JUDGMENT OF THE COURT (Grand Chamber)

8 March 2022 ( *1 )

Table of contents

I. Legal context A. Law on own resources 1. Decisions relating to the system of own resources 2. Regulations on the methods and procedure for making available own resources 3. Regulation No 608/2014 4. Regulation No 1553/89 B. Customs law 1. The Community Customs Code 2. The Union Customs Code 3. Implementing Regulation I 4. Implementing Regulation II C. VAT law II. Facts and pre-litigation procedure A. Background to the dispute B. Pre-litigation procedure III. Procedure before the Court IV. The action A. Admissibility 1. Infringement of the United Kingdom’s rights of defence during the pre-litigation procedure and in the proceedings before the Court (a) Arguments of the parties (b) Findings of the Court 2. Insufficiency of the factual and legal basis of the complaint relating to an infringement of EU law on VAT, particularly as regards customs procedure 42 (a) Arguments of the parties (b) Findings of the Court 3. Breach of the principles of the protection of legitimate expectations, legal certainty, estoppel and sincere cooperation (a) Arguments of the parties (b) Findings of the Court 4. The Court’s lack of jurisdiction, in infringement proceedings under Article 258 TFEU, to hear and determine an application by the Commission for a Member State to be ordered to make available a specific amount of own resources (a) Arguments of the parties (b) Findings of the Court 5. Whether the application is premature and inadmissible as regards the period from 1 May 2015 to 11 October 2017 inclusive on account of the Breach C18s issued in relation to that period (a) Arguments of the parties (b) Findings of the Court B. Substance 1. Failure to fulfil obligations to protect the financial interests of the European Union and to counter fraud, and failure to fulfil obligations under EU customs law (a) Infringement of Article 310(6) TFEU and Article 325 TFEU (1) Obligations imposed on Member States under Article 325 TFEU (2) Breach of obligations imposed under Article 325 TFEU (i) Preliminary observations (ii) Reminder of the essential characteristics of the undervaluation fraud at issue (iii) The United Kingdom’s knowledge, from the start of the infringement period, of the essential characteristics of the undervaluation fraud at issue and of effective measures needed to counter it (iv) Inconsistency with Article 325(1) TFEU of the system of customs controls applied by the United Kingdom during the infringement period to counter the undervaluation fraud at issue (b) Breach of obligations imposed by EU customs legislation (1) Preliminary observations (2) Breach of obligations imposed in Article 13 of the Community Customs Code and Article 46 of the Union Customs Code (i) Arguments of the parties (ii) Findings of the Court (3) Breach of obligations imposed in Article 248(1) of Implementing Regulation I and Article 244 of Implementing Regulation II (4) Breach of obligations imposed in Article 220(1) of the Community Customs Code and Article 105(3) of the Union Customs Code 2. Failure to fulfil obligations imposed by EU law on the making available of traditional own resources consisting in customs duties (a) Complaint alleging breach by the United Kingdom of its obligation of principle to make traditional own resources available (1) The principle of the United Kingdom’s liability for the non-establishment of losses of traditional own resources of the European Union (2) The United Kingdom’s liability for the losses of own resources of the European Union established in the Snake C18s (b) Complaint alleging breach by the United Kingdom of its obligation to make available specific amounts of traditional own resources (1) The United Kingdom’s argument that the Court must examine the United Kingdom’s estimate of traditional own resources losses first (2) The Commission’s estimate of the amounts of traditional own resources losses according to the OLAF-JRC method (3) The United Kingdom’s estimate of the amounts of traditional own resources losses according to the HMRC method (4) General arguments against the OLAF-JRC method (5) Estimate of the amount of traditional own resources losses for the period from November 2011 to November 2014 (6) Estimate of the amount of traditional own resources losses for the period from 1 January 2015 to 11 October 2017 inclusive (i) The criticism that the OLAF-JRC method leads to overestimates of the volume of imports that must considered to be undervalued (ii) The criticism that the OLAF-JRC method leads to overestimates of the value of imports that must be considered to be undervalued (7) Effect of the Breach C18s on the estimate of the amounts of own resources losses claimed by the Commission in respect of the period from 1 January 2015 to 11 October 2017 inclusive (8) Exchange rate to be applied in order to calculate the amount of own resources lost (9) Conclusion 3. Failure to fulfil obligations under the legislation on VAT and obligations to make available the corresponding own resources (a) Arguments of the parties (b) Findings of the Court 4. Breach of the duty of sincere cooperation laid down in Article 4(3) TEU (a) Arguments of the parties (b) Findings of the Court Costs

