private individuals, and are substantially determined by a measure enacted by the same State authority as that which infringed the injured party's rights by failing to fulfil its obligations?'
The first question
7 Since this question is analogous to those referred by the Tribunale Civile di Genova in Case C-231/96 EDIS, on which I am delivering my Opinion today, it would have been possible to give this opinion merely by referring to the text of another. But, since the cases have not been joined and the national court and the parties to the main proceedings are different, I have chosen to repeat at least the same basic considerations in both cases, including if appropriate a special mention of or reference to the Opinion in EDIS regarding certain details common to both cases.
8 The national court seeks to determine the compatibility or otherwise with Community law of national legislation which, for proceedings to recover taxes unduly paid, sets as the starting date for the three-year time-limit the date on which the tax was paid, at which time the Community directive applicable thereto had not been properly transposed into national law.
9 The written observations of the plaintiff, the Commission and various Member States have focused on the impact on this problem of the judgment of the Court of Justice of 25 July 1991 in Emmott. (5) As we know, in that judgment the Court of Justice stated: `... until such time as a directive has been properly transposed, a defaulting Member State may not rely on an individual's delay in initiating proceedings against it in order to protect rights conferred upon him by the provisions of the directive and ... a period laid down by national law within which proceedings must be initiated cannot begin to run before that time'. (6)
10 It is true that the scope of Emmott had nevertheless subsequently been limited by the Court of Justice, which emphasised that it was applicable only where the same unusual circumstances arose as in that case. In its judgments of 27 October 1993 in Steenhorst-Neerings, (7) and of 6 December 1994 in Johnson, (8) the Court of Justice confirmed the applicability of national limitation periods to claims for sums payable in respect of social benefits based on the application of certain directives, even where the latter had not yet been duly incorporated into national law.
11 Whilst the present case was still pending, the Court of Justice gave judgment in Haahr Petroleum (9) and Texaco and Olieselskabet Danmark. (10) In those judgments it again rejected application of the principle established in Emmott. In both cases, a claim for reimbursement - based on infringement of Article 95 of the Treaty - had been dismissed by the Danish authorities in reliance on a national provision under which court proceedings for the reimbursement of taxes improperly levied are time-barred after five years from the date of payment. The Court of Justice repeated that, even where such a provision prevents wholly or in part the repayment of those taxes, its application in those two cases was not contrary to Community law.
12 Finally, two months before the hearing in this case, the Court of Justice gave its judgment of 2 December 1997 in Fantask, (11) which is particularly important to the present case since the factual and legal issues were analogous. Fantask was concerned with the reimbursement of charges improperly levied and involved:
- the same type of national charge (a Danish tax on entry of companies on the requisite register);
- the same kind of incompatibility with Community law (specifically, with Directive 69/335) of the national provision governing the charge;
- the same obstacle deriving from national time-limits or limitation periods (five years, under national legislation, as from the date of payment of the tax).
13 In Fantask, as in this case, the national court, confronted with a dispute of the kind described above, asked the Court of Justice `whether Community law prevents a Member State from relying on a limitation period under national law to resist actions for recovery of charges levied in breach of the directive as long as that Member State has not properly transposed the directive'. The observations of the plaintiff companies and of the Commission were also based on the precedent set by Emmott, the application of which was opposed by the governments which submitted observations to the Court of Justice.
14 The Court of Justice again opted for the latter solution, repeating the line of reasoning to which I referred earlier.
15 In the first place, as a general principle, it pointed out that, in the absence of Community rules governing the matter, it is for the domestic legal system of each Member State to lay down the procedures for seeking the recovery of sums wrongly paid, provided that those procedures are not less favourable than those governing similar domestic actions and do not render virtually impossible or excessively difficult the exercise of rights conferred by Community law.
16 Second, after emphasising that it was compatible with Community law to set reasonable time-limits for bringing proceedings, in the interests of legal certainty which protects both the taxpayer and the administration, it stressed that such periods could not be regarded as rendering virtually impossible or excessively difficult the exercise of rights conferred by Community law even if, by definition, the expiry of those periods necessarily entailed the dismissal, in whole or in part, of the action brought. Specifically, the period of five years set by Danish law was reasonable and applied without distinction to actions based on Community law and those based on national law.
