Opinion of the Advocate General — ECLI:EU:C:2019:834
Date: 2019-10-03
Language of the case: Czech
Subject matter: Taxation;Value added tax;Excise duties
Procedure: Reference for a preliminary ruling
Origin: Czechia

summary, it must be stated that in ascribing the single cross-border transport to a certain supply in a supply chain, the crucial factor is who bears the risk for accidental loss during the cross-border transport of the goods. That supply is the exempt intra-Community supply, the place for which is where transport began. It is not decisive, on the other hand, who is the owner under civil law during the transport or whether the goods are transported under a special customs procedure. B. The second and third questions 1. Admissibility and understanding of the two questions 56. The second and third questions essentially concern the relationship between a directive and national law. Specifically, the constitutional principle of in dubio mitius in tax law requires that the interpretation of a national law that is favourable to the taxable person is always chosen. The condition for this is that those legal rules objectively offer a number of possible interpretations. 57. It is not evident from the request for a preliminary ruling whether this actually comes into question in the present case. Curiously, the relevance of this principle was not mentioned in the request for a preliminary ruling in AREX, (34) although the underlying situation and the majority of the questions were almost identical. This contradicts somewhat the referring court’s statement that objectively a number of possible interpretations are offered under national law. 58. Nevertheless, the view taken by the Czech Republic that the request for a preliminary ruling is inadmissible on that basis cannot be accepted. According to the settled case-law of the Court, questions referred by a national court enjoy a presumption of relevance. That court is responsible for defining the factual and legislative context in which it refers its questions on the interpretation of EU law. The Court may refuse to rule on a question referred by a national court only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it. (35) 59. Although, as the Commission rightly states, there are doubts whether the principle of in dubio mitius applies in this case, a hypothetical situation cannot be presumed. Consequently, the Court should answer the underlying legal question. 60. The Czech Republic has implemented the VAT Directive as far as possible. The concepts contained in the VAT Directive and their interpretation are sufficiently clear. However, ascribing the exemption to one of the supplies in the supply chain and, connected with this, determining the place of the other supplies are subject to a degree of legal uncertainty. This is shown by the many decisions in this regard which have now been made by the Court (36) and also by the new Article 36a of the VAT Directive, which is to be implemented on 1 January 2020. (37) 61. In the event that the national rules objectively permit a different way of ascribing the exemption to another supply by way of interpretation and this means that the place of performance in this case would objectively be in the Czech Republic, the question arises as to the relationship between the constitutional principle of in dubio mitius and the VAT Directive. It will then have to be determined whether the more favourable interpretation of national law provided for under national constitutional law can prevent an interpretation of national law which is less favourable to the taxable person, but is in conformity with EU law. 2. No question of the primacy of EU law 62. At first sight, one might be inclined to answer this question in the negative on the basis of the primacy of EU law. (38) However, this would overlook the fact that the question raised by the referring court — in so far as it actually arises — does not concern the primacy of EU law. This is because the primacy of EU law constitutes a conflict rule (39) which concerns the relationship between two provisions which are in themselves applicable. That is not the case here. 63. The VAT Directive is not a regulation, but a directive, which, under Article 288 TFEU, is addressed only to the Member State. In principle, it is not therefore directly applicable. An EU directive is directly applicable, according to the Court’s case-law, (40) only if it appears, so far as its subject matter is concerned, to be unconditional and sufficiently precise. 