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

Provisional text

JUDGMENT OF THE COURT (Eighth Chamber)

28 September 2023 (*)

(Reference for a preliminary ruling – Internal taxation – Article 110 TFEU – Repayment of a tax levied by a Member State in breach of EU law – Tax on the first registration of a motor vehicle – Incorporation of the tax in the market value of the vehicle in respect of which that tax was paid – Transfer to a subsequent purchaser of the vehicle of the right to reimbursement)

In Case C‑508/22,

REQUEST for a preliminary ruling under Article 267 TFEU from the Curtea de Apel Braşov (Court of Appeal, Braşov, Romania), made by decision of 22 June 2022, received at the Court on 27 July 2022, in the proceedings

KL,

PO

v

Administrația Județeană a Finanțelor Publice Brașov,

THE COURT (Eighth Chamber),

composed of M. Safjan, President of the Chamber, N. Jääskinen (Rapporteur) and M. Gavalec, Judges,

Advocate General: M. Szpunar,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

–        KL and PO, by D. Târşia, avocat,

–        the Romanian Government, by R. Antonie, E. Gane and O.-C. Ichim, acting as Agents,

–        the European Commission, by M. Björkland and T. Isacu de Groot, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1        This request for a preliminary ruling concerns the interpretation of Article 110 TFEU.

2        The request has been made in proceedings between, on the one hand, KL and PO, as the heirs of AX, and, on the other hand, the Administrația Județeană a Finanțelor Publice Brașov (District Finance Administration, Brașov, Romania) (‘the tax authority’), concerning the reimbursement of a tax, which was levied in breach of EU law at the time of the first registration of a vehicle, to a subsequent purchaser of that vehicle.

 Legal context

 European Union law

3        Article 110 TFEU provides:

‘No Member State shall impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products.

Furthermore, no Member State shall impose on the products of other Member States any internal taxation of such a nature as to afford indirect protection to other products.’

 Romanian law

4        The Ordonanța de urgență a Guvernului nr. 52/2017 privind restituirea sumelor reprezentând taxa specială pentru autoturisme și autovehicule, taxa pe poluare pentru autovehicule, taxa pentru emisiile poluante provenite de la autovehicule și timbrul de mediu pentru autovehicule (Emergency Government Order No 52/2017, on the refund of amounts constituting the special tax on passenger cars and motor vehicles, the tax on pollution from motor vehicles, the tax on pollutant emissions from motor vehicles and the environmental vignette for motor vehicles), of 4 August 2017 (Monitorul Oficial al României, Part I, No 644 of 7 August 2017; ‘OUG No 52/2017’), defines the procedure for the reimbursement of several motor vehicle taxes which the Court has held to be contrary to EU law.

5        According to Article 1(1) of OUG No 52/2017:

‘Taxpayers who have paid (i) the special tax on passenger cars and motor vehicles, laid down by Articles 214¹ to 214³ of Law No 571/2003 on the tax code, as subsequently amended and supplemented, (ii) the tax on motor vehicle pollution, laid down by Emergency Government Order No 50/2008, establishing the tax on motor vehicle pollution, approved by Law No 140/2011, (iii) the motor vehicle pollutant emissions tax, laid down by Law No 9/2012, regulating the motor vehicle pollutant emissions tax, as subsequently amended and supplemented, as well as (iv) the motor vehicle environmental vignette laid down by Emergency Government Order 9/2013 regulating the motor vehicle environmental vignette, approved with amendments and additions by Law No 37/2014, as subsequently amended and supplemented, and who have not benefited from reimbursement until the entry into force of the present Emergency Government Order may request the relevant reimbursement, including the interest accrued in the period from the date of collection to the date of reimbursement, by means of an application submitted to the competent central tax body. The interest rate is that provided for in Article 174(5) of Law No 207/2015 on the code of tax procedure, as subsequently amended and supplemented.’

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

6        On 3 March 2008, SC Zilex Corn SRL purchased, under a lease purchase agreement, a Toyota motor vehicle manufactured in 2007. In order to be able to register that vehicle for the first time in Romania, the leasing company, BCR Leasing IFN SA, had paid to the Romanian authorities a special tax on passenger cars and motor vehicles (‘the special registration tax’), plus value added tax, in the amount of 6 378.23 Romanian lei (RON) (approximately EUR 1 298). The leasing company recovered that sum from Zilex Corn.