(Failure of a Member State to fulfil obligations – Article 4(3) TEU – Article 310(6) and Article 325 TFEU – Own resources – Customs duties – Value added tax (VAT) – Protection of the financial interests of the European Union – Combating fraud – Principle of effectiveness – Obligation for Member States to make own resources available to the European Commission – Financial liability of Member States in the event of losses of own resources – Imports of textiles and footwear from China – Large-scale and systematic fraud – Organised crime – Missing importers – Customs value – Undervaluation – Taxable amount for VAT purposes – Lack of systematic customs controls based on risk analysis and carried out prior to the release of the goods concerned – No systematic provision of security – Method used to estimate the amount of traditional own resources losses in respect of imports presenting a significant risk of undervaluation – Statistical method based on the average price determined at EU level – Whether permissible)

In Case C‑213/19,

ACTION for failure to fulfil obligations under Article 258 TFEU, brought on 7 March 2019,

European Commission, represented by L. Flynn and F. Clotuche-Duvieusart, acting as Agents,

applicant,

v

United Kingdom of Great Britain and Northern Ireland, represented initially by F. Shibli, S. Brandon, Z. Lavery and S. McCrory, subsequently by F. Shibli and S. McCrory, acting as Agents, and by J. Eadie QC and I. Rogers QC, and by S. Pritchard, T. Sebastian and R. Hill, Barristers,

defendant,

supported by:

Kingdom of Belgium, represented by J.-C. Halleux, P. Cottin and S. Baeyens, acting as Agents,

Republic of Estonia, represented by N. Grünberg, acting as Agent,

Hellenic Republic, represented by M. Tassopoulou, acting as Agent,

Republic of Latvia, represented initially by K. Pommere, V. Soņeca and I. Kucina, and subsequently by K. Pommere, acting as Agents,

Portuguese Republic, represented by P. Barros da Costa, S. Jaulino, L. Inez Fernandes and P. Rocha, acting as Agents,

Slovak Republic, represented by B. Ricziová, acting as Agent,

interveners,

THE COURT (Grand Chamber),

composed of K. Lenaerts, President, L. Bay Larsen, Vice-President, A. Arabadjiev, A. Prechal (Rapporteur), I. Jarukaitis, N. Jääskinen, I. Ziemele and J. Passer, Presidents of Chambers, J.-C. Bonichot, T. von Danwitz, M. Safjan, A. Kumin and N. Wahl, Judges,

Advocate General: P. Pikamäe,

Registrar: M.A. Gaudissart, Deputy Registrar,

having regard to the written procedure and further to the hearing on 8 December 2020,

after hearing the Opinion of the Advocate General at the sitting on 9 September 2021,

gives the following

Judgment

I. Legal context

A. Law on own resources

1. Decisions relating to the system of own resources

2 As regards the period from November 2011 to 11 October 2017 inclusive (‘the infringement period’), in respect of which the Commission claims in the present proceedings that the United Kingdom failed variously to fulfil its obligations under EU law, two decisions relating to the system of own resources of the European Union were successively applicable: Decision 2007/436 and, with effect from 1 January 2014, Decision 2014/335.

3 Under Article 2(1)(a) and (b) of Decision 2014/335, the wording of which is essentially identical to that of Article 2(1)(a) and (b) of Decision 2007/436, revenue from the following is to constitute own resources entered in the budget of the European Union: ‘traditional own resources consisting of … Common Customs Tariff duties and other duties established or to be established by the institutions of the Union in respect of trade with third countries’, and ‘the application of a uniform rate valid for all Member States to the harmonised VAT assessment bases determined in accordance with Union rules’.

4 Article 8(1) of those decisions provides, in the first subparagraph, that Common Customs Tariff duties, as the European Union’s own resources, are to be collected by the Member States in accordance with the national provisions imposed by law, regulation or administrative action, which are, where appropriate, to be adapted to meet the requirements of EU rules, and, in the third subparagraph, that Member States are to make the resources provided for in Article 2(1)(a), (b) and (c) of those decisions available to the Commission.

2. Regulations on the methods and procedure for making available own resources

5 As regards the infringement period, two regulations on making available the own resources of the European Union were successively applicable: Regulation No 1150/2000 and, with effect from 1 January 2014, Regulation No 609/2014.