17 Third, it again rejected the application to disputes of that kind of the solution adopted in Emmott, which was justified by the particular circumstances of that case, in which the time-bar had the result of depriving the applicant of any opportunity whatever to rely on her right to equal treatment under a Community directive.
18 Finally, the Court of Justice concluded that `Community law, as it now stands, does not prevent a Member State which has not properly transposed the directive from resisting actions for the repayment of charges levied in breach thereof by relying on a limitation period under national law which runs from the date on which the charges in question became payable, provided that such a period is not less favourable for actions based on Community law than for actions based on national law and does not render virtually impossible or excessively difficult the exercise of rights conferred by Community law'.
19 In view of the clarity of that dictum and the clear analogy between the factual and legal circumstances of Fantask and this case, the Commission stated at the hearing that it relinquished its earlier position and recognised that the issue had been definitively disposed of by the decision in Fantask. The plaintiffs in the main proceedings, however, endeavoured on that occasion (12) to draw attention to features which distinguished Danish law from Italian law and made the application of Fantask to their case invalid.
20 In my opinion, that endeavour failed. First, because the point of departure was wrong: rather than alleged differences between Fantask and the present case, what would have had to be proved was an analogy between the circumstances of Emmott and those of this case, since the case-law subsequent to Emmott laid stress on the singularity of the features of that case, which determined the course taken. At the hearing the United Kingdom Government drew attention, on this matter, to the fact that - among other things - it was the authorities themselves which, in that case, encouraged Mrs Emmott not to appeal. In contrast, there was no bar to the Italian companies exercising their right to appeal against the tax assessments involved. (13)
21 Secondly - and this point is unconnected with the foregoing - the alleged differences between one national legislation and another are irrelevant as far as the repercussions for this case of the Fantask rule are concerned. Whether the time-limit is of five or of three years, and whether it is laid down in a general rule or in a special rule applicable to a given category of taxes, and whether or not there has been a change in the case-law concerning the interpretation of that pre-existing rule, the important thing is that the Court of Justice has confirmed that the time-limit - of five or three years - which may be relied on to resist actions based on grounds of Community law for the repayment of taxes paid but not due can start to run when the taxes were paid, not when the State correctly transposed the directive into its internal law.
22 That statement - which, of course, presupposes the absence of any Community law provisions in this area and the existence of a provision of national law which sets the time-limit in a non-discriminatory manner is thus not undermined by the fact that, logically, the expiry of the latter period prevents reimbursement of the tax paid. That is an inherent characteristic of such a time-limit which, being inspired by the principle of legal certainty, does not thereby detract from the effectiveness of the right to judicial protection: for three years following payment, the possibility of challenging the tax assessment was open to taxpayers.
23 It might be thought that this solution is not particularly satisfactory from the viewpoint of taxpayers who have been obliged to pay a tax contrary to Community law. And that indeed is the case. A possible solution, although not one free of serious difficulties, would be to lay down a uniform Community rule in this area, harmonising the various national rules applicable. Pending the adoption of such a provision, it is for the Member States to determine, under the conditions to which I have referred, the requirements for actions for recovery.
24 It is true that in the exercise of that power the Member States - in this case, the Italian Republic - must act in accordance with the requirements of Article 5 of the Treaty. It is also true that certain steps taken by the Italian authorities regarding repayment of the tax with which these preliminary rulings are concerned, as described in the parties' submissions, appear to have placed in the way of actions for repayment more difficulties than might reasonably be expected, in the light of that article. (14) But these preliminary-ruling proceedings cannot be converted into Treaty-infringement proceedings based on Article 169 of the Treaty, nor can the fact be disregarded that the official action of the Italian Republic has substantially been in conformity with its Treaty obligations: its legislative authorities have withdrawn that part of the national tax which was contrary to Community law and expressly acknowledged the right to repayment thereof, (15) a right which is also safeguarded by the Italian judicial authorities, albeit subject to the limits of the domestic provisions on time-bars to legal proceedings.
The second preliminary question
25 The national court is not over-explicit in describing the set of national provisions as to whose compatibility with Community law it entertains the doubts which it expresses in its second preliminary question. That question, although framed in very broad terms relating to any `remedial procedure', is in fact concerned with the duality of national provisions governing the charging of default interest in cases where revenue unduly levied is reimbursed. That is the inference to be drawn from the legal grounds of the order for reference.
