Judgment;Summary — ECLI:EU:C:2021:890
Date: 2021-10-28
Language of the case: Finnish
Court formation: Seventh Chamber
Subject matter: Taxation;Excise duties
Procedure: Reference for a preliminary ruling
Origin: Finland

Summary of the essential arguments of the parties 
14. In its appeal to the Supreme Administrative Court, A Oy asserted, in so far as it is 
the subject of this request for a preliminary ruling, that Article 4(2) of the 
Structural Directive contained [Or. 4] a definition of an independent small 
brewery. The second sentence of paragraph 2 concerned the definition of a 
fundamental concept which was inextricably linked to the application of the 
directive, and part of a fundamental concept could not be excluded from 
transposition at national level. The purpose of the Structural Directive and the 
national Law on the taxation of alcohol and alcoholic beverages did not support 
the view that the legislature deliberately chose not to include in the national 
legislation the provision on joint taxation contained in the Directive. Nor did the 
travaux préparatoires make any mention of a decision on the part of the 
legislature in this regard. 
15. The purpose of the tax reduction for small breweries is, it submits, to offset the 
competitive advantage that large breweries derive from their larger production 
capacities and thus to promote the operating conditions of small breweries. A 
further purpose is to prevent large breweries from benefiting from the reduction 
by dividing their activities between small breweries by formal means. This is clear 
from the judgment of the Court of Justice in Case C-83/08, Glückauf Brauerei 
GmbH. 
16. In addition, A Oy asserted that Article 4(3) of the Structural Directive required 
that the reduced rates of excise duty should apply equally to beer delivered from 
small breweries situated in other Member States. If the view that the provision on 
the joint taxation of small breweries contained in the directive had not been 
included in the national legislation were to be accepted, the Finnish State could be 
guilty of unequal tax treatment of beer brewed by small breweries in other 
Member States. 
17. Since the total annual production of A Oy and B Oy did not exceed the ceilings 
permitted by the Law on the taxation of alcohol and alcoholic beverages and since 
the companies were legally and economically independent of other small 
breweries, A Oy took the view that the companies were entitled to the tax 
reduction on the basis of their joint annual production. 
18. To the extent relevant to this request for a preliminary ruling, the Veronsaajien 
oikeudenvalvontayksikkö (body responsible for safeguarding the rights of 
taxpayers) asserted, before the Supreme Administrative Court, that Paragraph 9 of 
the Law on the taxation of alcohol and alcoholic beverages was consistent with 
Article 4 of the Structural Directive. The decisive question, however, was whether 
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the wording ‘those breweries may be treated as a single independent small 
brewery’ contained in the second sentence of Article 4(2) of the Directive gave a 
Member State the possibility of regarding as ‘an independent small brewery’ 
several breweries which cooperated among themselves or whether that wording 
obliged the Member State to do so. On the basis of its wording, that provision of 
the Directive was optional, that is to say, discretionary and not mandatory. There 
was no corresponding provision in the national Law on the taxation of alcohol and 
alcoholic beverages. It was clear that the provision of the Directive would have to 
be incorporated into the national law if it had direct effect. [Or. 5] 
Provisions of national law 
19. Pursuant to Paragraph 9 (as last amended by Law 571/1997), subparagraph 1 (as 
last amended by Laws 1298/2003 and 1128/2010) of the Alkoholi- ja 
alkoholijuomaverolaki (1471/1994) (Law on the taxation of alcohol and alcoholic 
beverages 1471/1994), if the taxpayer can reliably demonstrate that the beer was 
brewed in an undertaking that is legally and economically independent of other 
undertakings in the same sector and the volume of beer produced by that 
undertaking in a calendar year does not exceed 10 000 000 litres, the alcoholic 
beverage tax payable on the beer is to be reduced: 
(1) by 50 per cent in so far as the volume of beer produced by the undertaking in 
a calendar year does not exceed 200 000 litres; 
(2) by 30 per cent in so far as the volume of beer produced by the undertaking in 
a calendar year exceeds 200 000 litres but does not exceed 3 000 000 litres; 
(3) by 20 per cent in so far as the volume of beer produced by the undertaking in 
a calendar year exceeds 3 000 000 litres but does not exceed 5 500 000 litres; 
(4) by 10 per cent in so far as the volume of beer produced by the undertaking in 
a calendar year exceeds 5 500 000 litres but does not exceed 10 000 000 litres. 
