Opinion of the Advocate General — ECLI:EU:C:2014:246
Date: 2014-04-08
Language of the case: Portuguese
Subject matter: Taxation
Procedure: Reference for a preliminary ruling
Origin: Portugal

Summary 50. Therefore, the Tribunal Arbitral Tributário is not a court of arbitration established upon the wishes of the parties. On the contrary, in my view it must be found that it constitutes an element of the Portuguese judicial system on a par with general and administrative courts. The specific feature of that institution lies merely in the fact that the Portuguese legislature decided to give taxable persons the possibility of referring their disputes with the tax authorities to a court which operates in a less formalised, swifter and cheaper manner than ordinary administrative courts. It is a manifestation of a trend, which is not encountered only in Portugal, to deformalise and simplify the judicial procedure by using techniques and instruments characteristic of private dispute resolution mechanisms. It is also an element of the specialisation of courts and judges which is necessary in the context of the increasing complexity of socio-economic relations and thus also disputes submitted to the courts. That, one could say post-modern, approach to justice results from the development of the judicial system and the legal system as a whole. The Court cannot remain deaf to that development but should instead adapt its practice, including the interpretation of Article 267 TFEU, accordingly. 51. Therefore, I consider that the Tribunal Arbitral Tributário must be regarded as a ‘court or tribunal of a Member State’ within the meaning of Article 267 TFEU because it satisfies the above requirements arising from the Court’s case-law. Nor can I see any other reasons why it should be denied that character. This is further supported by the argument that under Articles 25 to 28 of Decree-Law No 10/2011 the judgments of that court can be contested solely on formal grounds, such as failure to state reasons or the incompatibility of those reasons with the content of the judgment, failure to give judgment or infringement of the rules of procedure and, as regards the merits only in exceptional cases of infringement of the constitution or incompatibility with the case-law of the administrative courts. Consequently, rejection of the possibility of courts of arbitration hearing tax cases from referring questions for a preliminary ruling would seriously deprive the Court of influence over Portuguese court rulings on tax issues and thus in a field which is largely harmonised in EU law and has a direct effect on the law and the obligations of individuals. Such a danger can be, according to the Court’s case-law, one of the facts in favour of regarding a body as entitled to refer a question for a preliminary ruling. (28) 52. The reply which I am proposing to the question concerning the admissibility of the reference for a preliminary ruling in this case in no way opens up the way to allowing in future references for preliminary rulings from persons or institutions using different, alternative methods of dispute resolution, in particular in the form of negotiation or mediation. (29) According to the established case-law of the Court — and regardless of whether or not other criteria are satisfied — only bodies which give judgment ‘in proceedings intended to lead to a decision of a judicial nature’ (30) can refer questions for a preliminary ruling pursuant to Article 267 TFEU. The Tribunal Arbitral satisfies that condition since it acts as a body independent of the parties to the dispute and gives judgments which are binding on those parties and which are in principle final, in the same way as the judgments of traditional courts. Therefore, the purpose of the proceedings before the Tribunal Arbitral Tributário is not the conclusion of an agreement by the parties and the judgment given does not have the character of a non-binding recommendation or opinion. That feature clearly distinguishes that court from a mediator and other similar persons. Substance 53. The present case is, in a sense, a continuation of the case of Optimus — Telecomunicações. (31) The Court will have an occasion to supplement the case-law initiated by that judgment. 54. It is first necessary to establish which provisions of Directive 69/335 apply to the facts of the case in the main proceedings. It should be noted that as a result of the amendments introduced by Directive 85/303 that directive does not provide an example of good legislative practice. (32) In the question referred the national court mentions inter alia Article 4(2)(a) of Directive 69/335, but it would appear that it does not apply in the main proceedings. Although the parties disagree as to the nature of the capital increases which form the subject-matter of the main proceedings — that is to say whether they consisted in cash or other contributions — (33) it is common ground that they did not take the form of ‘capitalisation of profits or of permanent or temporary reserves’ referred to in that provision of the directive. The transactions which form the subject-matter of the main proceedings fall within the category of ‘an increase in the capital of a capital company by contribution of assets of any kind’ referred to in Article 4(1)(c). 