26 Those provisions are described in that order in the following terms:
- According to traditional principles governing the recovery of undue payments, interest is awarded at the statutory rate (currently 10 per cent per annum) on the sums repayable, and, in circumstances where the recipient party is held to have acted in good faith at the time the sums were levied, is calculated as from the time when the claim for repayment was made.
In this case, however, the Avvocatura dello Stato (State Legal Service) contends, citing Article 3 of Decree-Law No 307 of 25 March 1994, which has now been converted into Law No 457 of 22 July 1994, that the rate to be applied is 3 per cent for each completed semester, as is usual in the case of obligations on the part of the State to make repayment.
If application were to be made of the decree-law cited above, which in particular refers for the determination of the rate to an administrative measure which is still pending, it would cause further damage to an individual who has made payment. Where the recipient public authority is held to have acted in good faith, the citizen is allowed interest on the sums in respect of which he succeeds in obtaining a repayment order only as from the date on which he instituted proceedings in respect of his claim, such interest being reduced, moreover, to the extent determined by that public body, which has failed to fulfil its obligation to transpose the Community directive into national law.
27 The question, put in those terms, raises two problems:
(a) whether national legislation which applies different rules to the charging of default interest on late payment of revenue unduly levied depending on whether debts between private persons or claims against the tax authorities are concerned is compatible with Community law;
(b) the impact which may also derive from the fact that the interest rate is determined `by a measure enacted by the same State as that which infringed the injured party's rights by failing to fulfil its obligations'.
28 I shall analyse the latter problem first. Both the Commission and the Italian Government state that the terms in which it is described do not sufficiently take account of the fact that the provision at issue has not been applied to the circumstances of the main proceedings and has not even been incorporated into domestic law.
29 In fact, Article 3 of Decree-Law No 307 of 23 May 1994 (subsequently converted into Law No 457 of 22 July 1994) which, as from its entry into force, (16) authorised the Minister of Finance to determine by decree the interest rates applicable to debts payable to and by the State, having regard to developments on the monetary and financial markets, has not been applied, since the Minister of Finance did not avail himself of that authority.
30 This means that the rates for default interest were and are determined by provisions ranking as laws, (17) applicable generally. Specifically, Decree-Law No 557/1993 of 30 December 1993 was applicable, which laid down an interest rate of 3% per half-year for claims and debts of a fiscal nature.
31 It is therefore unnecessary to take account of the circumstances to which the national court refers, since they are purely hypothetical and unconnected with the reality of the facts at issue in the main proceedings.
32 The fact that those provisions lay down, for debts of and claims against the revenue authorities, rates of default interest different from those applicable to relations between private persons lies at the heart of the second question, construed in accordance with the considerations set out in the order for reference. I must examine this point further.
33 As regards exercise of the right to secure repayment of tax paid but not due, where it derives from the incompatibility of the domestic tax with Community law, settled case-law, starting with the judgments in Rewe (18) and Comet, (19) has laid stress both on the obligation of the Member States to refund those payments, reflecting the right of taxpayers to have them repaid, (20) and on the fact that the exercise of that right is subject to the usual conditions applicable within the legal order of each State.
34 Summarising the approach taken in the case-law, the judgment of 29 June 1988 in Deville, (21) stated: `In the absence of Community rules concerning the refunding of national taxes which have been wrongly levied, it is for the domestic legal system of each Member State to designate the courts having jurisdiction and to determine the procedural conditions governing actions at law intended to ensure the protection of the rights which citizens derive from the direct effect of Community law, it being understood that such conditions cannot be less favourable than those relating to similar actions of a domestic nature, and may not make it impossible in practice to exercise rights which the national courts have a duty to protect.' (22)
35 Like all the Member States which have submitted observations in this case, I see no reason whatever to prevent a national legislature from making actions for the recovery of wrongly levied taxation subject to conditions different from those governing similar actions between private individuals.
36 The legality of that distinction was, moreover, upheld by the Court of Justice in paragraphs 22 to 25 of Denkavit Italiana, cited above. After recognising that Community law does not necessarily require the establishment of a uniform rule common to all Member States regarding the conditions of substance and of form governing objections to or recovery of taxes levied in breach of such law, and that the way this problem is dealt with varies from one Member State to another, and even within each State, depending on the various types of taxes, the Court of Justice acknowledged the viability of the two sets of national rules most prevalent in this area:
- In certain cases, national laws make objections or claims for the refund of taxes illegally levied subject to specific procedural conditions and time-limits with regard both to complaints submitted to the tax authorities and to legal proceedings.