20. Pursuant to Paragraph 9 (as last amended by Law 571/1997), subparagraph 3 (as 
last amended by Law 1298/2003) of the Law on the taxation of alcohol and 
alcoholic beverages (1471/1994), where two or more undertakings within the 
meaning of subparagraph 1 engage in production-related or operational 
cooperation, this does not mean that there is legal or economic interdependence 
between them. The procurement of raw materials and supplies needed to produce 
the beer, the packaging of the beer and marketing and distribution are regarded as 
production-related or operational cooperation. However, the application of this 
subparagraph requires that the combined production of beer of the undertakings in 
a calendar year should not exceed 10 000 000 litres. 
21. Pursuant to Paragraph 9 (in the version as last amended by Law 383/2015, 
applicable as from 1 January 2015), subparagraph 1 of the Law on the taxation of 
alcohol and alcoholic beverages (1471/1994), if the taxpayer can reliably 
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demonstrate that the beer was brewed in an undertaking that is legally and 
economically independent of other undertakings, is situated physically apart from 
other breweries and does not carry out production under licence, and the volume 
of beer produced by that undertaking in a calendar year does not exceed 
15 000 000 litres, the alcoholic beverage tax payable on the beer is to be reduced: 
(1) by 50 per cent in so far as the volume of beer produced by the brewery in a 
calendar year does not exceed 500 000 litres; 
(2) by 30 per cent in so far as the volume of beer produced by the brewery in a 
calendar year exceeds 500 000 litres but does not exceed 3 000 000 litres; 
(3) by 20 per cent in so far as the volume of beer produced by the brewery in a 
calendar year exceeds 3 000 000 litres but does not exceed 5 500 000 litres; 
(4) by 10 per cent in so far as the volume of beer produced by the brewery in a 
calendar year exceeds 5 500 000 litres but does not exceed 10 000 000 litres. 
[Or. 6] 
22. Pursuant to Paragraph 9 (as last amended by Law 383/2015), subparagraph 3 of 
the Law on the taxation of alcohol and alcoholic beverages (1471/1994), where 
two or more breweries within the meaning of subparagraph 1 engage in 
production-related or operational cooperation, this does not mean that there is 
legal or economic interdependence between them. The procurement of raw 
materials and supplies needed to produce the beer, the packaging of the beer and 
marketing and distribution are regarded as production-related or operational 
cooperation. However, the application of this subparagraph requires that the 
combined output of beer of the breweries in a calendar year should not exceed 
15 000 000 litres. 
Relevant provisions of EU law and case-law 
The Structural Directive 
23. Council Directive 92/83/EEC of 19 October 1992 on the harmonisation of the 
structures of excise duties on alcohol and alcoholic beverages lays down common 
rules on the structures of excise duties on alcohol and alcoholic beverages. The 
Directive defines and classifies the different types of alcohol and alcoholic 
beverages according to their characteristics and establishes a legal framework for 
tax reductions, exemptions and exceptions granted in certain sectors. 
24. The third recital of the Directive states that it is important to the proper 
functioning of the internal market to determine common definitions for all the 
products concerned. 
25. The seventh recital of the Directive states that, in the case of beer produced in 
small independent breweries and ethyl alcohol produced in small distilleries, 
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common solutions are required permitting Member States to apply reduced rates 
of duty to those products. 
26. According to the 17th recital of the Directive, in the cases where Member States 
are permitted to apply reduced rates, such reduced rates should not cause 
distortion of competition within the internal market. 
27. Article 4 of the directive reads: 
‘(1) Member States may apply reduced rates of duty, which may be 
differentiated in accordance with the annual production of the breweries 
concerned, to beer brewed by independent small breweries within the following 
limits: 
– the reduced rates shall not be applied to undertakings producing more than 
200 000 hl of beer per year, [Or. 7] 
– the reduced rates, which may fall below the minimum rate, shall not be set 
more than 50% below the standard national rate of excise duty. 
(2) For the purposes of the reduced rates the term “independent small brewery” 
shall mean a brewery which is legally and economically independent of any other 
brewery, which uses premises situated physically apart from those of any other 
brewery and does not operate under licence. However, where two or more small 
breweries cooperate, and their combined annual production does not exceed 
200 000 hl, those breweries may be treated as a single independent small brewery. 
(3) Member States shall ensure that any reduced rates they may introduce apply 
equally to beer delivered into their territory from independent small breweries 
situated in other Member States. In particular they shall ensure that no individual 
delivery from another Member State ever bears more duty than its exact national 
equivalent.’ 
