Case C‑90/17

Turbogás — Produtora Energética SA

v

Autoridade Tributária e Aduaneira

(Request for a preliminary ruling from the Tribunal Arbitral Tributário (Centro de Arbitragem Administrativa))

(Reference for a preliminary ruling — Directive 2003/96/EC — Taxation of energy products and electricity — Third subparagraph of Article 21(5) — Entity producing electricity for its own use — Small producers of electricity — Article 14(1)(a) — Energy products used for the production of electricity — Obligation to exempt)

Summary — Judgment of the Court (First Chamber), 27 June 2018

Tax provisions — Harmonisation of laws — Taxation of energy products and electricity — Directive 2003/96 — Exemption of energy products used to produce or maintain the ability to produce electricity — Obligation to exempt — Scope — Energy products produced by an entity producing electricity for its own use — Included — Burden of proof of use

(Council Directive 2003/96, Arts 14(1)(a) and 21(5), third para.)

The third subparagraph of Article 21(5) and Article 14(1)(a) of Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity must be interpreted as meaning that an entity such as the one in question in the main proceedings, which generates electricity for its own use, regardless of its size and irrespective of its main economic activity, must be regarded as a ‘distributor’, within the meaning of the first of those provisions, whose consumption of electricity for the production of electricity, however, comes under the mandatory exemption provided for in Article 14(1)(a).

It must be pointed out, however, that Directive 2003/96 does not govern how proof that energy products have been used for purposes giving rise to a right to exemption is to be adduced. On the contrary, as is clear from Article 14(1) thereof, Directive 2003/96 gives the Member States responsibility for laying down the conditions for the exemptions referred to in that provision, in order to ensure the correct and straightforward application of such exemptions and to prevent any evasion, avoidance or abuse. The fact remains that the Member States, when exercising their power to lay down the conditions to which the exemptions provided for in Article 14(1) of the directive are subject, must observe the general principles of law which form part of the legal order of the European Union, including, inter alia, the principle of proportionality (judgment of 2 June 2016, Polihim-SS, C‑355/14, EU:C:2016:403, paragraphs 57 and 59). While Member States may provide for a financial penalty to be imposed for non-compliance with formal requirements (see, to that effect, judgment of 2 June 2016, ROZ-ŚWIT, C‑418/14, EU:C:2016:400, point 40), such non-compliance cannot call into question entitlement to the mandatory exemption provided for in Article 14(1)(a) of Directive 2003/96 if the substantive conditions relating to its application are fulfilled (see, to that effect, judgment of 13 July 2017, Vakarų Baltijos laivų statykla, C‑151/16, EU:C:2017:537, paragraph 51).

(see paras 43-45, operative part)