Court of Justice of the European Communities (including Court of First Instance Decisions)

Provisional text

JUDGMENT OF THE COURT (Ninth Chamber)

18 January 2017 (*)

(Reference for a preliminary ruling — Directive 2003/96/EC — Taxation of energy products and electricity — Tax reductions — Substantive scope — Incentives in respect of the amounts covering general electricity charges — Article 17 — Energy-intensive businesses — Incentives granted to such businesses in the manufacturing sector alone — Lawfulness)

In Case C‑189/15,

REQUEST for a preliminary ruling under Article 267 TFEU from the Consiglio di Stato (Council of State, Italy), made by decision of 17 March 2015, received at the Court on 24 April 2015, in the proceedings

Istituto di Ricovero e Cura a Carattere Scientifico (IRCCS) — Fondazione Santa Lucia

v

Cassa conguaglio per il settore elettrico,

Ministero dello Sviluppo economico,

Ministero dell’Economia e delle Finanze,

Autorità per l’energia elettrica e il gas,

intervening party:

2M SpA,

THE COURT (Ninth Chamber),

composed of E. Juhász, President of the Chamber, C. Vajda (Rapporteur) and C. Lycourgos, Judges,

Advocate General: M. Campos Sánchez-Bordona,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

–        Istituto di Ricovero e Cura a Carattere Scientifico (IRCCS) — Fondazione Santa Lucia, by G. Pellegrino, avvocato,

–        the Italian Government, by G. Palmieri, acting as Agent, and by A. Vitale and P. Gentili, avvocati dello Stato,

–        the European Commission, by K. Herrmann, M. Owsiany-Hornung and F. Tomat, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 21 April 2016,

gives the following

Judgment

1        This request for a preliminary ruling concerns the interpretation of Article 17(1) of Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity (OJ 2003 L 283, p. 51).

2        The request has been made in proceedings between the Istituto di Ricovero e Cura a Carattere Scientifico (IRCCS) — Fondazione Santa Lucia (Scientific In-patient Care Institute — Foundation Saint Lucia; ‘the foundation’) and the Cassa conguaglio per il settore elettrico (Electricity Industry Equalisation Fund, Italy), the Ministero dello Sviluppo economico (Ministry of Economic Development, Italy), the Ministero dell’Economia e delle Finanze (Ministry of Economy and Finances, Italy) and the Autorità per l’energia elettrica e il gas (Electrical Energy and Gas Authority, Italy) concerning the refusal by the competent Italian authorities to permit the foundation to benefit from the Italian national payment incentive scheme covering general electricity charges (‘general electricity charges’).

 Legal context

 EU law

3        Recitals 9, 10 and 11 of Directive 2003/96 read as follows:

‘(9)      Member States should be given the flexibility necessary to define and implement policies appropriate to their national circumstances.

(10)      Member States wish to introduce or retain different types of taxation on energy products and electricity. To that end, Member States should be permitted to comply with the Community minimum taxation levels by taking into account the total charge levied in respect of all indirect taxes which they have chosen to apply (excluding [value added tax (VAT)]).

(11)      Fiscal arrangements made in connection with the implementation of this Community framework for the taxation of energy products and electricity are a matter for each Member State to decide. In this regard, Member States might decide not to increase the overall tax burden if they consider that the implementation of such a principle of tax neutrality could contribute to the restructuring and the modernisation of their tax systems by encouraging behaviour conducive to greater protection of the environment and increased labour use. ‘

4        Article 1 of Directive 2003/96 provides:

‘Member States shall impose taxation on energy products and electricity in accordance with this Directive. ‘

5        According to Article 4 of that directive:

‘1.      The levels of taxation which Member States shall apply to the energy products and electricity listed in Article 2 may not be less than the minimum levels of taxation prescribed by this directive.

2.      For the purpose of this directive “level of taxation” is the total charge levied in respect of all indirect taxes (except VAT) calculated directly or indirectly on the quantity of energy products and electricity at the time of release for consumption.’

6        Article 8(2) of that directive states:

This article shall apply to the following industrial and commercial purposes:

...

(b)      stationary motors;

(c)      plant and machinery used in construction, civil engineering and public works;

... ‘

7        Article 11 of the directive reads as follows:

‘1.      In this directive, “business use” shall mean the use by a business entity, identified in accordance with paragraph 2, which independently carries out, in any place, the supply of goods and services, whatever the purpose or results of such economic activities.

