Opinion of the Advocate General — ECLI:EU:C:2020:737
Date: 2020-09-17
Language of the case: Estonian
Subject matter: Taxation;Approximation of laws
Procedure: Reference for a preliminary ruling
Origin: Estonia

summary of the tax audit, the Finnish 
tax authority had adopted the position that X’s customary place of residence and 
centre of life was actually in Finland, where he had also performed the 
management functions of Heavyinstall OÜ. The overall economic activity of the 
company had also taken place in Finland. Accordingly, under Article 5(1) and (2) 
of the Convention between the Republic of Estonia and the Republic of Finland 
for the avoidance of double taxation of income and assets and the prevention of 
tax evasion (Double Taxation Convention), Heavyinstall OÜ had a permanent 
establishment in Finland, but the company had not paid any taxes there. The sole 
member of the board of Heavyinstall OÜ had made a false statement both in 
relation to the economic activity of the company and in relation to his residence. 
Such conduct showed the attitude of the representative of Heavyinstall OÜ to 
public-law obligations. 
2.2. By ruling of the court of first instance of Keski-Pohjanmaa of 8 February 
2018, which was enclosed with the request, the assets of Heavyinstall OÜ were 
attached on application of the Finnish tax authority in an amount securing the 
applicant’s claim of EUR 320 022. In that ruling, it was found that there was the 
risk of Heavyinstall OÜ concealing, destroying or transferring its assets or acting 
in another way endangering the satisfaction of the tax authority’s claim. Due to 
the conduct of the taxable person, it could be much more difficult or impossible to 
enforce the tax liability. The board member of the company had deliberately 
misled the tax authority in relation to a possible permanent establishment and the 
tax liability resulting therefrom. In consideration of the findings of the Finnish tax 
authority, it was obvious that, ever since 2010, it had been the objective of 
Heavyinstall OÜ to evade taxes, and the company’s conduct in relation to tax had 
not improved despite the inspection conducted in the meantime and the 
determination of additional taxes. Heavyinstall OÜ could also have the same 
attitude to the tax liability to be determined as a result of the present proceedings, 
which meant that the taxes might not be paid at all. The company had not 
submitted an annual report for the financial year 2017 and, according to data from 
the traffic register of the Roads Office, the person concerned had sold the Renault 
Trafic belonging thereto on 21 March 2018. In addition, in its written statement of 
13 March 2018, the Finnish tax authority informed the MTA that it had filed a 
complaint to the Finnish police, because Heavyinstall OÜ had possibly committed 
tax fraud. 
3. The Tallinna Halduskohus (Tallinn Administrative Court) refused the 
application by order of 3 April 2018. 
3.1. In its opinion, the condition cited in Paragraph 1361(1) MKS is not met, 
according to which, for the application of precautionary measures, there would 
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have to be reason to suspect that, following the establishment of a monetary claim 
or liability resulting from tax legislation, the enforcement thereof could prove to 
be much more difficult or impossible due to the conduct of the taxable person. 
The performance of precautionary measures restricted the right of a person to 
freely dispose of its property and to conduct business activities to a considerable 
extent, which meant that such precautionary measures should not be taken lightly. 
The suspicion that the enforcement of the tax liability could prove to be much 
more difficult or impossible due to the conduct of the person concerned could not 
be justified solely with the amount of tax owed. Heavyinstall OÜ’s annual report 
for the financial year 2016 revealed that it was an active, profitable company with 
respectable sales. It was admittedly plausible that, in continuing with the 
traditional economic activity, the company might not be able to pay the total 
amount of tax expected to be demanded thereof. However, it was not to be 
excluded that, regardless of the additional tax liability, the trader would want to 
continue with his economic activity and settle the tax debt using the mechanisms 
provided for in Finnish law. [Or. 3] 
3.2. It could not be seen from the documents that Heavyinstall OÜ had hidden 
information from the tax authority. The difference in opinion between the person 
concerned and the Finnish tax authority was more legal in nature. The fact that, in 
the opinion of the Finnish tax authority, Heavyinstall OÜ had not declared its tax 
liabilities in Finland did not as such justify the conclusion that it would prevent 
the fulfilment of the tax liability as soon as this had been established. It could not 
be seen from either the application or the enclosed documents that the company’s 
economic situation had significantly changed. It could not be concluded solely 
from the fact that the person concerned had sold a vehicle that it had made that 
transaction with the intention of circumventing any future tax liability. 