7        Ownership of the vehicle was transferred on 12 November 2012 to SC Zaral SRL and then, on 16 May 2016, to AX.

8        On 28 August 2018, AX submitted to the tax authority an application for reimbursement of the special registration tax paid for the vehicle in question, on the basis of Article 1(1) of OUG No 52/2017. The tax authority rejected that application by decision of 5 March 2019, on the ground that it had not been made by the person who had paid that tax. AX lodged a complaint against that decision, which was dismissed by decision of 29 July 2019.

9        AX brought an action before the Tribunalul Brașov (District Court, Braşov, Romania) seeking annulment of those two decisions, and an order that the tax authority reimburse the special registration tax and pay the corresponding interest.

10      By judgment of 23 December 2020, that court dismissed the action on the ground that, in accordance with the applicable national legislation, the right to reimbursement belonged only to the person who paid the special registration tax at the time of the first registration of the vehicle in question and not to subsequent purchasers of that vehicle.

11      AX brought an appeal against that judgment before the Curtea de Apel Braşov (Court of Appeal, Braşov, Romania), the referring court.

12      By judgment of 5 April 2022, that court dismissed the appeal on the ground that AX had not proved that the right to reimbursement had been transferred to her at the same time as ownership of the vehicle in question. It also held that that tax claim could not have been transferred by operation of law at the time the vehicle was purchased.

13      AX brought an application for review of that judgment before that court, alleging, inter alia, misinterpretation of Article 110 TFEU and infringement of the principle of effectiveness.

14      The referring court questions whether a Member State may refuse to reimburse a tax, which was levied at the time of the first registration of a vehicle and in breach of EU law, to the subsequent purchaser of that vehicle.

15      That court notes that OUG No 52/2017 was adopted following the judgments of the Court which held several taxes applicable to motor vehicles introduced by Romania to be contrary to EU law, including the special registration tax at issue. Further, under Article 1(1) of that order, the right to reimbursement of a tax deemed to be contrary to EU law is, however, conferred only on the taxable person who paid it.

16      Nonetheless, that court notes that since the introduction of the taxes applicable to motor vehicles, referred to in OUG No 52/2017, the vehicles concerned have been the subject of transactions and that, by the judgment of 7 April 2011, Tatu (C‑402/09, EU:C:2011:219), the Court held that such a tax, once paid, was incorporated in the market value of the vehicle.

17      Accordingly, the referring court is uncertain whether the limitation, laid down in Article 1(1) of OUG No 52/2017, of the right to reimbursement of taxes levied in breach of EU law is consistent with the Member States’ obligation to reimburse such taxes.

18      In those circumstances the Curtea de Apel Braşov (Court of Appeal, Braşov) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1)      Can EU law (Article 110 TFEU) be interpreted as meaning that the amount of a tax prohibited under EU law is incorporated in the value of a vehicle and [the claim in respect of that tax] may be transferred to third-party purchasers along with the right of ownership over the vehicle?

(2)      Does the interpretation of [Article] 110 TFEU preclude national rules, such as those laid down by Article 1 of [OUG No 52/2017], under which a refund of a tax prohibited by EU law may be made only to the taxpayer who paid the tax and not – where the tax has not been refunded to the person who paid it – to subsequent purchasers of the vehicle in respect of which the tax was paid?’

 Consideration of the questions referred

 Preliminary observations

19      Article 110 TFEU covers all products coming from the other Member States, including products originating in non-Member countries which are in free circulation in the European Union (see, to that effect, judgment of 7 May 1987, Cooperativa Co-Frutta, 193/85, EU:C:1987:210, paragraph 29).

20      In that regard, the European Commission noted, in its written observations, that the order for reference did not state whether the vehicle in question in the main proceedings, acquired in Romania, had been imported from another Member State and, consequently, expressed doubts as to whether that vehicle fell within the scope of Article 110 TFEU.

21      However, it is apparent from that order for reference that the vehicle in question is of the Toyota brand. According to the information available to the Court, vehicles of that brand are not manufactured in Romania. It can, therefore, be reasonably assumed that the vehicle in question comes from another Member State or originates in a non-Member country and is in free circulation in the European Union.