The economic activities comprise all activities of producers, traders and persons supplying services including mining and agricultural activities and activities of the professions.

...

2.      With respect to this directive, the business entity cannot be considered as smaller than a part of an enterprise or a legal body that from an organisational point of view constitutes an independent business, that is to say an entity capable of functioning by its own means.

...

4.      Member States may limit the scope of the reduced level of taxation for business use.’

8        Article 17(1) of Directive 2003/96 provides:

‘Provided the minimum levels of taxation prescribed in this directive are respected on average for each business, Member States may apply tax reductions on the consumption of energy products used for heating purposes or for the purposes of Article 8(2)(b) and (c) and on electricity in the following cases:

(a) in favour of energy-intensive business

An “energy-intensive business” shall mean a business entity, as referred to in Article 11, where either the purchases of energy products and electricity amount to at least 3.0% of the production value or the national energy tax payable amounts to at least 0.5% of the added value. Within this definition, Member States may apply more restrictive concepts, including sales value, process and sector definitions.

...’

9        Article 26(1) and (2) of Directive 2008/95 provides:

‘1.      Member States shall inform the Commission of measures taken pursuant to Articles 5, 14(2), 15 and 17.

2.      Measures such as tax exemptions, tax reductions, tax differentiation and tax refunds within the meaning of this Directive might constitute State aid and in those cases have to be notified to the Commission pursuant to Article 88(3) of the Treaty.

Information provided to the Commission on the basis of this Directive does not free Member States from the notification obligation pursuant to Article 88(3) of the Treaty.’

10      Article 1(1) and (2) of Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for excise duty and repealing Directive 92/12/EEC (OJ 2008 L 9, p. 12) provides:

‘1.      This directive lays down general arrangements in relation to excise duty which is levied directly or indirectly on the consumption of the following goods (hereinafter “excise goods”):

(a) energy products and electricity covered by Directive 2003/96/EC;

...

2.      Member States may levy other indirect taxes on excise goods for specific purposes, provided that those taxes comply with the Community tax rules applicable for excise duty or value added tax as far as determination of the tax base, calculation of the tax, chargeability and monitoring of the tax are concerned, but not including the provisions on exemptions.’

 Italian law

11      Decreto legislativo n. 26 (Legislative Decree No 26) of 2 February 2007 (ordinary supplement to GURI No 68 of 22 March 2007) transposed Directive 2003/96 into national law.

12      Decreto-legge n. 83 (Decree-Law No 83) of 22 June 2012 (ordinary supplement to GURI No 147 of 26 June 2012), converted, with amendments, into a Law (‘Decree-Law No 83/2012’), provides for urgent measures for growth in Italy.

13      Article 39 of Decree-Law No 83/2012, entitled ‘Review criteria for the excise system for electricity and energy products and the general electricity charges for energy-intensive businesses — Special tariff schemes for energy-intensive businesses in the manufacturing sector’, provides, in paragraphs (1) to (3):

‘1.      The Minister for the Economy and Finances, together with the Minister for Economic Development, shall adopt, by 31 December 2012 at the latest, one or more ministerial decrees, defining, pursuant to Article 17 of Directive 2003/96 ..., energy-intensive businesses, on the basis of conditions and criteria related to the minimum levels of consumption and the effect of the energy cost on the value of the undertaking’s activity.

2.      The decrees referred to in paragraph 1 are intended, next, to determine a simplified and fair system of excise duty rates on electricity and energy products used as fuel, in compliance with the conditions laid down in Directive 2003/96 ...; that system must ensure that tax income is maintained ...

3.      Within 60 days of the adoption of the decrees referred to in paragraph 1, the Electrical Energy and Gas Authority shall set the new amounts payable for general electricity charges and the criteria for their attribution by end-users, such as to take account of the definition of energy-intensive businesses in the decrees referred to in paragraph 1 and in compliance with the conditions set out in paragraph 2, in accordance with the guidelines laid down by the Minister for Economic Development ...’

14      Decreto ministeriale — Definizione delle imprese a forte consumo di energia (Ministerial Decree — Definition of energy-intensive businesses) of 5 April 2013 (GURI No 91 of 18 April 2013) was adopted to implement Article 39 of Decree-Law No 83/2012.