- In other cases, claims for repayment of taxes paid but not due must be brought before the ordinary courts, in particular in the form of claims for the refunding of sums paid but not owed. Such actions are available for varying lengths of time, in some cases for the limitation period laid down under the general law.
37 Next, the Court of Justice, reiterating its case-law in Rewe and Comet, cited above, held that, from the Community point of view, the conditions required of the various national systems regarding claims for refunds of amounts paid but not due, the illegality of which derives from a Community provision, were the abovementioned requirements that there must be no discrimination and the actions concerned must not be rendered illusory. Both those requirements are an expression, according to the recent judgment of 10 July 1997 in Palmisani, (23) of the `principle of equivalence' (with the requirements laid down for similar domestic claims) and of the `principle of effectiveness' of Community law, respectively.
38 Those conditions apply both to the principal obligation of repaying the sum unduly levied and to the incidental obligation of paying interest thereon. The latter obligation must thus also be governed by the national provisions applicable to this matter, applied without distinction to claims originating in domestic law or in Community law.
39 The Court of Justice expressly confirmed this in its judgment of 12 June 1980 in Express Dairy Foods: (24) in the absence of provisions of Community law on this point it is for the national authorities, and particularly for national courts, in cases concerning the recovery of charges improperly imposed, to settle all ancillary questions relating to such reimbursement, such as the payment of interest, by applying their domestic rules regarding the rate of interest and the date from which interest must be calculated.
40 In my Opinion in EDIS, I have expressed the view that no provision or principle of Community law prevents the national legislature from setting limitation periods or time-limits for the institution of proceedings which differ according to the area of law involved, provided that they apply without distinction to rights deriving from national provisions or Community provisions. The national legislature is free to impose limitation periods or time-limits in matters of taxation which need not coincide with those laid down for any other kind of civil relationship. No rule or principle of Community law requires it for such purposes to treat tax relations in the same way as relations inter privatos.
41 These statements apply also to another aspect of the rules on entitlement to refunds, namely the payment of interest. Community law does not require that the rate and the other features of interest governed by legislation should be the same for relations between private individuals as for relations with tax authorities. What it does require is that the rates and other factors should apply without distinction to actions based on domestic law and those based on Community law.
42 There would thus be discrimination if the Italian provision on interest applicable to actions for repayment of the tax unduly paid provided for rates which differed according to the origin - national or Community - of the obligation to reimburse. That would be the case if the rates applicable to the refund of the tax, on the ground that it was contrary to Community law, were lower than those applicable to refund of the same tax for any other reason under national law. But since that does not occur and the interest which the tax authorities must pay, in accordance with the rules cited by the national court, applies without distinction to all actions for recovery of the tax, whatever the basis thereof, the answer to the second question from the national court must uphold the compatibility of those rules with Community law.
43 As regards the other aspects of this question which were not directly raised by the national court, but by the Commission and other plaintiff companies in their observations, (25) I refer to what I have already stated in my Opinion in EDIS (points 51 to 65).
Conclusion
44 I therefore suggest that the Court of Justice answer the questions from the Tribunale di Genova as follows:
(1) Community law does not preclude the application to a claim for refund of a tax incompatible with a directive of a national provision under which legal proceedings for recovery of taxes paid but not due are time-barred on the expiry of three years after the date of payment, even where that provision prevents, wholly or in part, the repayment of those taxes.
(2) Community law does not preclude the imposition by national law, for actions against the tax authorities for the recovery of taxes paid but not due, of interest rates which differ from those laid down for actions for the recovery of sums unduly paid between private individuals, provided that those rates apply without distinction to actions for recovery based on grounds of domestic law and those deriving from the application of Community provisions.
(1) - Joined Cases C-71/91 and C-178/91 [1993] ECR I-1915.
(2) - OJ, English Special Edition 1969 (II), p. 412.
(3) - The relevant measure was Decree Law No 331 of 30 August 1993, converted into Law No 427 of 29 October 1993.