55. The referring court also mentions Article 7(1) of that directive. However, that provision cannot be read in isolation from paragraph 2 of that article since those two provisions together create a cohesive rule — Article 7(1) or (2) will apply depending on the legal position in a particular Member State on 1 July 1984. If it is considered, as the referring court does, that the main proceedings concern increases in capital through non-cash contributions and a transaction which was subject to stamp duty in Portugal on 1 July 1984, (34) Article 7(2) must apply. (35) 56. Therefore, the legal problem in this case concerns whether Article 7(2) of Directive 69/335 permits the re-introduction of capital duty on the transactions referred to in Article 4(1)(c) which were subject to that duty on 1 July 1984, but were subsequently exempted from it. 57. The original wording of Directive 69/335 laid down the rules for imposing capital duty on the transactions set out therein. Under Article 4 thereof, the transactions referred to in paragraph 1 are to be subject to that duty and the transactions referred to in paragraph 2 may be covered by it. Article 7 of the directive fixed the rates of capital duty. However, Article 7 of Directive 69/335 was completely reworded pursuant Directive 85/303. In relation to transactions which in individual Member States were exempted from capital duty or taxed at a rate of 0.50% or less on 1 July 1984, it requires that they be permanently exempted (Article 7(1)). In relation to other transactions, however, the Member States have a choice — they can also exempt them or they can charge duty on them at a single rate not exceeding 1% (Article 7(2)). 58. As grounds for this, the Community legislature stated in the preamble to Directive 85/303 that capital duty is detrimental to the development of undertakings and consequently the best solution would be to abolish it. However, since the losses of budget revenue from that duty would be unacceptable for certain Member States, it is necessary to enable them to continue to apply that duty at a single rate. 59. This altered the legislative nature of Article 4(1) of Directive 69/335, which no longer obliges the Member States to charge capital duty on the transactions referred to therein since that obligation was removed pursuant to Article 7 of the directive, as amended by Directive 85/303, which constitutes a lex posterior in relation to Article 4(1). Now that provision merely indicates the types of transaction to which the provisions on capital duty relate. 60. All that remains is to determine whether Article 7(2) of Directive 69/335 constitutes a standstill clause which only allows the Member States to maintain the tax applicable on 1 July 1984 (with the possible adjustment of the rate thereof) or whether, as the Portuguese suggests in its written observations, authorisation for the Member States, if they so wish, to abolish and re-introduce capital duty depending on the current tax policy and budget requirements. 61. I firmly support the first proposition. First, as the preamble to Directive 85/303 indicates, the intention of the legislature was to abolish capital duty and the possibility of maintaining it is merely an exception resulting from the fear of budget losses by the Member States. However, if a Member State has abolished capital duty, any associated losses of budget revenue have already occurred and therefore its re-introduction is not justified in the light of the objectives which the Community legislature sought to attain through Directive 85/303. 62. Second, the need to regard Article 7(2) of Directive 69/335 as a standstill clause is also indicated by the logic thereof, and in particular the reference to the legal situation in force on 1 July 1984. Although the legislature intended to give the Member States the freedom to maintain, abolish and possibly subsequently to reinstate capital duty, it does not make that authorisation contingent on the essentially random fact that that duty was in force at a particular rate on 1 July 1984. The reference to that specific date indicates unequivocally the legislature’s desire to introduce a standstill clause in this case. 63. It should also be borne in mind that the Court took a similar position, albeit in relation to transactions referred in Article 4(2) of Directive 69/335, where the legal position is somewhat different, in its judgment in Logstor ROR Polska. (36) In paragraph 39 of that judgment it stated clearly that ‘a Member State which has, in accordance with Article 7(2) of Directive 69/335, waived subjecting certain transactions to capital duty after 1 July 1984 cannot re-establish such taxation on the same transactions’. 64. Finally, it should be noted that according to subparagraph 26.3 of Annex III to Decree-Law No 322-B/2001 the capital increases which form the subject-matter of the main proceedings were subject to stamp duty at 0.4% and thus at a rate which, if it were in force on 1 July 1984, would have necessitated the abolition of that duty pursuant to Article 7(1) of Directive 69/335. Although that rate is consistent with the letter of paragraph 2 of that article, (37) it is particularly difficult to reconcile the re-introduction of that duty at that rate with the logic of Article 7 of Directive 69/335. Conclusion 65. In the light of the foregoing, I propose that the Court rule that the order for reference from the Tribunal Arbitral Tributário is admissible and reply to the question referred as follows: Article 7(2) of Council Directive 69/335/EEC of 17 July 1969 concerning indirect taxes on the raising of capital, in the version resulting from Council Directive 85/303/EEC of 10 June 1985, in conjunction with Article 7(1) of Directive 69/335, must be interpreted as precluding the re-introduction by a Member State of capital duty on transactions referred to in Article 4(1)(c) of that directive which were subject to that duty on 1 July 1984 and were subsequently exempted from it. 1 – Original language: Polish. 