64. However, as the Court has expressly stated, such a directive cannot of itself impose obligations on an individual and cannot therefore be relied on as such against such a person before a national court. (41) Thus, obligations arising from a directive must be transposed into national law in order to be capable of being relied on directly against an individual. 65. The Court has created an effective instrument for the enforcement of EU law in favour of the individual. Accordingly, the Member State is not able to rely on failure to transpose EU law or incorrect transposition against an individual. The State is prevented from taking advantage of its own failure to comply with EU law. (42) If the interpretation of national law in conformity with EU law is the interpretation more favourable to the taxable person, both the national principle of in dubio mitius and a possible direct application of the directive achieve the same result. 66. The principle of in dubio mitius can thus have autonomous effect in the field of VAT law only if the interpretation possible at national level leads to a more favourable result for the taxable person than is prescribed by the directive. In such cases, however, the direct applicability of the VAT Directive is precluded. Consequently, there is no conflict between two rules that are applicable in themselves, such that the question of the primacy of one of the rules does not arise. 3. Divergence between the directive and national law 67. On the contrary, there is a classic case of a divergence between a directive and national law. This divergence is to be resolved in principle by the requirement for national law to be interpreted in conformity with EU law. (43) It permits national courts, for the matters within their jurisdiction, to ensure the full effectiveness of EU law when they determine the disputes before them. 68. The principle that national law must be interpreted in conformity with EU law requires national courts to do whatever lies within their jurisdiction, taking the whole body of domestic law into consideration and applying the interpretative methods recognised by domestic law, with a view to ensuring that the directive in question is fully effective and achieving an outcome consistent with the objective pursued by it. (44) 4. Limits of an interpretation in conformity with EU law 69. However, the requirement of an interpretation in conformity with EU law is not unlimited. On the contrary, the obligation on a national court to refer to the content of a directive when interpreting and applying the relevant rules of domestic law is limited by general principles of law, particularly those of legal certainty and non-retroactivity, and that obligation cannot serve as the basis for an interpretation of national law contra legem. (45) 70. According to the referring court, the general legal principle of in dubio mitius fosters legal certainty in the Czech Republic because it regulates the impact of legal uncertainty arising from an unclear law clearly and to the detriment of the party causing the uncertainty. As a principle of Czech law, it thus constitutes a limit on interpretation in conformity with EU law in the same way as the limits of the wording of a rule. 71. It is evident from the abovementioned case-law that not all national law can be interpreted in conformity with EU law. Furthermore, EU law requires the Member States, under certain circumstances, to make good damage caused if the result prescribed by a directive cannot be achieved by way of interpretation. (46) 72. If, therefore, it is not possible to interpret national law in conformity with EU law, national law is contrary to EU law but applicable in favour of the taxable person. This situation can arise not only if the wording of national legislation is clearly conflicting, but also where legal principles — in this case the constitutional principle of in dubio mitius — reduce the possibilities for interpretation to just one possible interpretation. It is, however, for the referring court to make this determination. 