Case-law of the Court of Justice 
28. The Court of Justice interpreted the definition of ‘independent small brewery’ 
contained in Article 4(2) of the Structural Directive in its judgment in Case 
C-83/08, Glückauf Brauerei GmbH. Although that case essentially concerned the 
interpretation of the requirement of legal and economic independence of the 
brewery laid down in that provision, the Court of Justice also made more general 
statements regarding the purpose of the Structural Directive and the interpretation 
of Article 4(2) thereof. 
29. In paragraph 21 of that judgment, the Court of Justice recalled, referring to the 
third recital of the Structural Directive and to its title, that, in order to ensure the 
proper functioning of the internal market, the Directive seeks to establish common 
definitions for all the products concerned, adopted as part of a policy designed to 
harmonise the structures of excise duty on alcohol and alcoholic beverages. 
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According to the Court of Justice, in order to ensure that that directive is applied 
in a uniform fashion, the terms in it must be interpreted independently on the basis 
of the wording of the provisions in question and the purpose of the Directive. 
30. In paragraph 25 of the aforementioned judgment, the Court of Justice stated that, 
in accordance with the 7th and 17th recitals of the Directive, the latter seeks, in 
the case of beer produced in small independent breweries, common solutions to 
permit [Or. 8] Member States to apply reduced rates of duty to those products, 
while not allowing those reduced rates to lead to distortions of competition in the 
internal market. 
31. According to paragraph 26 of the aforementioned judgment, it follows that the 
Directive seeks to prevent the benefits of such a reduction from being granted to 
breweries, the size and capacity of which could cause distortions in the internal 
market. 
32. In paragraph 29 of the aforementioned judgment, the Court of Justice states that 
the purpose of the independence criterion is to ensure that the reduced rate of duty 
actually benefits those breweries the size of which represents a handicap, and not 
those which belong to a group. 
33. The Court of Justice also expressed its view on the interpretation of Article 4(2) of 
the Structural Directive in Case C-285/14, Brasserie Bouquet. That case 
concerned the interpretation of the concept of ‘production under licence’ within 
the meaning of that provision. 
The need for the preliminary ruling 
Interpretation of Article 4(2) of the Structural Directive 
34. According to the Supreme Administrative Court, the Court of Justice’s case-law to 
date does not provide an unequivocal answer to the question of whether a Member 
State which applies reduced rates of excise duty to beer brewed by independent 
small breweries within the meaning of Article 4 of the Structural Directive must 
also apply the provision on the joint taxation of small breweries contained in the 
second sentence of Article 4(2) or whether the application of the latter provision is 
left to the discretion of the Member State concerned. 
35. The Supreme Administrative Court takes the view that an unequivocal answer to 
the above question of interpretation cannot be inferred from the wording of 
Article 4(2) of the Structural Directive either. 
36. On the one hand, it could be argued that the purpose of the expression ‘may be 
treated’ used in the second sentence of that provision is to leave the application of 
joint taxation of small breweries to the discretion of the Member State even if that 
Member State has decided to apply the reduced rates of excise duty to beer 
produced by independent small [Or. 9] breweries in accordance with Article 4 of 
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the Structural Directive. It might be assumed that if the EU legislature had 
intended to oblige a Member State applying the reduced rates to apply the joint 
taxation of small breweries as well, the provision would have been worded in such 
a way as to make it clearer that it was binding on Member States which applied 
reduced rates. 
37. On the other hand, it could also be argued that if the EU legislature had intended 
to leave the application of joint taxation to the discretion of the Member State 
applying reduced rates, it would probably have used, for example, the expression 
‘the Member State may’ in the second sentence of Article 4(2) of the Directive. 
The Supreme Administrative Court considers that this is the wording that is 
customary (and used, for example, in Article 4(1)) for a provision if its application 
is to be left to the discretion of the Member State. 
38. Accordingly, it could also be assumed that the wording ‘may be treated’ used in 
the second sentence of Article 4(2) of the Directive does not refer to the Member 
State’s discretion in applying that provision, but to the fact that breweries that do 
not satisfy the requirements of the first sentence of Article 4(2) in relation to 
independence but do satisfy those of the second sentence of that provision may be 
treated for tax purposes as a single independent small brewery, without prejudice 
to the first sentence of that provision. 
39. On the basis of that interpretation, it could be considered that the word 
‘[h]owever’ used in the second sentence of Article 4(2) links that sentence to the 
definition of ‘independent small brewery’ contained in the first sentence of 
Article 4(2). 