22      It is in the light of that assumption that the questions referred must be examined.

 The first question

23      By its first question, the referring court asks, in essence, whether Article 110 TFEU must be interpreted as meaning that the amount of a tax levied, in breach of EU law, by a Member State on motor vehicles at the time of first registration may be incorporated in the value of those vehicles, with the result that the claim against the State on account of the unlawful levying of that tax is considered to have been transferred, on the sale of those vehicles, to subsequent purchasers thereof.

24      In that regard, it should be noted that the first paragraph of Article 110 TFEU prohibits Member States from imposing, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products.

25      According to settled case-law, there is a breach of Article 110 TFEU where the amount of tax levied on an imported second-hand vehicle exceeds the residual tax incorporated in the value of similar second-hand vehicles already registered on national territory (judgment of 7 April 2011, Tatu, C‑402/09, EU:C:2011:219, paragraph 39 and the case-law cited).

26      When examining the compatibility with Article 110 TFEU of a registration tax introduced by a Member State and imposed on an imported second-hand vehicle, the Court has stated that the amount of such a tax is incorporated in the value of the vehicle when that tax is paid. Thus, if a vehicle registered in the Member State in question is subsequently sold as a second-hand vehicle in that Member State, its market value, including the residual registration tax, will be equal to a percentage of its original value, determined by depreciation (see, in particular, judgment of 7 April 2011, Tatu, C‑402/09, EU:C:2011:219, paragraph 40 and the case-law cited). That said, in certain specific situations, the residual amount of a tax may cease to be incorporated in the market value of the vehicles in question (see, to that effect, judgment of 9 June 2016, Budișan, C‑586/14, EU:C:2016:421, paragraph 41).

27      It must be noted that those judgments concern the examination of the neutrality of taxes whose compatibility with Article 110 TFEU has been assessed by the Court. That case-law cannot be transposed to the situation at issue in the main proceedings, which does not relate to the neutrality of the special registration tax at issue, but to the question whether, in the context of reimbursement of a tax levied in breach of EU law, such a tax may be regarded as being passed on, generally and in all cases, to the subsequent purchaser or purchasers of the vehicle in question.

28      As the Court has consistently held in relation to indirect taxes, even though indirect taxes in commerce are normally passed on in whole or in part to the final consumer, it cannot be generally assumed that the charge is actually passed on in every case. The actual passing on of such taxes, either in whole or in part, depends on various factors in each commercial transaction which distinguish it from other transactions in other contexts. Consequently, the question whether an indirect tax has or has not been passed on in each case is a question of fact to be determined by the national court, which is free to assess the evidence adduced before it (see, to that effect, judgment of 25 February 1988, Les Fils de Jules Bianco and Girard, 331/85, 376/85 and 378/85, EU:C:1988:97, paragraph 17, and order of 7 February 2022, Vapo Atlantic, C‑460/21, EU:C:2022:83, paragraph 44 and the case-law cited).

29      That must also be the case of taxes such as the special registration tax at issue, which is levied on motor vehicles at the time of their first registration in a Member State. Whether or not such tax is actually passed on, in whole or in part, to the subsequent purchaser of a vehicle in respect of which such tax has been paid depends, ultimately, on various factors relating to the factual circumstances of the commercial transactions in the context of which ownership of such a vehicle is transferred.

30      It is, therefore, for the national court to assess, on the basis of the circumstances of the case before it, whether the tax has actually been passed on in whole or in part to any of the subsequent purchasers.

31      In so far as the national court finds, on the basis of its freedom to assess the evidence submitted to it, that a special registration tax, which was paid at the time of the first registration of a vehicle, was actually passed on to the subsequent purchaser of that vehicle, there is nothing, in principle, to preclude a finding that the claim against the State on account of the unlawful levying of that tax was transferred, along with the right of ownership of the vehicle, to that purchaser.

32      Consequently, the answer to the first question is that Article 110 TFEU must be interpreted as meaning that the amount of a tax levied, in breach of EU law, by a Member State on motor vehicles at the time of their first registration may be incorporated in the value of those vehicles, with the result that the claim against the State on account of the unlawful levying of that tax is considered to have been transferred, on the sale of those vehicles, to the subsequent purchasers thereof.