73. Such consequences of a directive not being directly applicable, which are regrettable from the point of view of EU law, also arise in other areas of law. (47) It is then for the Member State to comply with its implementation obligations and to organise its national law (clearly) in conformity with EU law if it wishes to avoid infringement proceedings being brought by the Commission. 5. Conclusion 74. Neither the principle of VAT neutrality nor any other principle of EU law preclude the application of conflicting national law, provided that the individual does not or cannot himself rely directly on the VAT Directive and it is also not possible to interpret national law in conformity with EU law (here based on the principle of in dubio mitius). C. The third question 75. By the third question, the referring court would like to know whether — if it is ‘possible to apply’ the principle of in dubio mitius — the legal concept of supply of goods or transport of goods, which both have (or do not have) the same content for the purposes of the VAT Directive and for the purposes of the Excise Duty Directive, can be considered as objectively uncertain and offering two interpretations. 76. As has already been stated above, in determining the place of supply under Article 32 of the VAT Directive, the concepts of VAT law alone are decisive, and they cannot be regarded as objectively uncertain. A degree of legal uncertainty applies ‘only’ in ascribing the exemption to one of the supplies in the supply chain and, connected with this, in determining the place of the other supplies. 77. However, this does not preclude a different interpretation of the formulations of national law in their own context (scheme, drafting history, spirit and purpose) notwithstanding an identical wording. The principle of in dubio mitius relates only to national law, with the result that the only decisive factor in this connection is whether the national rules objectively offer a number of possible interpretations. 78. This remains a question of national law which can be answered only by the referring court. V. Conclusion 79. I therefore propose that the Court answer the questions referred by the Krajský soud v Praze (Regional Court, Prague, Czech Republic) as follows: (1) In ascribing the single cross-border transport to a certain supply in a supply chain, the crucial factor is who bears the risk for accidental loss during the cross-border transport of the goods. That supply is the exempt intra-Community supply, the place for which is where transport began. (2) Neither the principle of VAT neutrality nor any other principle of EU law preclude the application of the constitutional principle of in dubio mitius in national law, which obliges public authorities, where legal rules are ambiguous and objectively offer a number of possible interpretations, to choose the interpretation that benefits the person subject to the legal rule (here the taxable person for VAT). 1 Original language: German. 2 The Court has already dealt with the question of ascribing transport to a supply with regard to an ‘intra-Community chain transaction’ in a number of cases; see, for example, judgments of 19 December 2018, AREX CZ (C‑414/17, EU:C:2018:1027); of 21 February 2018, Kreuzmayr (C‑628/16, EU:C:2018:84); of 26 July 2017, Toridas (C‑386/16, EU:C:2017:599); of 27 September 2012, VSTR (C‑587/10, EU:C:2012:592); of 16 December 2010, Euro Tyre Holding (C‑430/09, EU:C:2010:786); and of 6 April 2006, EMAG Handel Eder (C‑245/04, EU:C:2006:232). 3 Judgment of 19 December 2018, AREX CZ (C‑414/17, EU:C:2018:1027). 4 OJ 2006 L 347, p. 1. 5 Zákon č. 235/2004 Sb., o dani z přidané hodnoty (Law No 235/2004 on value added tax). 6 Judgment of 19 December 2018, AREX CZ (C‑414/17, EU:C:2018:1027). 7 See my Opinions in AREX CZ (C‑414/17, EU:C:2018:624, point 28) and EMAG Handel Eder (C‑245/04, EU:C:2005:675, points 23 to 25). 8 Judgments of 26 July 2017, Toridas (C‑386/16, EU:C:2017:599, paragraph 31); of 18 November 2010, X (C‑84/09, EU:C:2010:693, paragraph 28); and of 27 September 2007, Teleos and Others (C‑409/04, EU:C:2007:548, paragraphs 23 and 24). 9 Judgments of 26 July 2017, Toridas (C‑386/16, EU:C:2017:599, paragraph 34); and of 6 April 2006, EMAG Handel Eder (C‑245/04, EU:C:2006:232, paragraph 45), and my Opinions in AREX CZ (C‑414/17, EU:C:2018:624, point 55) and EMAG Handel Eder (C‑245/04, EU:C:2005:675, point 35). 10 Judgment of 6 April 2006, EMAG Handel Eder (C‑245/04, EU:C:2006:232, paragraph 50). 