40. The Supreme Administrative Court points out that, according to the case-law of 
the Court of Justice, when interpreting a provision of EU law which makes no 
express reference to the law of the Member States for the purpose of determining 
its meaning and scope, and its terms do not allow its meaning and scope to be 
determined with certainty, it is important to take into account the context and 
objectives of that provision (for example, judgment of 6 March 2008, C-98/07, 
Nordania Finans A/S, EU:C:2008:144, paragraph 18). 
41. In the present context, the Court of Justice confirmed in paragraphs 20 and 21 of 
its judgment in Case C-83/08, Glückauf Brauerei GmbH, cited above, that the 
concept of ‘independent small brewery’ in Article 4(2) of the Structural Directive 
must be interpreted independently on the basis of the wording of the provisions in 
question [Or. 10] and the purpose of the Directive. In the same context, the Court 
of Justice stated that ‘… in order to ensure the proper functioning of the internal 
market, the Directive seeks to establish common definitions for all the products 
concerned, adopted as part of a policy designed to harmonise the structures of 
excise duty on alcohol and alcoholic beverages.’ The Supreme Administrative 
Court concludes that, in the light of the aforementioned purpose of the Directive, 
the concept of ‘independent small brewery’ must be interpreted in a uniform 
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fashion, both in terms of its content and meaning, in all Member States applying 
the reduced rates on the basis of Article 4 of the Directive. 
42. The Supreme Administrative Court takes the view that when interpreting 
Article 4(2) of the Structural Directive in the context of the present question of 
interpretation, account should be taken, in addition to the aforementioned general 
objective of the Directive, of the specific objectives pursued by the EU legislature 
when it authorised Member States to apply reduced rates of excise duty to beer 
produced by small breweries in accordance with Article 4 of the Directive. 
43. In this regard, the Supreme Administrative Court refers in particular to 
paragraph 25 of the judgment in Case C-83/03, Glückauf Brauerei GmbH, cited 
above, in which the Court of Justice held that the purpose of the Directive was to 
seek, ‘in the case of beer produced in small independent breweries, common 
solutions to permit Member States to apply reduced rates of duty to those 
products, while not allowing those reduced rates to lead to distortions of 
competition in the internal market.’ 
44. In paragraph 26 of the judgment in Case C-83/08, Glückauf Brauerei GmbH, the 
Court of Justice also stated that it follows that the Structural Directive ‘… seeks to 
prevent the benefits of such a reduction [based on Article 4 of the Directive] from 
being granted to breweries, the size and capacity of which could cause distortions 
in the internal market.’ In paragraph 29 of the judgment, the Court of Justice also 
held that the purpose of the independence criterion in Article 4(2) of the Directive 
‘… is to ensure that the reduced rate of duty actually benefits those breweries the 
size of which represents a handicap, and not those which belong to a group.’ 
45. The Supreme Administrative Court concludes from the above statements of the 
Court of Justice that, when interpreting Article 4(2) of the Directive, account must 
be taken, on the one hand, of the desire to harmonise the structures of excise 
duties on alcohol and alcoholic beverages [Or. 11] and, on the other hand, of the 
objective of promoting, without causing distorting of competition within the 
internal market, the position on the market of small breweries the size of which 
represents a handicap. 
46. The Supreme Administrative Court takes the view that the decision of a Member 
State applying reduced rates of excise duty not to treat two or more small 
breweries which cooperate with each other and the combined annual output of 
which does not exceed 200 000 hectolitres as a single independent small brewery 
would not appear to be consistent with the aforementioned general objective of the 
Directive and the above-described specific objectives of Article 4 of the Directive. 
Rather, it would appear to lead to unequal treatment of the very smallest breweries 
within the meaning of the second sentence of Article 4(2) in relation to those 
which can be regarded as ‘independent small breweries’ under the first sentence of 
that provision. 
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47. However, in view of the fact that the wording of the second sentence of 
Article 4(2) of the Structural Directive requires interpretation and in view of the 
lack of any case-law of the Court of Justice in that regard, the first question is 
referred for a preliminary ruling. 
Direct effect of the second sentence of Article 4(2)of the Structural Directive 
48. The Supreme Administrative Court states that the second sentence of Article 4(2) 
of the Structural Directive, which concerns the joint taxation of small breweries, 
has not been transposed into Finnish national law. 
49. The provisions based on Article 4 of the Directive that concern the reduction of 
the alcoholic beverage tax on beer produced by small breweries are contained in 
Paragraph 9 (as last amended by Law 383/2015) of the Law on the taxation of 
alcohol and alcoholic beverages (1471/1994). However, that provision does not 
contain provisions on the joint taxation of small breweries that correspond to the 
second sentence of Article 4(2) of the Directive. 
