ECJ Judgment 27 February 2014, C-82/12, Transportes Jordi Besora, considers that the Spanish Tax on Oil Retail Sales was contrary to EU law and that the tax revenue collected over the years (€ 13,000 M) should be refunded to taxpayers.
According to the Court:
“Article 3(2) of Council Directive 92/12/EEC of 25 February 1992 on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products must be interpreted as precluding national legislation that establishes a tax on the retail sale of mineral oils such as the tax on retail sales of certain hydrocarbons (Impuesto sobre las Ventas Minoristas de Determinados Hidrocarburos) at issue in the main proceedings, for such a tax cannot be regarded as pursuing a specific purpose within the meaning of that provision where that tax, intended to finance the exercise by the regional or local authorities concerned of their powers in the fields of health and the environment, is not itself directed at protecting health and the environment”.
The tax was introduced to help finance the regional competencies on healthcare, implemented in 2001. The tax was created by the Spanish Parliament and ceded to the regions. It consisted of a general tax rate (which applied in every region) and a surcharge that could be implemented at regional level. The idea was to make the regions politically responsible for their level of healthcare expenditure by means of such surcharge. The scheme did not work properly until the global economic crisis as most regions were reluctant to implement the surcharge.
Parliamentary Act no. 2 of 2012 repealed the Tax on Oil Retail Sales and introduced a new regional variable tax rate into the ordinary Hydrocarbons Tax. The legal grounds were on a provision of the Proposal for a Council Directive amending Directive 2003/96/EC restructuring the Community framework for the taxation of energy products and electricity (COM(2011)0169 – C7-0105/2011 – 2011/0092(CNS)). The problem is that the regional tax rate is already in force but the proposal has not been passed yet.
As I mentioned before, the Oil Retail Tax collected over the years amounts to € 13,000 M which, in principle, should be refunded to taxpayers.
To avoid such refund, “in their written observations, the Generalitat de Catalunya and the Spanish Government have requested that the Court limit the temporal effects of the present judgment in the event that it should find that Article 3(2) of Directive 92/12 precludes the establishment of a tax such as the IVMDH at issue in the main proceedings” (paragraph 37).
“In support of their request, the Generalitat de Catalunya and the Spanish Government, first, draw the Court’s attention to the serious financial consequences which a judgment making such a finding would have. The IVMDH has given rise to abundant litigation. The obligation to refund that tax, the proceeds of which reached approximately EUR 13 billion between 2002 and 2011, would jeopardise the financing of public health in the Autonomous Communities” (paragraph 38).
“Secondly, they contend that, having regard to the European Commission’s conduct, they had in good faith become convinced that the tax complied with European Union law” (paragraph 39).
However, the Judgment considers that:
“The opinion provided by the staff of the Commission, on which the Generalitat de Catalunya and the Spanish Government rely, clearly concluded that the introduction of a tax on mineral oils that would vary in rate from one Autonomous Community to another, such as that proposed by the Spanish authorities, was contrary to European Union law. In particular, the Commission staff made it clear that such a tax could be regarded as compatible with Article 3(2) of Directive 92/12 only if a coherent link existed between the amount of that tax and the health or environmental protection problems it was intended to remedy and on the condition that it was not chargeable at the time of the mineral oils’ release for consumption. Furthermore, as early as 2003, that is, the year after the IVMDH came into force, the Commission initiated an infringement procedure against the Kingdom of Spain concerning that tax”.
“It should nevertheless be recalled that it is settled case-law that the financial consequences which might ensue for a Member State from a preliminary ruling do not in themselves justify limiting the temporal effects of the ruling (Case C‑184/99 Grzelczyk  ECR I‑6193, paragraph 52; Case C‑209/03 Bidar  ECR I‑2119, paragraph 68; Kalinchev, paragraph 52; and Santander Asset Management SGIIC and Others, paragraph 62)” (paragraph 48).
“If it were otherwise, the most serious infringements would receive more lenient treatment inasmuch as it is those infringements that are liable to have the most significant financial implications for Member States. Furthermore, to limit the temporal effects of a judgment solely on the basis of such considerations would considerably diminish the judicial protection of the rights which taxpayers have under the fiscal legislation of the European Union (Joined Cases C‑367/93 to C‑377/93 Roders and Others  ECR I‑2229, paragraph 48)” (paragraph 49).
“It follows from those considerations that it is not appropriate to limit the temporal effects of the present judgment” (paragraph 50).
The financial consequences could seriously damage Spanish fiscal policies. The next question would be who is responsible for the refund to taxpayers: the Spanish Parliament introduced the law, most regional parliaments introduced surcharges and all the money went to regional authorities.
Pedro M. Herrera