Opinion of the Advocate General — ECLI:EU:C:2000:645
Date: 2000-11-23
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Taxation;Value added tax
Procedure: Action for failure to fulfil obligations - successful;Action for failure to fulfil obligations - unfounded
Origin: Portugal

Summary of the Judgment 
1. Actions for failure to fulfil obligations — Measures adopted by the Member State 
concerned after proceedings have been commenced — Not relevant 
(EC Treaty, Art. 169 (now Art. 226 EC» 
2. Member States — Obligations — Implementation of directives — Failure — Justi­
fication — Not permissible 
(EC Treaty, Art. 169 (now Art. 226 EC)) 
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SUMMARY — CASE C-276/98 
3. Tax provisions — Harmonisation of laws — Turnover taxes — Common system of 
value added tax — Option for Member States to apply a reduced rate on a transitional 
basis — Maintenance of a reduced rate of 5% applicable to transactions concerning 
certain goods and services not appearing in Annex H to the Sixth Directive — Not 
permissible 
(Council Directive 77/388, Arts 12(3) and 28(2)) 
4. Tax provisions — Harmonisation of laws — Turnover taxes —• Common system of 
value added tax — Taxable persons •—· Bodies governed by public law — Activities 
in the exercise of public authority not taxable — Such activities taxable in the event of 
significant distortions of competition 
(Council Directive 77/388, Art. 4(5), first and second subparas) 
1. In an action for failure to fulfil obliga­
tions, the Court cannot take account of 
measures adopted by the Member State 
concerned in order to comply with 
those obligations after the action has 
been commenced. 
(see para. 20) 
2. A Member State cannot rely on provi­
sions, practices or circumstances in its 
own legal order to justify failure to 
implement a directive within the pre­
scribed period. 
(see para. 20) 
3. It is an infringement of a Member 
State's obligations under Articles 12(3) 
and 28(2) of the Sixth Directive 77/388 
on the harmonisation of the laws of the 
Member States relating to turnover 
taxes for that Member State to main­
tain in force a reduced rate of value 
added tax of 5% on transactions 
concerning certain goods and services 
which do not appear on the list in 
Annex H to the Sixth Directive. Mem­
ber States which applied a reduced rate 
to those transactions on 1 January 
1991 are entitled, under the provisions 
cited above, to apply a reduced rate of 
value added tax on those operations, 
which may not, however, be lower than 
12%. 
(see paras 17, 21 
and operative part) 
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COMMISSION V PORTUGAL 
4. Where the conditions laid down in the 
first subparagraph of Article 4(5) of 
the Sixth Directive 77/388 on the 
harmonisation of the laws of the 
Member States relating to turnover 
taxes are fulfilled, namely where bodies 
governed by public law engage in 
activities as public authorities, services 
supplied by such bodies are not subject 
to value added tax. If, however, exemp­
tion of the activity in question from 
value added tax would lead to signifi­
cant distortions of competition within 
the meaning of the second subpara­
graph of Article 4(5) of the Sixth 
Directive, the activity is taxable by 
virtue of the latter provision. 
(see paras 25, 27-28) 
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