50. For the sake of clarity, the Supreme Administrative Court points out that 
Paragraph 9(3) of the Law on the taxation of alcohol and alcoholic beverages does 
not correspond to the second sentence of Article 4(2) of the Directive. That 
provision of the Law on the taxation of alcohol and alcoholic beverages only lays 
down the conditions under which two or more small breweries that engage in 
production-related or operational cooperation are to be regarded as legally and 
economically independent small breweries despite that [Or. 12] cooperation. 
However, the provision does not provide for the possibility of treating two or 
more small breweries as one single independent small brewery. 
51. Consequently, if the Court of Justice’s answer to the first question referred is that 
a Member State which applies reduced rates of excise duty to beer brewed by 
independent small breweries within the meaning of Article 4 of the Structural 
Directive must also apply the provision on the joint taxation of small breweries 
contained in the second sentence of Article 4(2), it is necessary to assess whether 
individuals can derive rights that they can rely on before the national courts from 
the latter provision. 
52. According to settled case-law of the Court of Justice, whenever the provisions of a 
directive appear, so far as their subject matter is concerned, to be unconditional 
and sufficiently precise, they may be relied upon before the national courts by 
individuals against the State where the State has failed to implement that directive 
in domestic law within the period prescribed or where it has failed to implement 
that directive correctly (for example, judgment of 15 February 2017, C-592/15, 
Commissioners for Her Majesty’s Revenue & Customs, EU:C:2017:117, 
paragraph 13). 
53. The Supreme Administrative Court considers that the second sentence of 
Article 4(2) of the Structural Directive could potentially be interpreted as leaving 
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a margin of discretion to the Member State in so far as the provision lays down a 
maximum quantity of 200 000 hectolitres for the combined annual production of 
breweries. That ceiling corresponds to the annual production ceiling for an 
independent small brewery laid down in the first indent of Article 4(1) of the 
Directive. However, Article 4(1) of the Directive allows Member States to 
differentiate the reduced rates of excise duty in accordance with the annual 
production of the breweries concerned within the limits of that maximum 
production volume. It is conceivable that this possibility of differentiation could 
also apply to the joint taxation of breweries under the second sentence of 
Article 4(2) of the Directive, which could be interpreted as leaving a certain 
margin of discretion to the Member State. 
54. On the other hand, it could be argued that, if a Member State decides to 
differentiate rates of duty on the basis of Article 4(1) of the Directive, it is 
necessarily also obliged to apply a corresponding differentiation criterion to joint 
taxation under the second sentence of Article 4(2) of the Directive. The Supreme 
Administrative Court takes the view that this would be justified from the point of 
view of equal treatment of [Or. 13] small breweries. In this case, the discretion 
conferred by Article 4 of the Directive would relate exclusively to Article 4(1) and 
not to the second sentence of Article 4(2). On the basis of that interpretation, it 
would have to be assumed that the latter provision provides for the joint taxation 
of two or more small breweries which cooperate and the combined annual output 
of which does not exceed 200 000 hectolitres in such a way as to leave no margin 
of discretion to the Member State when applying that provision. 
55. However, in the absence of any case-law of the Court of Justice on that question, 
the second question is referred. 
56. A Oy and the body responsible for safeguarding the rights of taxpayers have been 
granted a right to be heard with a view to requesting a preliminary ruling from the 
Court of Justice. 
Interlocutory order of the Supreme Administrative Court on requesting a 
preliminary ruling from the Court of Justice of the European Union 
57. The Supreme Administrative Court has decided to stay the proceedings and to 
request a preliminary ruling from the Court of Justice of the European Union 
pursuant to Article 267 of the Treaty on the Functioning of the European Union 
(TFEU) concerning the application of the second sentence of Article 4(2) of the 
Structural Directive. The request for a preliminary ruling is necessary for the 
resolution of the dispute before the Supreme Administrative Court. 
Questions referred 
1. Is Article 4 of Directive 92/83/EEC to be interpreted as meaning that a 
Member State which applies reduced rates of excise duty to beer brewed by 
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independent small breweries pursuant to that provision must also apply the 
provision on the joint taxation of small breweries contained in the second sentence 
of Article 4(2) of that directive, or is the application of the latter provision left to 
the discretion of the Member State concerned? 
2. Does the second sentence of Article 4(2) of Directive 92/83/EEC have direct 
effect? 
[...] [Or. 14] [...]