11 Judgment of 6 April 2006, EMAG Handel Eder (C‑245/04, EU:C:2006:232, paragraph 50). 12 Judgment of 19 December 2018, AREX CZ (C‑414/17, EU:C:2018:1027, paragraph 66 et seq. and 73 and 74); see also my Opinion in AREX CZ (C‑414/17, EU:C:2018:624, point 69 et seq.). 13 Judgment of 6 April 2006, EMAG Handel Eder (C‑245/04, EU:C:2006:232, paragraphs 40, 42 and 50). 14 Judgments of 26 July 2017, Toridas (C‑386/16, EU:C:2017:599, paragraph 34); and of 6 April 2006, EMAG Handel Eder (C‑245/04, EU:C:2006:232, paragraph 45); and my Opinions in AREX CZ (C‑414/17, EU:C:2018:624, point 55) and EMAG Handel Eder (C‑245/04, EU:C:2005:675, point 35). 15 See judgments of 19 December 2018, AREX CZ (C‑414/17, EU:C:2018:1027, paragraph 70); of 26 July 2017, Toridas (C‑386/16, EU:C:2017:599, paragraphs 34 to 36); and of 6 April 2006, EMAG Handel Eder (C‑245/04, EU:C:2006:232, paragraph 50). 16 Thus, according to the German and French language versions, ‘wie ein Eigentümer’ and ‘comme un propriétaire’ respectively, whereas in the English and Estonian language versions (‘as owner’ and ‘“Kaubatarne” on materiaalse vara omanikuna käsutamise õiguse üleminek’ respectively). 17 Judgments of 2 July 2015, NLB Leasing (C‑209/14, EU:C:2015:440, paragraph 29); of 16 February 2012, Eon Aset Menidjmunt (C‑118/11, EU:C:2012:97, paragraph 39); of 6 February 2003, Auto Lease Holland (C‑185/01, EU:C:2003:73, paragraph 32); and of 8 February 1990, Shipping and Forwarding Enterprise Safe (C‑320/88, EU:C:1990:61, paragraphs 7 and 8). 18 See judgment of 19 December 2018, AREX CZ (C‑414/17, EU:C:2018:1027, paragraph 78). 19 See, to that effect, judgments of 16 December 2010, Euro Tyre Holding (C‑430/09, EU:C:2010:786, paragraph 40), and of 27 September 2012, VSTR (C‑587/10, EU:C:2012:592, paragraph 32 et seq.), where transfer of ownership played no role at all and regard was had instead to notification of the intention to sell on. 20 It is not disputed that, for example, although a carrier currently has actual physical control of goods, it does not act as a participating supplier, but as a carrier for a supplier. See, to that effect, judgment of 16 December 2010, Euro Tyre Holding (C‑430/09, EU:C:2010:786, paragraph 40). 21 Judgment of 27 September 2012, VSTR (C‑587/10, EU:C:2012:592, paragraphs 36 and 37). 22 Judgments of 21 February 2018, Kreuzmayr (C‑628/16, EU:C:2018:84, paragraph 32); of 26 July 2017, Toridas (C‑386/16, EU:C:2017:599, paragraph 35); of 27 September 2012, VSTR (C‑587/10, EU:C:2012:592, paragraph 32); and of 16 December 2010, Euro Tyre Holding (C‑430/09, EU:C:2010:786, paragraph 27); and my Opinions in AREX CZ (C‑414/17, EU:C:2018:624, point 58 et seq.) and EMAG Handel Eder (C‑245/04, EU:C:2005:675, point 56). 23 See also judgment of 16 December 2010, Euro Tyre Holding (C‑430/09, EU:C:2010:786, end of paragraph 40). 24 See my Opinion in AREX CZ (C‑414/17, EU:C:2018:624, point 60). 25 See judgments of 26 July 2017, Toridas (C‑386/16, EU:C:2017:599, paragraph 36); of 27 September 2012, VSTR (C‑587/10, EU:C:2012:592, paragraph 34); and of 16 December 2010, Euro Tyre Holding (C‑430/09, EU:C:2010:786, paragraph 33). 26 See my Opinions in AREX CZ (C‑414/17, EU:C:2018:624, point 62) and EMAG Handel Eder (C‑245/04, EU:C:2005:675, point 58). 27 See also my Opinion in AREX CZ (C‑414/17, EU:C:2018:624, point 62). 28 See also my Opinion in AREX CZ (C‑414/17, EU:C:2018:624, point 73). 29 The carrier or forwarder does not hold the power to dispose of the goods as owner; see judgments of 20 June 2018, Enteco Baltic (C‑108/17, EU:C:2018:473, paragraph 88), and of 3 June 2010, De Fruytier (C‑237/09, EU:C:2010:316, paragraph 25). 30 See, to that effect, judgments of 20 June 2018, Enteco Baltic (C‑108/17, EU:C:2018:473, paragraph 86), and of 3 June 2010, De Fruytier (C‑237/09, EU:C:2010:316, paragraph 24). 31 The EU legislature attempts to introduce new rules with greater legal certainty to govern this situation (transport by the intermediate undertaking) with the aid of a fiction in the new Article 36a of the VAT Directive (OJ 2018 L 311, p. 3), which is to be implemented on 1 January 2020. 32 Similarly, judgment of 20 June 2018, Enteco Baltic (C‑108/17, EU:C:2018:473, paragraph 89). 33 See also, to that effect, judgments of 16 December 2010, Euro Tyre Holding (C‑430/09, EU:C:2010:786, paragraph 45), and of 27 September 2012, VSTR (C‑587/10, EU:C:2012:592, paragraph 37). 