3.3. The attachment of a trader’s current accounts was particularly restrictive. 
Therefore, under Paragraph 1361 MKS, there should be a very important reason 
for attaching a trader’s bank account before the tax liability has been established, 
which was not, however, apparent in the present case. On the basis of Heavyinstall 
OÜ’s annual report, it was plausible that the attachment of the bank accounts 
could bring about the end of the company’s activity or at least the need to 
transform the company’s activity in such a way as to entail costs and activities 
which were to be regarded as irreversible or as consequences that were difficult to 
overcome. 
4. MTA lodged an appeal at the Ringkonnakohus. 
5. By order of 8 May 2018, the Ringkonnakohus Tallinn did not allow the 
appeal and did not amend the operative part of the order of the Administrative 
Court, but supplemented the reasoning for the order of the Administrative Court 
with its own reasoning. The Ringkonnakohus also did not allow the MTA’s 
application for a request for a preliminary ruling to be submitted to the Court of 
Justice of the European Union. … [not translated]. 
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5.1. An analysis of the tax law of the European Union had revealed that, in 
situations in which requests for precautionary measures were made without an 
instrument permitting enforcement of the claim having been issued in the 
applicant State, according to the currently valid Directive 2010/24/EU the so-
called dual system was applicable. The duality consisted in that both the applicant 
and the requested Member States were entitled to assess the merit of the 
application of precautionary measures under the national laws. Pursuant to 
Article 16 of Directive 2010/24/EU, the Member State that had received a request 
for precautionary measures had to take precautionary measures according to the 
procedures provided for in the law of that Member State and to assess whether, 
under the relevant circumstances, the adoption of such measures was in 
accordance with its law and its administrative practices. In the opinion of the 
Ringkonnakohus, it is clearly apparent from the above that, in the scope of 
international mutual assistance, the performance of precautionary measures in a 
situation in which there was no instrument permitting enforcement differed 
significantly from the international recovery of tax claims which were already 
established and that, when ruling on the request for precautionary measures under 
Article 16 of the Directive, the requested Member State also had to assess the 
merit and proportionality of the measures under national law and the national 
administrative practices. Even though the Member State requested to carry out 
precautionary measures should not recognise, supplement or replace the original 
document which approved precautionary measures in the applicant Member State 
(in the present case the ruling of the Finnish court; second and third sentences of 
Article 16(1) of the Directive), the authority or the court of the requested Member 
State was not obliged by that document to carry out the requested precautionary 
measures in its own territory if the adoption of those measures was not in 
accordance with its law and administrative practices and was not proportional. 
5.2. In the present case, not all of the conditions under Paragraph 1361 MKS for 
the performance of enforcement action were met in relation to the person 
concerned. In relation to the present request, the Court was not convinced that the 
fulfilment of the tax liabilities possibly to be imposed on Heavyinstall OÜ could 
prove to be more difficult or impossible due to the latter’s conduct. Although the 
Finnish tax authority had found that the board member of the person concerned 
had spent most of the year in Finland, the conclusion drawn did not undoubtedly 
reveal that the conduct of the person concerned suggested the intention to commit 
tax fraud or that its conduct was not trustworthy ... [not translated]. The adoption 
of precautionary measures in relation to Heavyinstall OÜ would also be in breach 
of the principle of proportionality. [Or. 4] The Finnish tax authority wanted to 
impose an additional tax liability on the person concerned in a situation in which 
the person concerned had fulfilled comparable tax liabilities in the same 
assessment period in the Republic of Estonia. The tax audit summary drawn up by 
the Finnish tax authority had revealed that the person concerned had paid taxes to 
the Republic of Estonia in the assessment period in question (around 
EUR 131 000), but it was not apparent from the summary that the Finnish tax 
authority had deducted that amount from the planned tax claim. The measures 
requested of the MTA to secure the Finnish tax authority’s claim expected to be 
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EUR 320 022 largely consisted in the attachment of the current assets in the 
company’s bank accounts (in the amount of EUR 297 304.74). In view of the 
objective of fulfilling the expected tax liability, the attachment of the bank 
accounts would be a measure that would excessively restrict the rights of the 
person concerned. An attachment of the current assets would undoubtedly hinder 
the further business activity of the company. In a situation in which the expected 
tax claim of the Finnish tax authority was essentially already secured to a 
significant extent with the amount paid by the person concerned to the Republic of 
Estonia and there was no direct evidence that the company’s assets would not be 
sufficient for fulfilling the remaining tax liability or those assets were very 
probably concealed, the actual cessation of the business activity of the person 
concerned through the attachment of the bank accounts would not be justified. In a 
situation in which the Court had no data in relation to the company’s current 
economic situation (the period for filing the annual reports for the financial year 
2017 had not expired) and, according to the profit-and-loss account submitted to 
the Commercial Register in 2016, the person concerned had made a net profit for 
the financial year of EUR 173 376, the Court had no basis for the view that the 
company was acting in bad faith with the aim of preventing the fulfilment of 
possible future tax liabilities. 
