# C_2006060EN.01002301.xml

| 11.3.2006 | EN | Official Journal of the European Union | C 60/23 |
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11.3.2006

EN

Official Journal of the European Union

C 60/23

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Action brought on 22 December 2005 by the Commission of the European Communities against the Portuguese Republic

(Case C-462/05)

(2006/C 60/45)

Language of the case: Portuguese

An action against the Portuguese Republic was brought before the Court of Justice of the European Communities on 22 December 2005 by the Commission of the European Communities, represented by Richard Lyal and Margarida Afonso, acting as Agents, with an address for service in Luxembourg.

The Commission claims that the Court should:

| 1) | declare that, by maintaining in force a reduced rate of value added tax of 5 % applicable to tolls on road crossings of the River Tagus in Lisbon, the Portuguese Republic has failed to fulfil its obligations under Articles 12 and 28 of the Sixth Directive; (1) |
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1)

declare that, by maintaining in force a reduced rate of value added tax of 5 % applicable to tolls on road crossings of the River Tagus in Lisbon, the Portuguese Republic has failed to fulfil its obligations under Articles 12 and 28 of the Sixth Directive; (1)

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| 2) | order the Portuguese Republic to pay the costs. |
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2)

order the Portuguese Republic to pay the costs.

Pleas in law and main arguments

It is apparent from the Court of Justice's judgment in Case C-276/98 Commission v Portugal [1998] ECR I-1699, and it is furthermore impliedly accepted by the Portuguese authorities, that the Sixth Directive contains no provision whatsoever that might allow of the application of a reduced rate of 5 % to the services in question. The Portuguese authorities have none the less deferred indefinitely putting an end to that failure to fulfil obligations which has subsisted since 1 January 1995, falling back on a series of contradictory arguments, and also on equivocal declarations and frequent changes of position on the question whether Article 4(5) of the Sixth Directive is to find application.

Commission

Portugal

After thorough examination of the arguments of and the various positions adopted by the Portuguese Government on this point during the pre-litigation stage of the procedure, the Commission takes the view that the conditions on which Article 4(5) of the Sixth Directive may be regarded as applicable to the services at issue have not been fulfilled.

It is clear from Article 12(3)(a) of the Sixth Directive that a reduced rate of value added tax may be applied only to transactions that, while taxable, consist of one of the categories specified in Annex H — which is not the case when the essence of the services is to make available to users a highway infrastructure through the payment of tolls.

The Commission takes the view that Article 28(2)(e) of the Sixth Directive, relied upon by the Portuguese authorities, entails an obligation not to continue to apply a reduced rate to transactions in respect of which the transition, regarded as desirable, to the field of application of the standard rate of tax has already been possible. As a matter of fact, to accept that a Member State can, as the Portuguese Government argues, again apply a reduced rate after a period of greater or lesser duration in which the standard rate applied would render unfeasible the gradual or progressive approximation of the rates and levels of value added tax judged necessary by the Community legislature.

In any event, even if the Court should not agree with the restrictive interpretation of Article 28(2)(e) of the Sixth Directive propounded by the Commission, it must still be held that the Portuguese legislation, in providing for the application of a reduced rate of 5 %, or in any case of less than 12 %, to tolls on road crossings of the River Tagus in Lisbon, is not compatible with that provision.

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(1)  Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1).

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