2 – OJ, English Special Edition 1969 (II), p. 412. 3 – OJ 1985 L 156, p. 23. 4 – Diário da República, 1. seria, No 82, of 28 April 2010, p. 1466-(111). 5 – Diário da República, 1. seria, No 14, of 20 January 2011, p. 370. 6 – Diário da República I seria A, No 213, p. 6264. 7 – Diário da República I seria A, No 288, p. 8278-(12). 8 – Paragraph 26 of the schedule of capital duties was subsequently amended and ultimately repealed, but that is not of relevance to the present case. 9 – Nordsee (102/81, EU:C:1982:107). 10 – Paragraphs 10 to 13 of the judgment. Detailed consideration of the factors militating against allowing orders for reference from courts of arbitration was undertaken by Advocate General Reischl in his Opinion in Nordsee (EU:C:1982:31). 11 – Eco Swiss (C‑126/97, EU:C:1999:269, paragraph 34). 12 – Denuit and Cordenier (C‑125/04, EU:C:2005:69, paragraph 13). 13 – Judgment in Vaassen-Göbbels (61/65, EU:C:1966:39). 14 – See, for example, the judgment in Handels- og Kontorfunktionærernes Forbund i Danmark (109/88, EU:C:1989:383, paragraphs 7 to 9). 15 – Order in Merck Canada (C‑555/13, EU:C:2014:92, paragraphs 15 to 25). 16 – As regards the essence of arbitration, see, for example: T.E. Carbonneau, The Law and Practice of Arbitration, New York 2007; T. Ereciński, K. Weitz, Sąd arbitrażowy, Warsaw 2008; J.P. Lachmann, Handbuch für die Schiedsgerichtspraxis, Cologne 2008; and A. Szumański (edit.), Arbitraż handlowy, Warsaw 2010. 17 – T. Ereciński, K. Weitz, op.cit., p. 21. 18 – In academic legal writings consideration is given primarily to whether they can be only property disputes or also non-property disputes, but the question of the arbitrability of disputes relating to tax law does not arise. See A. Szumański in: A. Szumański (edit.), op. cit., p. 8 and 9. See also B. Hanotiau, L’arbitrabilité, Recueil des Cour de l’Académie de Droit International, vol. 296 (2002), The Hague 2003. 19 – A detailed, but critical, analysis of the relevant case-law in that regard was put forward by Advocate General Ruiz-Jarabo Colomer in his Opinion in Case C‑17/00 De Coster, EU:C:2001:366. 20 – See inter alia: Dorsch Consult (C‑54/96, EU:C:1997:413, paragraph 23); Syfait and Others (C‑53/03, EU:C:2005:333, paragraph 29); Forposta (formerly Praxis) and ABC Direct Contact (C‑465/11, EU:C:2012:801, paragraph 17). 21 – OJ 2012 C 338, p. 1. 22 – Advocate Lenz made a similar finding in his Opinion in Handels- og Kontorfunktionærernes Forbund i Danmark (EU:C:1989:228, point 21). 23 – According to Portaria n.º 112-A/2011, de 22 de março de 2011 (Order No 112-A/2011 of 22 March 2011, Diário da República, 1. seria, No 57), issued pursuant to Article 4(1) of DecreeLaw No 10/2011, the jurisdiction of courts of arbitration hearing tax cases is compulsory for the tax authority in cases where the amount at issue in the dispute is under EUR 10 000 000. 24 – However, it should be noted that the compulsory jurisdiction of the referring body for the defendant was, in the view of the Court, sufficient to regard that criterion as having been met in Handels- og Kontorfunktionærernes Forbund i Danmark (EU:C:1989:383, paragraph 7). 25 – A similar position was expressed by Advocate General Ruiz-Jarabo Colomer at paragraph 29 of his Opinion in Emanuel (C‑259/04, EU:C:2006:50). Also in Broekmeulen (246/80, EU:C:1981:218). The Court allowed a question referred for a preliminary ruling from a professional body even though the applicant had the alternative possibility of referring the case to an ordinary court (see paragraph 15 of that judgment). 26 – See inter alia RTL Belgium (C‑517/09, EU:C:2010:821, paragraphs 39 and 40). 27 – As was the case in the main proceedings. 28 – See inter alia Broekmeulen (EU:C:1981:218, paragraph 16), and also Gourmet Classic (C‑458/06, EU:C:2008:338, paragraph 32). 29 – For example, those laid down in Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters (OJ 2008 L 136, p. 3). 30 – See inter alia the order in Borker (138/80, EU:C:1980:162, paragraph 4); Weryński (C‑283/09, EU:C:2011:85, paragraph 44); Bełow (C‑394/11, EU:C:2013:48, paragraph 39). 31 – Optimus — Telecomunicações (C‑366/05, EU:C:2007:366). 32 – That is also the view of Advocate General Sharpston in her Opinion in Optimus-Telecomunicações (EU:C:2007:58, point 39). 33 – Ascendi claims that the conversion into capital of the claims of shareholders against the company should be regarded as an increase in capital made in cash. In that case the judgment in Optimus — Telecomunicações (EU:C:2007:366), which concerned precisely the compatibility with the directive of stamp duty on those transactions, should be applied directly in the present case. However, the referring court appears to take the view that the transaction forming the subject-matter of the main proceedings did not consist in cash contributions to the company. In any event, that involves an assessment the facts which it is for the referring court to make. 34 – See point 9 above. 35 – The Republic of Portugal did not accede to the European Community until 1 January 1986 but according to the judgment in Optimus — Telecomunicações (EU:C:2007:366, paragraph 32), 1 July 1984 must also be taken as the relevant date for the purpose of interpreting Directive 69/335 in relation to that Member State. 36 – Logstor ROR Polska (C‑212/10, EU:C:2011:404). 37 – I should point out that it allows the duty to be applied ‘at a single rate not exceeding 1%’.