ARGUMENTS OF THE PARTIES 
6. The MTA lodged an appeal at the Riigikohus, in which it requests that the 
order of the Ringkonnakohus be annulled and a new order be issued, with which 
its application for precautionary measures to be carried out in relation to 
Heavyinstall OÜ is allowed. 
6.1. In the present case, the general principle of European Union law, the 
principle of effectiveness, was decisive. According to the case-law of the Court of 
Justice, the Member States should not render impossible or excessively difficult 
the assertion of claims under European Union law through procedural rules 
provided for in their national legal systems (see, inter alia, C-542/08, Barth, 
paragraph 17). The approach that the Estonian court should re-examine the 
package of evidence submitted by Finland, which the Finnish court had already 
assessed, removed the meaning and purpose of the content of Article 16(1), 
according to which the document submitted by the applicant Member State should 
not be subject to recognition, supplementing or replacement. Through a disregard 
for the principle of effectiveness, this approach also made it excessively difficult 
to fulfil the request in the requested Member State, as the Estonian court had to 
assess for a second time the facts which had already been established in the 
applicant Member State. 
6.2. The MTA does not agree with the Ringkonnakohus that there was no 
justification for complying with the request to carry out precautionary measures in 
relation to Heavyinstall OÜ. It had explained both in its application for approval 
and in its appeal to the Ringkonnakohus that the unreliable and bad-faith conduct 
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of the person was clearly apparent from the false statement made to the Finnish 
tax authority by X, the company’s board member, in 2013, on the basis of which 
the Finnish tax authority had drawn an incorrect conclusion and therefore 
refrained from rectifying the company’s tax liability. The Riigikohus had also 
agreed that a false statement meant that the enforcement of a tax claim in the 
future could prove to be much more difficult or could be rendered impossible ... 
[not translated]. The Finnish tax authority had filed a complaint regarding a 
financial crime with the police. Circumstances indicative of tax fraud also gave 
cause for reasonable suspicion. As the Court had found that the requested 
measures were disproportionate in consideration of the circumstances set out 
above, the possibility of partial compliance with the request should also have been 
examined. The Court could have deducted the sum paid by the company in 
Estonia from the amount set out in the request or only allowed the entry of a 
prohibition of disposal in relation to the company’s vehicle. [Or. 5] 
6.3. The Finnish tax authority informed the MTA that the District Court (Keski-
Pohjanmaan käräjäoikeus) had made a final ruling on the precautionary measures 
on 21 June 2018. The ruling had the same content as the preliminary ruling made 
on 8 February 2018. 
… [not translated] [gathering of evidence — hearing of the parties] 
RELEVANT LEGAL PROVISIONS 
10. Article 16 (‘Request for precautionary measures’) of Directive 2010/24/EU 
concerning mutual assistance for the recovery of claims relating to taxes, duties 
and other measures specifies: 
‘(1) At the request of the applicant authority, the requested authority shall take 
precautionary measures, if allowed by its national law and in accordance with its 
administrative practices, to ensure recovery where a claim or the instrument 
permitting enforcement in the applicant Member State is contested at the time 
when the request is made, or where the claim is not yet the subject of an 
instrument permitting enforcement in the applicant Member State, in so far as 
precautionary measures are also possible, in a similar situation, under the national 
law and administrative practices of the applicant Member State. 
The document drawn up for permitting precautionary measures in the applicant 
Member State and relating to the claim for which mutual assistance is requested, if 
any, shall be attached to the request for precautionary measures in the requested 
Member State. This document shall not be subject to any act of recognition, 
supplementing or replacement in the requested Member State.’ 
11. Maksukorralduse seadus (MKS, Fiscal Code) 
Paragraph 511 MKS ‘International assistance’ 
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‘(1) The Maksu- ja Tolliamet shall provide international assistance to the 
competent authorities of the States which belong to the European Union or with 
which Estonia has a valid international agreement with corresponding content 
(hereinafter: competent authority of the foreign State). 