 The second question

33      By its second question, the referring court asks, in essence, whether Article 110 TFEU must be interpreted as precluding national legislation which provides that a tax levied by a Member State, in breach of EU law, on motor vehicles at the time of their first registration can be refunded only to the taxable person who paid that tax, and not to a subsequent purchaser of the vehicle in question.

34      In that regard, in the first place, it is settled case-law that the right to a refund of taxes levied by a Member State in breach of the rules of EU law is the consequence and complement of the rights conferred on individuals by provisions of EU law prohibiting such taxes, as interpreted by the Court. A Member State is, therefore, in principle required to repay charges levied in breach of EU law (see, in particular, judgments of 19 July 2012, Littlewoods Retail Ltd and Others, C‑591/10, EU:C:2012:478, paragraph 24, and of 15 October 2014, Nicula, C‑331/13, EU:C:2014:2285, paragraph 27 and the case-law cited).

35      Furthermore, where a Member State has levied taxes in breach of the rules of EU law, individuals are entitled to reimbursement not only of the tax unduly levied but also of the amounts paid to that State or retained by it which relate directly to that tax (see, in particular, judgments of 19 July 2012, Littlewoods Retail Ltd and Others, C‑591/10, EU:C:2012:478, paragraph 25, and of 15 October 2014, Nicula, C‑331/13, EU:C:2014:2285, paragraph 28 and the case-law cited).

36      In the second place, it is apparent from the Court’s case-law that the repayment of duties wrongly levied can be refused, by way of exception to the principle of reimbursement, where repayment entails unjust enrichment of the persons concerned, that is to say, where it is established that the person required to pay such charges has actually passed them on to the purchaser directly (judgment of 20 October 2011, Danfoss and Sauer-Danfoss, C‑94/10, EU:C:2011:674, paragraph 21 and the case-law cited).

37      Indeed, the protection of the rights so guaranteed by the legal order of the European Union does not require repayment of taxes, charges and duties levied in breach of EU law where it is established that the person required to pay such charges has actually passed them on to other persons, such as the purchaser (see, to that effect, judgment of 16 May 2013, Alakor Gabonatermelő és Forgalmazó, C‑191/12, EU:C:2013:315, paragraph 25 and the case-law cited).

38      That is the case since, in such circumstances, the burden of the charge levied but not due has been borne not by the taxable person, but by the purchaser to whom the cost has been passed on. Accordingly, to repay the taxable person the amount of the charge already collected from the purchaser would be tantamount to paying him or her twice over, which may be described as unjust enrichment, whilst in no way remedying the consequences for the purchaser of the illegality of the charge (judgment of 20 October 2011, Danfoss and Sauer-Danfoss, C‑94/10, EU:C:2011:674, paragraph 22 and the case-law cited)

39      Such an interpretation is consonant with the purpose of the right to the recovery of sums unduly paid, which helps to offset the consequences of the duty’s incompatibility with EU law by neutralising the economic burden which that duty has unduly imposed on the operator who, in the final analysis, has actually borne it (judgments of 20 October 2011, Danfoss and Sauer-Danfoss, C‑94/10, EU:C:2011:674, paragraph 23, and of 16 May 2013, Alakor Gabonatermelő és Forgalmazó, C‑191/12, EU:C:2013:315, paragraph 24).

40      In the third place, in the absence of EU rules on the matter, it is for each Member State to lay down the detailed rules governing the recovery of national taxes levied though not due, provided, however, that those rules comply with both the principle of equivalence and the principle of effectiveness (see, to that effect, judgment of 14 October 2020, Valoris, C‑677/19, EU:C:2020:825, paragraph 21, and the case-law cited).

41      In that regard, given the purpose of the right to the recovery of sums unduly paid, as recalled in paragraph 39 above, and in order to comply with the principle of effectiveness, the conditions under which an action may be brought for recovery of sums unduly paid, fixed by the Member States, pursuant to the principle of procedural autonomy, must result in the economic burden of the duty unduly paid being able to be neutralised (judgments of 20 October 2011, Danfoss and Sauer-Danfoss, C‑94/10, EU:C:2011:674, paragraph 25, and of 16 May 2013, Alakor Gabonatermelő és Forgalmazó, C‑191/12, EU:C:2013:315, paragraph 27 and the case-law cited).