15      Article 3 of the Ministerial Decree provides that the review of general electricity charges is intended to institute an incentive system in favour of energy-intensive businesses, after the issue of the ministerial guidelines referred to in Article 39(3) of Decree-Law No 83/2012. Article 3(2) states that ‘the general electricity charges shall be reviewed downwards on a sliding scale according to energy consumption ..., if necessary also by reference to the sectors of activity designated by the ATECO codes [national economic activity classification system] ...’

16      The guidelines of the Minister for Economic Development of 24 July 2013 were adopted to implement Article 39(3) of Decree-Law No 83/2012 and Article 3 of that Ministerial Decree. In particular, they give the Electrical Energy and Gas Authority (now the Electrical Energy, Gas and Water System Authority) the task of redefining the amounts to cover the general electricity charges, by restricting the grant of the incentives referred to in Article 3 to energy-intensive businesses in the manufacturing sector.

17      Those guidelines were implemented by three decisions of the Electrical Energy and Gas Authority adopted in October 2013, which effectively restricted those advantages to businesses in the manufacturing sector.

 The dispute in the main proceedings and the questions referred for a preliminary ruling

18      The Foundation is a hospital and care research institute active, in particular, in the health services sector. In the view of the referring court, it can be classified as a ‘business entity’ within the meaning of Article 11 of Directive 2003/96.

19      During 2014, the Foundation applied to the Tribunale amministrativo regionale della Lombardia (Regional Administrative Court, Lombardy, Italy) for the annulment of the acts by which the competent authorities refused to allow it to benefit under the payment incentive system covering general electricity charges. That court held that the Foundation’s action was inadmissible for reasons connected with the date on which it was brought.

20      Hearing the appeal, the Consiglio di Stato (Council of State, Italy) took the view that the Foundation’s action was admissible. Consequently, it has examined the substance of the case, which raises, in particular, questions relating to EU law.

21      The referring court considers that it is able, without asking the Court, to resolve the questions relating to Articles 107 TFEU and 108 TFEU raised by the main proceedings, so its request for a preliminary ruling concerns, in particular, the interpretation of Article 17(1) of Directive 2003/96.

22      The referring court is unsure whether the incentives linked to the general electricity charges falls within the scope of Article 17(1) thereof, which deals with tax reductions. In that regard, it explains that those charges are intended to finance objectives in the general interest, such as the promotion of renewable energy sources (A3 component) and energy efficiency (UC7 component), the costs of nuclear safety and territorial clearance payments (A2 and MCT components), the special tariff schemes for the national railway company (A4 component), compensation intended for small undertakings in the electricity sector (UC4 component), support for applied research in the electricity sector (A5 component) and covering the ‘electricity bonus’ (As component) and incentives granted to energy-intensive businesses (Ae component). According to that court, the general electricity charges are charged to electricity consumers and apportioned between them, including businesses, by being entered on the electricity bills.

23      Since the incentives linked to the general electricity charges must be regarded as tax reductions, the referring court asks whether Article 17(1) of Directive 2003/96 permits Member States which introduce such reductions under that provision to grant them solely to certain energy-intensive businesses operating in sectors designated by the national authorities in order to pursue objectives in the general interest.

24      In those circumstances, the Consiglio di Stato (Council of State) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘1.      Do Italian rules (such as those at issue in the main proceedings) which, firstly, include a definition of ‘energy-intensive businesses’ in line with the directive and, secondly, grant companies of this type payment incentives covering general electricity charges (and not incentives relating to taxation of energy products and electricity as such) fall within the scope of Directive [2003/96]?

2.      Does EU law, and in particular Articles 11 and 17 of Directive [2003/96], preclude a regulatory and administrative system (such as that in force in Italian law and described in the present order) which, firstly, opts to introduce a system of concessions on the consumption of energy products (electricity) by ‘energy-intensive businesses’ within the meaning of the above-mentioned Article 17 and, secondly, restricts the possibility of benefiting from those concessions to ‘energy-intensive’ businesses operating in the manufacturing sector only, thereby excluding businesses operating in other production sectors?’

 Consideration of the questions referred

 The first question

25      By its first question, the referring court asks, in essence, whether Article 17(1) of Directive 2003/96 must be interpreted as meaning that the concept of ‘tax reductions’ covers the incentives granted, under national law, to energy-intensive businesses, as defined in that provision, in respect of amounts, such as those at issue in the main proceedings, covering general electricity charges.

26      The answer to that question depends on whether the amounts covering general electricity charges are fiscal in nature and, more particularly, constitute indirect taxation, referred to in Article 4(2) of Directive 2003/96.