… 
(3) International assistance shall be requested and provided on the basis of the 
international agreement and according to the procedure and to the extent regulated 
in the law of Estonia and that of the European Union. 
(4) The competence of the authority providing assistance and the rights and 
obligations of the parties shall be established with national legislation. 
...’ 
Paragraph 513 MKS ‘Recovery by way of international assistance’ 
‘(1) The Maksu- ja Tolliamet shall provide international assistance for the 
recovery of taxes imposed by the State making a request for recovery or 
information or a request for precautionary measures, or by one of its regional 
authorities or another administrative unit, from a taxable person with residence or 
registered office in Estonia or possessing assets in Estonia. 
… [Or. 6] 
(3) On the basis of a request for precautionary measures made by the competent 
authority of the foreign State, the Maksu- ja Tolliamet shall be authorised to take 
enforcement action in accordance with the procedure regulated in Paragraph 1361 
of the present law. 
Paragraph 130 MKS ‘Enforcement action by the tax authority’ 
‘(1) If the taxable person has not met the financial obligation within the period 
set in the administrative act of the tax authority or in a ruling cited in 
Paragraph 128(4) No 2 or 3, the tax authority shall begin to recover the debt by 
way of compulsory enforcement. The tax authority shall have the right: 
1. to request the entry of a note on a prohibition of disposal in the land register 
or another register of assets without the consent of the party concerned; 
2. to request the creation of a mortgage in respect of real estate, a ship entered 
in the ship register or an aircraft entered in the register of civil aviation according 
to the provisions of the property law regarding the regulation of forced mortgages; 
3. to carry out the enforcement in terms of financial rights pursuant to the 
provisions of the present law and the legislation regulating the enforcement 
procedure; 
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4. to attach other property rights in respect of which no enforcement within the 
meaning of No 3 of this paragraph is possible, and to request the entry of a note on 
a prohibition of disposal with regard to those rights in the corresponding register 
on those rights; 
5. to issue the order to block securities or a securities account in accordance 
with the provisions of the securities register law. ...’ 
Paragraph 1361 MKS ‘Precautionary measures before establishment of the 
monetary claim or liability’ 
‘(1) If, upon inspection of the correct payment of taxes, there is reason to suspect 
that, following the establishment of the monetary claim or liability arising from 
tax legislation, the enforceability thereof may prove to be much more difficult or 
impossible due to the conduct of the taxable person, the head of the tax authority 
or an officer authorised thereby may ask the Administrative Court to grant 
approval for an enforcement measure provided for in Paragraph 130(1) of the 
present law. 
(11) If an enforcement measure regulated in Paragraph 130(1) of the present law 
is not possible in the case or would very probably not be successful, the head of 
the tax authority or an officer authorised thereby may ask the Administrative 
Court to allow the bailiff to take the following enforcement measures: 
1. To attach the assets of the taxable person or the recipient of the notice of 
liability which are in the possession of the taxable person, the recipient of the 
notice of liability or a third person; 
2. To prohibit a third person from transferring assets to the taxable person or 
the recipient of the notice of liability or fulfilling other commitments therefor, 
which may also involve the obligation to transfer assets to the bailiff or money to 
an account provided for that purpose. 
(12) In the case cited in subparagraph 11 No 1 of the present paragraph, the court 
may, on the basis of an application by the tax authority, the taxable person or the 
recipient of the notice of liability, order that the attached assets be sold and the 
proceeds from that sale be paid into an account provided for that purpose, if the 
object may significantly diminish in value or retaining the object would cause 
excessive costs. 
(13) The application cited in subparagraphs 1 and 11 of the present paragraph 
shall be made to the Administrative Court in whose district the taxable person or 
the recipient of the notice of liability has his residence or registered office. If the 
residence or registered office of the taxable person or the recipient of the notice of 
liability is not known or is not in Estonia, the application shall be made to the 
Administrative Court in whose district the assets in question are located. 
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(14) In order to recover the enforcement costs in connection with the measures 
cited in subparagraph l1 Nos 1 and 2 of the present paragraph, the tax authority 
shall issue an order establishing the period for the payment thereof and pointing 
out that, if the enforcement costs are not paid within that period, the non-settled 
liability will be enforced under Paragraphs 128-132 of the present law. 