42      The Court has also stated that, if the final consumer is able, on the basis of national law, to obtain reimbursement through the taxable person of the amount of the charge passed on to him or her, that taxable person must in turn be able to obtain reimbursement from the national authorities (see, to that effect, judgment of 20 October 2011, Danfoss and Sauer-Danfoss, C‑94/10, EU:C:2011:674, paragraph 26 and the case-law cited).

43      Accordingly, a Member State may, in principle, oppose a claim for the reimbursement of a duty unduly paid, made by the final consumer to whom that duty has been passed on, on the ground that it is not that consumer who has paid the duty to the tax authorities, provided, however, that the consumer is able, on the basis of national law, to bring a civil action against the taxable person for recovery of the sums unduly paid (see, to that effect, judgment of 20 October 2011, Danfoss and Sauer-Danfoss, C‑94/10, EU:C:2011:674, paragraph 27).

44      However, if reimbursement by the taxable person were to prove impossible or excessively difficult, the principle of effectiveness requires that the purchaser be able to bring his or her claim for reimbursement against the tax authorities directly and that, to that end, the Member State must provide the necessary instruments and detailed procedural rules (see, to that effect, judgment of 20 October 2011, Danfoss and Sauer-Danfoss, C‑94/10, EU:C:2011:674, paragraph 28 and the case-law cited).

45      It follows that the purchaser of a vehicle in respect of which a tax levied by a Member State in breach of EU law has been paid and to which that tax has been passed on, must be able, in accordance with detailed national procedural rules, to obtain the reimbursement thereof from the taxable person who paid the tax or, if necessary, from the tax authorities.

46      It is nevertheless important to point out that, where a vehicle in respect of which a tax has been paid at the time of its first registration loses part of its market value, the amount of the tax included in the value of that vehicle diminishes in the same proportion as that value. Where the residual amount of the tax is passed on to the subsequent purchaser of the vehicle, it follows from the case-law cited in paragraph 36 above, which allows Member States to refuse repayment of a tax levied in breach of EU law where that repayment entails unjust enrichment of the persons concerned, that the tax to be refunded to the purchaser cannot, in any event, exceed that residual amount.

47      Thus, in the present case, the referring court must in particular ascertain, if it finds, on the basis of an assessment of the evidence submitted to it, that a residual part of the special registration tax paid at the time of the first registration of the vehicle in question has actually been passed on to a subsequent purchaser of that vehicle, that reimbursement of that tax to such a purchaser will not lead to the unjust enrichment of that purchaser.

48      Consequently, the answer to the second question is that Article 110 TFEU must be interpreted as not precluding national legislation which provides that a tax levied by a Member State, in breach of EU law, on motor vehicles at the time of their first registration can be refunded only to the taxable person who paid that tax, and not to a subsequent purchaser of the vehicle in question, provided that the purchaser who actually bore the burden of that tax may, in accordance with detailed national procedural rules, obtain the reimbursement thereof from the taxable person who paid the tax or, if necessary, from the tax authorities, where, in particular, repayment by that taxable person proves impossible or excessively difficult.

 Costs

49      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring 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 (Eighth Chamber) hereby rules:

1.      Article 110 TFEU must be interpreted as meaning that the amount of a tax levied, in breach of EU law, by a Member State on motor vehicles at the time of their first registration may be incorporated in the value of those vehicles, with the result that the claim against the State on account of the unlawful levying of that tax is considered to have been transferred, on the sale of those vehicles, to the subsequent purchasers thereof.

2.      Article 110 TFEU must be interpreted as not precluding national legislation which provides that a tax levied by a Member State, in breach of EU law, on motor vehicles at the time of their first registration can be refunded only to the taxable person who paid that tax, and not to a subsequent purchaser of the vehicle in question, provided that the purchaser who actually bore the burden of that tax may, in accordance with detailed national procedural rules, obtain the reimbursement thereof from the taxable person who paid the tax or, if necessary, from the tax authorities, where, in particular, repayment by that taxable person proves impossible or excessively difficult.

[Signatures]

*      Language of the case: Romanian.

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