6 Under Article 2(1) of Regulation No 609/2014, the content of which is, in essence, identical to that of Article 2(1) of Regulation No 1150/2000: ‘For the purpose of applying this Regulation, the Union’s entitlement to the traditional own resources referred to in Article 2(1)(a) of Decision [2014/335] shall be established as soon as the conditions provided for by the customs regulations have been met concerning the entry of the entitlement in the accounts and the notification of the debtor.’

7 Article 6(1) and the first and second subparagraphs of Article 6(3) of Regulation No 609/2014, the content of which is, in essence, identical to that of Article 6(1) and (3)(a) and (b) of Regulation No 1150/2000, provides: ‘1. Accounts for own resources shall be kept by the Treasury of each Member State or by the body appointed by each Member State and broken down by type of resources. … 3. Entitlements established in accordance with Article 2 shall, subject to the second subparagraph of this paragraph, be entered in the accounts[, commonly known as “the A account”,] at the latest on the first working day after the nineteenth day of the second month following the month during which the entitlement was established. Established entitlements not entered in the accounts referred to in the first subparagraph, because they have not yet been recovered and no security has been provided, shall be shown in separate accounts within the period laid down in the first subparagraph[, commonly known as “the B account”]. Member States may adopt this procedure where established entitlements for which security has been provided have been challenged and might, upon settlement of the disputes which have arisen, be subject to change. …’

8 As originally worded, the first subparagraph of Article 9(1) of Regulation No 609/2014, the content of which was, in essence, identical to that of the first subparagraph of Article 9(1) of Regulation No 1150/2000, provided: ‘In accordance with the procedure laid down in Article 10, each Member State shall credit own resources to the account opened in the name of the Commission with its Treasury or the body it has appointed.’

9 Since 1 October 2016, that provision has been worded as follows: ‘In accordance with the procedure laid down in Articles 10, 10a and 10b, each Member State shall credit own resources to the account opened in the name of the Commission with its treasury or national central bank. Subject to the application of negative interest as referred to in the third subparagraph, that account may only be debited upon instruction by the Commission.’

10 As originally worded, Article 12(1) and (3) of Regulation No 609/2014, the content of which was, in essence, identical to that of Article 11(1) and (3) of Regulation No 1150/2000, was worded as follows: ‘1. Any delay in making the entry in the account referred to in Article 9(1) shall give rise to the payment of interest by the Member State concerned. … 3. In the case of Member States not belonging to the Economic and Monetary Union, the rate shall be equal to the rate applied on the first day of the month in question by the Central Banks for their main refinancing operations, increased by two percentage points, or, for the Member States for which the Central Bank rate is not available, the most equivalent rate applied on the first day of the month in question on the Member State’s money market, increased by two percentage points. This rate shall be increased by 0.25 of a percentage point for each month of delay. The increased rate shall be applied to the entire period of delay.’

11 Since 1 October 2016, Article 12(5) of Regulation No 609/2014, replacing Article 12(3) thereof, has provided: ‘In the case of Member States not belonging to the Economic and Monetary Union, the interest rate shall be equal to the rate applied on the first day of the month in question by the central banks for their main refinancing operations, or 0 per cent, whichever is higher, increased by 2.5 percentage points. For the Member States for which the central bank rate is not available, the interest rate shall be equal to the most equivalent rate applied on the first day of the month in question on the Member State’s money market, or 0 per cent, whichever is higher, increased by 2.5 percentage points. This rate shall be increased by 0.25 of a percentage point for each month of delay. The total increase pursuant to the first and the second subparagraphs shall not exceed 16 percentage points. The increased rate shall be applied to the entire period of delay.’