(2) The application to the Administrative Court shall indicate: 
1. A reason why the recovery of the possible tax liability will be much more 
difficult or impossible; [Or. 7] 
2. The estimated amount of the possible monetary claim or liability; 
3. Indications of the security upon provision of which the tax authority shall 
end the enforcement measure; 
4. One or more of the enforcement measures cited in Paragraph 130(1) of the 
present law or in the enforcement regulation and reasoning why the tax authority 
considers the chosen measure to be necessary. 
(3) If the circumstance which caused the performance of the enforcement 
measure has ceased to exist or if the taxable person has provided a security to 
ensure the payment of the possible monetary claim or liability, the tax authority 
shall end the enforcement measure within two working days at the latest. 
(4) The tax authority and the person whose rights are affected by the order may 
lodge an appeal against the order with which the request cited in subparagraphs 1-
12 of the present paragraph or the application cited therein was or was not 
allowed. An appeal may be lodged against the order of the Ringkonnakohus 
regarding the appeal.’ 
POSITION OF THE CHAMBER 
12. In dispute in the present case is the question of whether the courts were right 
not to allow the MTA’s application of 29 March 2018 for the granting of approval 
for prohibitions of disposal to be entered in relation to Heavyinstall OÜ’s assets 
and for its assets to be attached. Decisive for the resolution of the case is the 
clarification of the question of whether the national courts, when ruling on the 
application for precautionary measures made by the MTA by way of mutual 
assistance, may assess the evidence themselves, including the ruling on the 
application of precautionary measures of the Finnish court, and may decide 
according to their own conviction whether the conditions for applying the 
measures are met, or whether the courts must proceed on the basis of the legal 
assessment made by the Finnish court in its ruling in relation to the facts. 
13. The courts decided that the conditions of Paragraph 1361(1) MKS were not 
met in the case of the MTA’s application. Conveying the view taken by the 
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Finnish tax authority, the MTA is also of the opinion that the Estonian courts had 
incorrectly started to examine whether the request was in accordance with the 
national laws as, under the last sentence of Article 16(1) of Directive 2010/24/EU, 
the document of another Member State should not be reassessed. 
14. Under national law, Paragraph 513(3) and Paragraph 1361 MKS concern the 
ruling on a request for precautionary measures by way of mutual assistance. Those 
provisions do not yield any differences for the ruling on a request by way of 
mutual assistance and an application which is necessary for securing the MTA’s 
own procedure. Accordingly, when implementing the Directive, the Estonian 
legislature was of the opinion that the last sentence of Article 16(1) of Directive 
2010/24/EU provides no basis for the approval granted by the Finnish court for 
carrying out precautionary measures being transferred to the Estonian territory. 
The Chamber also prefers the interpretation of Article 16(1) of the Directive 
according to which the ruling of the Finnish court on the performance of 
precautionary measures is just one item of evidence to be considered when 
examining the condition of Paragraph 1361 MKS and the approval of the 
enforcement measures. That is confirmed by the first sentence of Article 16(1), 
according to which the requested authority shall take precautionary measures, if 
the request is allowed by its national law and in accordance with its administrative 
practices. 
15. In the view of the Chamber, the interpretation by the tax authority (which 
also conveys the position of the Finnish tax authority), that under the last sentence 
of Article 16(1) of the Directive, a departure from the assessment of the facts 
established in the court ruling attached to the request was not admissible and 
Estonia had made a mistake when implementing the Directive, is however not 
excluded. In the recovery procedure, a uniform instrument was used as a basis for 
the compulsory enforcement and there was no examination of its correspondence 
with the laws at national level. When applying precautionary measures, it was also 
appropriate to refer to the principles of mutual trust and cooperation and the 
principle of effectiveness, and to proceed on the basis of the position of the court 
of the applicant Member State that had already assessed the need to apply 
precautionary measures. Therefore, the Chamber does not agree with the view 
taken by the Ringkonnakohus that an acte clair situation applied. 
16. There is no case-law of the Court of Justice of the European Union in 
relation to the interpretation of Article 16 of Directive 2010/24/EU. It is also not 
apparent that requests for a preliminary ruling have been submitted in relation 
thereto. [Or. 8] 
17. On the basis of the foregoing considerations, and since there is no case-law 
of the Court of Justice of the European Union on these matters, the Chamber 
considers it necessary to request a preliminary ruling from the Court of Justice of 
the European Union. … [not translated][stay of proceedings] 
… [not translated]