27      Firstly, Article 17(1) of that directive makes the application of tax reductions on consumption of energy products and electricity subject to compliance with the minimum Community levels of taxation laid down in that directive. Secondly, Article 4(2) of Directive 2003/96 defines the concept of ‘level of taxation’, for the purposes of that directive, as the total charge levied in respect of all indirect taxes.

28      The Italian Government is of the opinion that the amounts covering general electricity charges are not fiscal but relating to pricing, since they are covered through the components of the electricity tariff.

29      However, it must be borne in mind that the nature of a tax, duty or charge must be determined by the Court, under EU law, according to the objective characteristics by which it is levied, irrespective of its classification under national law (see judgments of 12 December 2006, Test Claimants in the FII Group Litigation, C‑446/04, EU:C:2006:774, paragraph 107, and of 24 June 2010, P. Ferrero e C. and General Beverage Europe, C‑338/08 and C‑339/08, EU:C:2010:364, paragraph 25).

30      Accordingly, it is necessary to examine the objective characteristics of the amounts covering general electricity charges.

31      Firstly, it must be noted that, as is apparent from the order for reference, the amounts covering general electricity charges are laid down in Italian law and, in particular, in Article 39(3) of Decree-Law No 83/2012.

32      Furthermore, for the purposes of classification of the amounts covering general electricity charges as tax, there must be an obligation to pay those amounts and, where that obligation is not satisfied, the debtor must be pursued by the competent authorities, provided that, in the case of indirect taxation, the person legally liable to pay is not necessarily the end consumer who has in turn been charged those amounts (see, by analogy, as regards VAT, judgment of 14 January 2016, Commission v Belgium, C‑163/14, EU:C:2016:4, paragraph 44).

33      That appears to be the case of the amounts covering general electricity charges. It seems, in the light of the observations of the Italian Government, that the entities using the services of the electricity network are obliged by law to pay those amounts to the Electricity Industry Equalisation Fund. It is, however, for the referring court to confirm the existence of such an obligation and of the monitoring of compliance therewith by the competent authorities.

34      Secondly, as is also apparent from the order for reference, the amounts covering general electricity charges are intended to finance not necessarily the electricity production and distribution costs but objectives in the general interest, in accordance with the allocation criteria laid down by the public authorities, on the basis of the guidelines of the Minister for Economic Development of 24 July 2013 and the decisions of the Electrical Energy and Gas Authority adopted in October 2013, in the context of the national electricity system. Those objectives include the promotion of renewable energy sources and energy efficiency, nuclear safety and territorial clearance payments, the special tariff schemes for the national railway company, compensation intended for small undertakings in the electricity sector, support for applied research in the electricity sector and covering the ‘electricity bonus’ and incentives granted to energy-intensive businesses.

35      In that context, it must be noted that the fact that the amounts covering general electricity charges are not intended for the general national budget but, as the Italian Government states, are paid to the management accounts of the Electricity Industry Equalisation Fund and allocated to certain categories of operators for specific uses cannot of itself preclude them from coming within the field of direct taxation (see, by analogy, judgment of 15 April 2010, CIBA, C‑96/08, EU:C:2010:185, paragraph 23).

36      Thirdly, as regards, more specifically, indirect taxation, it must be noted that such duties are typically charged to the end consumer of the goods or service supplied by their inclusion in the amount on the invoice sent to him (see, to that effect, judgment of 14 January 2016, Commission v Belgium, C‑163/14, EU:C:2016:4, paragraph 39).

37      In that regard, the referring court points out that the general electricity charges are charged to electricity consumers and apportioned between them, including businesses, by being entered on their electricity bills. That is confirmed in Article 39(3) of Decree-Law No 83/2012, by virtue of which the amounts covering those charges are charged in turn to the end consumers.

38      In addition, it seems that those amounts are linked to the electricity consumed since, by virtue of Article 3(2) of the Ministerial Decree of 5 April 2013, the general electricity charges are reduced according to electricity consumption.

39      For those reasons, the amounts covering general electricity charges cannot be compared with the tax at issue in the case which gave rise to the judgment of 4 June 2015, Kernkraftwerke Lippe-Ems (C‑5/14, EU:C:2015:354), in which the Court took the view that that tax could not be regarded calculated directly or indirectly on the basis of the quantity of electricity at the time of release for consumption of that product within the meaning of Article 4(2) of Directive 2003/96. The Court based that conclusion on the findings in paragraphs 62 and 63 of that judgment that the tax was calculated in particular on the quantity of nuclear fuel used to produce electricity and that that quantity was not directly commensurate with the amount of electricity produced, so that the tax could be levied without any electricity having necessarily even been produced or, as a consequence, consumed.