12 Article 13 of Regulation No 609/2014, entitled ‘Irrecoverable amounts’, the content of which is, in essence, identical to that of Article 17 of Regulation No 1150/2000, provides: ‘1. Member States shall take all requisite measures to ensure that the amounts corresponding to the entitlements established under Article 2 are made available to the Commission as specified in this Regulation. 2. Member States shall be released from the obligation to place at the disposal of the Commission the amounts corresponding to entitlements established under Article 2 which prove irrecoverable for either of the following reasons: (a) for reasons of force majeure; (b) for other reasons which cannot be attributed to them. Amounts of established entitlements shall be declared irrecoverable by a decision of the competent administrative authority finding that they cannot be recovered. Amounts of established entitlements shall be deemed irrecoverable, at the latest, after a period of five years from the date on which the amount has been established in accordance with Article 2 or, in the event of an administrative or judicial appeal, the final decision has been given, notified or published. … 3. Within three months of the administrative decision mentioned in paragraph 2 of this Article or in accordance with the time limits referred to in that paragraph, Member States shall provide a report to the Commission with information on those cases where paragraph 2 of this Article has been applied provided the established entitlements involved exceed EUR 50000. That report shall include all the facts necessary for a full examination of the reasons referred to in paragraph 2(a) and (b) of this Article, which prevented the Member State concerned from making available the amounts in question, and the recovery measures the Member State took in the case or cases in question. That report shall be made on a form established by the Commission. For that purpose the Commission shall adopt implementing acts. Those implementing acts shall be adopted in accordance with the advisory procedure referred to in paragraph 2 of Article 16. 4. The Commission shall, within six months from the receipt of the report provided for in paragraph 3, communicate its comments to the Member State concerned. Where the Commission finds it necessary to request additional information, the six-month time limit shall run from the date of receipt of the requested supplementary information.’

3. Regulation No 608/2014

13 As regards the part of the infringement period commencing on 1 January 2014, Article 2 of Regulation No 608/2014, entitled ‘Control and supervision measures’, provides: ‘… 2. Member States shall take all measures that are necessary to ensure that the own resources referred to in Article 2(1) of Decision [2014/335] are made available to the Commission. 3. Where control and supervision measures concern the traditional own resources referred to in Article 2(1)(a) of Decision [2014/335]: (a) Member States shall conduct the checks and enquiries concerning the establishment and the making available of those own resources. … (c) Member States shall, if the Commission so requests, associate it with the inspections which they carry out. Where the Commission is associated with an inspection, the Commission shall have access, in so far as the application of this Regulation so requires, to the supporting documents concerning establishing and making available own resources, and to any other appropriate document related to those supporting documents. (d) The Commission may itself carry out inspections on the spot. The agents authorised by the Commission for such inspections shall have access to documents as set out for the inspections referred to in point (c). Member States shall facilitate those inspections. …’

4. Regulation No 1553/89

14 Article 2(1) of Regulation No 1553/89 provides: ‘The VAT resources base shall be determined from the taxable transactions referred to in Article 2 of [Sixth] Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment [(OJ 1977 L 145, p. 1)] …’

15 The first paragraph of Article 3 of that regulation provides: ‘For a given calendar year, and without prejudice to Articles 5 and 6, the VAT resources base shall be calculated by dividing the total net VAT revenue collected by a Member State during that year by the rate at which VAT is levied during that same year.’

B. Customs law

1. The Community Customs Code

16 The Community Customs Code is applicable to the relevant imports made during the part of the infringement period prior to 1 May 2016.

17 Article 13 of that code provided: ‘1. Customs authorities may, in accordance with the conditions laid down by the provisions in force, carry out all the controls they deem necessary to ensure that customs rules and other legislation governing the entry, exit, transit, transfer and end-use of goods moved between the customs territory of the [European] Community and third countries and the presence of goods that do not have Community status are correctly applied. Customs controls for the purpose of the correct application of Community legislation may be carried out in a third country where an international agreement provides for this. 2. Customs controls, other than spot-checks, shall be based on risk analysis using automated data processing techniques, with the purpose of identifying and quantifying the risks and developing the necessary measures to assess the risks, on the basis of criteria developed at national, Community and, where available, international level. The committee procedure shall be used for determining a common risk management framework, and for establishing common criteria and priority control areas. Member States, in cooperation with the Commission, shall establish a computer system for the implementation of risk management. 3. Where controls are performed by authorities other than the customs authorities, such controls shall be performed in close coordination with the customs authorities, wherever possible at the same time and place. …’

18 Title II of that code included a Chapter 3 entitled ‘Value of goods for customs purposes’, comprising Articles 28 to 36.

