Case C-480/10

European Commission

v

Kingdom of Sweden

‛Failure of a Member State to fulfil obligations — Taxation — Directive 2006/112/EC — Article 11 — National legislation restricting the possibility of forming a group of persons which can be regarded as a single taxable person for VAT purposes to undertakings in the financial and insurance sector’

Summary — Judgment of the Court (Fourth Chamber), 25 April 2013

1. Actions for failure to fulfil obligations — Subject-matter of the dispute — Determination during the pre-litigation procedure — New complaints raised in the application instituting proceedings — Not permissible

   (Art. 258 TFEU)

2. Harmonisation of fiscal legislation — Common system of value added tax — Principle of equal treatment — Principle of fiscal neutrality — Not coinciding

   (Council Directive 2006/112, Art. 11)

3. Harmonisation of fiscal legislation — Common system of value added tax — Taxable persons — Concept — Independent and uniform interpretation

   (Council Directive 2006/112, Art. 11)

4. Harmonisation of fiscal legislation — Common system of value added tax — Taxable persons — Concept — Possibility for Member States to regard closely linked persons as a single taxable person — National legislation restricting in practice the possibility of forming a group of persons regarded as a single taxable person to providers of financial and insurance services — Failure to fulfil obligations — Absence

   (Council Directive 2006/112, Art. 11)

1.  See the text of the decision.

   (see paras 15, 16, 18, 19)

2.  The principle of fiscal neutrality was intended to reflect, in matters relating to value added tax, the general principle of equal treatment, which requires that comparable situations must not be treated differently unless such treatment is objectively justified. However, although infringement of the principle of fiscal neutrality may be envisaged only as between competing traders, infringement of the general principle of equal treatment may be established, in matters relating to tax, by other kinds of discrimination which affect traders who are not necessarily in competition with each other but who are nevertheless in a similar situation in other respects. It follows that the principle of equal treatment, in matters relating to tax, does not coincide with the principle of fiscal neutrality.

   (see paras 17, 18)

3.  See the text of the decision.

   (see para. 34)

4.  A Member State does not fail to fulfil its obligations under Article 11 of Directive 2006/112 on the common system of value added tax by in practice restricting the possibility of forming a group of persons regarded as a single taxable person as regards value added tax to providers of financial and insurance services.

   As regards the objectives of Article 11 of Directive 2006/112, the European Union legislature intended, either in the interests of simplifying administration or with a view to combating abuses such as, for example, the splitting-up of one undertaking among several taxable persons so that each might benefit from a special scheme, to ensure that Member States would not be obliged to treat as taxable persons those whose ‘independence’ is purely a legal technicality.

   In addition, the second paragraph of Article 11 of Directive 2006/112 also permits Member States to adopt any measures needed to prevent tax evasion or avoidance through the use of the first paragraph of the article. Thus, with the reservation that such measures may, however, be taken only in compliance with European Union law, it is permissible for Member States to restrict the application of the scheme provided for under Article 11 to combat tax evasion or avoidance.

   The Commission has failed to show convincingly that, in the light of the need to combat tax evasion and avoidance, that measure is not well founded.

   (see paras 37-40)

Case C-480/10

European Commission

v

Kingdom of Sweden

‛Failure of a Member State to fulfil obligations — Taxation — Directive 2006/112/EC — Article 11 — National legislation restricting the possibility of forming a group of persons which can be regarded as a single taxable person for VAT purposes to undertakings in the financial and insurance sector’

Summary — Judgment of the Court (Fourth Chamber), 25 April 2013

1. Actions for failure to fulfil obligations — Subject-matter of the dispute — Determination during the pre-litigation procedure — New complaints raised in the application instituting proceedings — Not permissible

   (Art. 258 TFEU)

2. Harmonisation of fiscal legislation — Common system of value added tax — Principle of equal treatment — Principle of fiscal neutrality — Not coinciding

   (Council Directive 2006/112, Art. 11)

3. Harmonisation of fiscal legislation — Common system of value added tax — Taxable persons — Concept — Independent and uniform interpretation

   (Council Directive 2006/112, Art. 11)

4. Harmonisation of fiscal legislation — Common system of value added tax — Taxable persons — Concept — Possibility for Member States to regard closely linked persons as a single taxable person — National legislation restricting in practice the possibility of forming a group of persons regarded as a single taxable person to providers of financial and insurance services — Failure to fulfil obligations — Absence

   (Council Directive 2006/112, Art. 11)

1.  See the text of the decision.

   (see paras 15, 16, 18, 19)

2.  The principle of fiscal neutrality was intended to reflect, in matters relating to value added tax, the general principle of equal treatment, which requires that comparable situations must not be treated differently unless such treatment is objectively justified. However, although infringement of the principle of fiscal neutrality may be envisaged only as between competing traders, infringement of the general principle of equal treatment may be established, in matters relating to tax, by other kinds of discrimination which affect traders who are not necessarily in competition with each other but who are nevertheless in a similar situation in other respects. It follows that the principle of equal treatment, in matters relating to tax, does not coincide with the principle of fiscal neutrality.

   (see paras 17, 18)

3.  See the text of the decision.

   (see para. 34)

4.  A Member State does not fail to fulfil its obligations under Article 11 of Directive 2006/112 on the common system of value added tax by in practice restricting the possibility of forming a group of persons regarded as a single taxable person as regards value added tax to providers of financial and insurance services.

   As regards the objectives of Article 11 of Directive 2006/112, the European Union legislature intended, either in the interests of simplifying administration or with a view to combating abuses such as, for example, the splitting-up of one undertaking among several taxable persons so that each might benefit from a special scheme, to ensure that Member States would not be obliged to treat as taxable persons those whose ‘independence’ is purely a legal technicality.

   In addition, the second paragraph of Article 11 of Directive 2006/112 also permits Member States to adopt any measures needed to prevent tax evasion or avoidance through the use of the first paragraph of the article. Thus, with the reservation that such measures may, however, be taken only in compliance with European Union law, it is permissible for Member States to restrict the application of the scheme provided for under Article 11 to combat tax evasion or avoidance.

   The Commission has failed to show convincingly that, in the light of the need to combat tax evasion and avoidance, that measure is not well founded.

   (see paras 37-40)