34 Judgment of 19 December 2018, AREX CZ (C‑414/17, EU:C:2018:1027). 35 Judgments of 17 September 2014, Cruz & Companhia (C‑341/13, EU:C:2014:2230, paragraph 32); of 30 April 2014, Pfleger and Others (C‑390/12, EU:C:2014:281, paragraph 26); of 22 June 2010, Melki and Abdeli (C‑188/10 and C‑189/10, EU:C:2010:363, paragraph 27); and of 22 January 2002, Canal Satélite Digital (C‑390/99, EU:C:2002:34, paragraph 19). 36 Judgments of 19 December 2018, AREX CZ (C‑414/17, EU:C:2018:1027); of 21 February 2018, Kreuzmayr (C‑628/16, EU:C:2018:84); of 26 July 2017, Toridas (C‑386/16, EU:C:2017:599); of 27 September 2012, VSTR (C‑587/10, EU:C:2012:592); of 16 December 2010, Euro Tyre Holding (C‑430/09, EU:C:2010:786); and of 6 April 2006, EMAG Handel Eder (C‑245/04, EU:C:2006:232). 37 Council Directive (EU) 2018/1910 of 4 December 2018 amending Directive 2006/112/EC as regards the harmonisation and simplification of certain rules in the value added tax system for the taxation of trade between Member States (OJ 2018 L 311, p. 3). 38 Judgments of 9 March 1978, Simmenthal (106/77, EU:C:1978:49, paragraphs 17/18); of 17 December 1970, Internationale Handelsgesellschaft (11/70, EU:C:1970:114, paragraph 3); and of 15 July 1964, Costa (6/64, EU:C:1964:66, p. 1270). 39 Primacy is thus rightly characterised as a conflict resolution rule in Marc Desens, Auslegungskonkurrenzen im europäischen Mehrebenensystem, EuGRZ 2011, p. 211 (212), Harald Schaumburg in Schaumburg/Englisch, Europäisches Steuerrecht, Cologne 2015, paragraph 4.19 et seq., Claus Dieter Classen/Martin Nettesheim in Oppermann/Classen/Nettesheim, Europarecht, Munich, 8th edition 2018, § 10, paragraph 33. 40 Judgments of 22 November 2017, Cussens and Others (C‑251/16, EU:C:2017:881, paragraph 26); of 16 July 2015, Larentia + Minerva and Marenave Schiffahrt (C‑108/14 and C‑109/14, EU:C:2015:496 paragraphs 48 and 49); of 12 December 2013, Portgás (C‑425/12, EU:C:2013:829, paragraph 18); of 24 January 2012, Dominguez (C‑282/10, EU:C:2012:33, paragraph 33); and of 19 January 1982, Becker (8/81, EU:C:1982:7, paragraph 25). 41 Judgments of 22 November 2017, Cussens and Others (C‑251/16, EU:C:2017:881, paragraph 26); of 12 December 2013, Portgás (C‑425/12, EU:C:2013:829, paragraph 22); of 24 January 2012, Dominguez (C‑282/10, EU:C:2012:33, paragraphs 37 and 38); of 14 July 1994, Faccini Dori (C‑91/92, EU:C:1994:292, paragraph 20); and of 26 February 1986, Marshall (152/84, EU:C:1986:84, paragraph 48). 42 See expressly, to that effect, judgments of 24 January 2012, Dominguez (C‑282/10, EU:C:2012:33, paragraph 38); of 14 July 1994, Faccini Dori (C‑91/92, EU:C:1994:292, paragraphs 22 and 23); and of 26 February 1986, Marshall (152/84, EU:C:1986:84, paragraph 49). 43 Judgments of 4 July 2006, Adeneler and Others (C‑212/04, EU:C:2006:443, paragraphs 109 and 110); of 16 June 2005, Pupino (C‑105/03, EU:C:2005:386, paragraphs 44 and 47); of 5 October 2004, Pfeiffer and Others (C‑397/01 to C‑403/01, EU:C:2004:584, paragraph 114); of 14 July 1994, Faccini Dori (C‑91/92, EU:C:1994:292, paragraph 26); and of 13 November 1990, Marleasing (C‑106/89, EU:C:1990:395, paragraph 8). 44 Judgments of 24 January 2012, Dominguez (C‑282/10, EU:C:2012:33, paragraph 24); of 4 July 2006, Adeneler and Others (C‑212/04, EU:C:2006:443, paragraph 111); and of 5 October 2004, Pfeiffer and Others (C‑397/01 to C‑403/01, EU:C:2004:584, paragraphs 115, 116, 118 and 119). 45 Judgments of 24 January 2012, Dominguez (C‑282/10, EU:C:2012:33, paragraph 25); of 4 July 2006, Adeneler and Others (C‑212/04, EU:C:2006:443, paragraph 110); and of 16 June 2005, Pupino (C‑105/03, EU:C:2005:386, paragraphs 44 and 47). 46 See, to that effect, judgments of 24 January 2012, Dominguez (C‑282/10, EU:C:2012:33, paragraphs 42 and 43); of 4 July 2006, Adeneler and Others (C‑212/04, EU:C:2006:443, paragraph 112); and of 14 July 1994, Faccini Dori (C‑91/92, EU:C:1994:292, paragraph 27). 47 See, for example, judgments of 16 July 2015, Larentia + Minerva and Marenave Schiffahrt (C‑108/14 and C‑109/14, EU:C:2015:496, paragraph 52); of 12 December 2013, Portgás (C‑425/12, EU:C:2013:829, paragraph 31, in so far as the body was not sufficiently closely related to the State); and of 14 July 1994, Faccini Dori (C‑91/92, EU:C:1994:292, paragraph 30).