(4) - To that effect, see the judgments of the Corte di Cassazione (First Civil Chamber) of 28 March 1994 (No 2992); of 23 November 1994 (No 9900), and of 23 February 1996 (Nos 4468/96 and 3458/96), the latter having been delivered by the Combined Chambers (Sezioni Unite). Similarly, in the second paragraph of the grounds of judgment No 56 of 24 February 1995, the Corte Costituzionale, after outlining the problematical legislative background to the charge, considered that it should be abolished as regards previous years (1993): `Since the charge was improperly levied by the Italian State, in breach of Article 10 of Directive 69/335/EEC of 17 July 1969, as interpreted by the Court of Justice in its judgment of 20 April 1993 in Joined Cases C-71/91 and C-178/91, the sums paid are recoverable under Community law, which is directly applicable within the Italian legal order.'
(5) - Case C-208/90 [1991] ECR I-4269.
(6) - Paragraph 23.
(7) - Case C-338/91 [1993] ECR I-5475.
(8) - Case C-410/92 [1994] ECR I-5483.
(9) - Case C-90/94 [1997] ECR I-4085.
(10) - Joined Cases C-114/95 and C-115/95 [1997] ECR I-4263.
(11) - Case C-188/95 [1997] ECR I-6783, paragraphs 42 to 52.
(12) - The hearing was held jointly for Cases C-231/96 EDIS, C-260/96 SPAC, C-279/96 Ansaldo Energia, C-280/96 Marine Insurance Consultants and C-281/96 GMB and Others.
(13) - The lawyer acting for EDIS made this clear himself at the hearing when he recognised that as early as 1989 (and therefore, not only before the judgment in Ponente Carni but also before the question disposed of by that judgment arose) another EDIS company, linked with his client, and a number of other Italian companies had challenged the registration tax assessment before the Italian courts. Although their actions were dismissed, on substantive grounds, it was thus clear that they were not denied entitlement to judicial protection.
(14) - Amongst others, the need to commence legal proceedings to obtain a right enforceable against the revenue authorities, a requirement which may also involve an unjustified increase in litigation - and, incidentally, a delay in the administration of justice - to the detriment of tax payers.
(15) - Article 61 of Decree-Law No 331 of 30 August 1993 lays down the procedure for reimbursement of sums unduly paid in respect of this tax, either by an administrative complaint procedure (for sums paid in respect of the 1992 tax year) or by means of set-off (for those paid in respect of 1993).
(16) - 1 January 1995.
(17) - The laws and decree-laws governing the interest rates in question have undergone numerous changes over recent years, obviously as a result of changes in rates on the monetary and financial markets.
(18) - Case 33/76 [1976] ECR 1989.
(19) - Case 45/76 [1976] ECR 2043.
(20) - The basis of this right, in the case of repayment of national taxes incompatible with Community law, is to be found in various rules or principles, to some of which reference has been made in judgments of the Court of Justice. Thus, reference has been made to Article 5 of the Treaty, in so far as it requires the Member States to ensure fulfilment of Treaty obligations; on other occasions, reference has been made to the need to uphold the direct effect of the Community provisions with which the national provision establishing the tax is incompatible; mention has also been made of the general prohibition of unjust enrichment, from which the State would benefit if it did not have to repay the sums improperly levied.
(21) - Case 240/87 [1988] ECR 3513.
(22) - Those statements are a consistent feature in what is now a long series of judgments which, starting with Rewe and Comet, cited above, have been delivered in this area: Case 177/78 Pigs & Bacon Commission [1979] ECR 2161; Case 68/79 Just [1980] ECR 501; Case 265/78 Ferwerda [1980] ECR 617; Case 61/79 Denkavit Italiana [1980] ECR 1205; Case 811/79 Ariete [1980] ECR 2545; Case 826/79 MIRECO [1980] ECR 2559; Case 199/82 San Giorgio [1983] ECR 3595; Joined Cases 331/85, 376/85 and 378/85 Bianco and Girard [1988] ECR 1099; Case C-5/94 Hedley Lomas [1996] ECR I-2553, among others.
(23) - Case C-261/95 [1997] ECR I-4025.
(24) - Case 130/79 [1980] ECR 1887, paragraph 17.
(25) - In this case, the Commission confined itself to a reference to its submissions in EDIS.
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