40      In the light of the foregoing considerations and subject to verification by the referring court of the facts and the rules of national law on which they are based, it must be held that the amounts covering general electricity charges constitute indirect taxation within the meaning of Article 4(2) of Directive 2003/96.

41      Furthermore, as the Commission noted in its written observations, since the amounts covering general electricity charges constitute indirect taxes, the conditions laid down by EU law as regards products, such as electricity, which, as follows from Article 1(1) of Directive 2008/118, are subject to the general arrangements in relation to excise duty established thereby, must be satisfied.

42      More specifically, in accordance with Article 1(2) of that directive, electricity may be subject to indirect taxation other than the excise duty established by that directive if, firstly, the tax pursues one or more specific purposes and if, secondly, it complies 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, which rules do not include the provisions on exemptions.

43      It is for the referring court to ascertain whether the amounts covering general electricity charges satisfy those conditions.

44      In the light of the foregoing considerations, the answer to the first question is that Article 17(1) of Directive 2003/96 must be interpreted as meaning that the concept of ‘tax reductions’ covers the incentives granted, under national law, to energy-intensive businesses, as defined in that provision, in respect of amounts, such as those at issue in the main proceedings, covering general electricity charges, subject to verification by the referring court of the facts and the rules of national law on which this answer from the Court is based.

 The second question

45      By its second question, the referring court asks, in essence, whether Article 17(1) of Directive 2003/96 must be interpreted as precluding national rules which provide for tax reductions on the consumption of electricity in favour of energy-intensive businesses, within the meaning of that provision, in the manufacturing sector alone.

46      In that regard, it is apparent from the order for reference that, by virtue of the national rules at issue in the main proceedings, only ‘energy-intensive’ businesses in the manufacturing sector have the benefit of incentives relating to the amounts covering general electricity charges.

47      In accordance with Article 17(1)(a) of Directive 2003/96, provided the minimum levels of taxation prescribed in that directive are respected on average for each business, Member States may apply tax reductions on the consumption of electricity in favour of energy-intensive businesses.

48      That provision also defines the concept of ‘energy-intensive business’ and states, in the context of that definition, that Member States may apply more restrictive criteria, such as sales value, process and sector definitions.

49      It follows therefrom that, for the purposes of that provision, the Member States remain free to restrict the benefit of tax reductions for energy-intensive businesses to those in one or more industrial sectors. Consequently, that provision does not preclude national rules, such as those at issue in the main proceedings, which grant incentives in respect of the amounts covering general electricity charges to the manufacturing sector alone.

50      That interpretation is borne out by the examination of the objectives pursued by Directive 2003/96. It is apparent from recitals 9 and 11 of that directive that it seeks to give Member States the flexibility necessary to define and implement policies appropriate to their national circumstances and the arrangements made in connection with the implementation of that directive are a matter for each Member State to decide.

51      Nevertheless, it must be pointed out that the fact that national rules such as those at issue in the main proceedings, which restrict the benefit of a tax reduction to an industrial sector, do not run counter to Article 17(1) of Directive 2003/96 is, as follows from Article 26(2) of that directive, without prejudice to whether those rules constitute State aid. However, as the referring court has expressly stated, that question does not form part of the present reference for a preliminary ruling.

52      Having regard to the foregoing considerations, the answer to the second question is that Article 17(1) of Directive 2003/96 must be interpreted as not precluding national rules which provide for tax reductions on the consumption of electricity in favour of energy-intensive businesses, within the meaning of that provision, in the manufacturing sector alone.

 Costs

53      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Ninth Chamber) hereby rules:

1.      Article 17(1) 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 the concept of ‘tax reductions’ covers the incentives granted, under national law, to energy-intensive businesses, as defined in that provision, in respect of amounts, such as those at issue in the main proceedings, covering general electricity charges, subject to verification by the referring court of the facts and the rules of national law on which this answer from the Court is based.

2.      Article 17(1) of Directive 2003/96 must be interpreted as not precluding national rules which provide for tax reductions on the consumption of electricity in favour of energy-intensive businesses, within the meaning of that provision, in the manufacturing sector alone.

[Signatures]

* Language of the case: Italian.

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