19 Article 29 of that code provided: ‘1. The customs value of imported goods shall be the transaction value, that is, the price actually paid or payable for the goods when sold for export to the customs territory of the Community, adjusted, where necessary, in accordance with Articles 32 and 33 … … 2. (a) In determining whether the transaction value is acceptable for the purposes of paragraph 1, the fact that the buyer and the seller are related shall not in itself be sufficient grounds for regarding the transaction value as unacceptable. Where necessary, the circumstances surrounding the sale shall be examined and the transaction value shall be accepted provided that the relationship did not influence the price. … … 3. (a) The price actually paid or payable is the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods and includes all payments made or to be made as a condition of sale of the imported goods by the buyer to the seller or by the buyer to a third party to satisfy an obligation of the seller. … …’

20 Under Article 30 of the Community Customs Code: ‘1. Where the customs value cannot be determined under Article 29, it is to be determined by proceeding sequentially through subparagraphs (a), (b), (c) and (d) of paragraph 2 to the first subparagraph under which it can be determined … 2. The customs value as determined under this Article shall be: (a) the transaction value of identical goods sold for export to the Community and exported at or about the same time as the goods being valued; (b) the transaction value of similar goods sold for export to the Community and exported at or about the same time as the goods being valued; (c) the value based on the unit price at which the imported goods for identical or similar imported goods are sold within the Community in the greatest aggregate quantity to persons not related to the sellers; (d) the computed value … …’

21 Article 31 of that code read as follows: ‘1. Where the customs value of imported goods cannot be determined under Articles 29 or 30, it shall be determined, on the basis of data available in the Community, using reasonable means consistent with the principles and general provisions of: – the agreement on implementation of Article VII of the General Agreement on Tariffs and Trade of 1994 [(OJ 1994 L 336, p. 103) set out in Annex 1A to the Agreement establishing the World Trade Organisation (OJ 1994 L 336, p. 3)] – Article VII of the General Agreement on Tariffs and Trade of 1994 – the provisions of this chapter. 2. No customs value shall be determined under paragraph 1 on the basis of: (a) the selling price in the Community of goods produced in the Community; (b) a system which provides for the acceptance for customs purposes of the higher of two alternative values; (c) the price of goods on the domestic market of the country of exportation; (d) the cost of production, other than computed values which have been determined for identical or similar goods in accordance with Article 30(2)(d); (e) prices for export to a country not forming part of the customs territory of the Community; (f) minimum customs values; or (g) arbitrary or fictitious values.’

22 Article 68 of that code provided: ‘For the verification of declarations which they have accepted, the customs authorities may: (a) examine the documents covering the declaration and the documents accompanying it. The customs authorities may require the declarant to present other documents for the purpose of verifying the accuracy of the particulars contained in the declaration; (b) examine the goods and take samples for analysis or for detailed examination.’

23 Article 71 of that code was worded as follows: ‘1. The results of verifying the declaration shall be used for the purposes of applying the provisions governing the customs procedure under which the goods are placed. 2. Where the declaration is not verified, the provisions referred to in paragraph 1 shall be applied on the basis of the particulars contained in the declaration.’

24 Article 217(1) of the Community Customs Code provided: ‘Each and every amount of import duty or export duty resulting from a customs debt … shall be calculated by the customs authorities as soon as they have the necessary particulars, and entered by those authorities in the accounting records or on any other equivalent medium (entry in the accounts).’

25 According to the first subparagraph of Article 218(1) of that code: ‘Where a customs debt is incurred as a result of the acceptance of the declaration of goods for a customs procedure other than temporary importation with partial relief from import duties or any other act having the same legal effect as such acceptance the amount corresponding to such customs debt shall be entered in the accounts as soon as it has been calculated and, at the latest, on the second day following that on which the goods were released.’

26 Article 220(1) of that code provided: ‘Where the amount of duty resulting from a customs debt has not been entered in the accounts in accordance with Articles 218 and 219 or has been entered in the accounts at a level lower than the amount legally owed, the amount of duty to be recovered or which remains to be recovered shall be entered in the accounts within two days of the date on which the customs authorities become aware of the situation and are in a position to calculate the amount legally owed and to determine the debtor (subsequent entry in the accounts). That time limit may be extended in accordance with Article 219.’

27 Article 221 of that code stated: ‘1. As soon as it has been entered in the accounts, the amount of duty shall be communicated to the debtor in accordance with appropriate procedures. … 3. Communication to the debtor shall not take place after the expiry of a period of three years from the date on which the customs debt was incurred. This period shall be suspended from the time an appeal within the meaning of Article 243 is lodged, for the duration of the appeal proceedings. 4. Where the customs debt is the result of an act which, at the time it was committed, was liable to give rise to criminal court proceedings, the amount may, under the conditions set out in the provisions in force, be communicated to the debtor after the expiry of the three-year period referred to in paragraph 3.’

2. The Union Customs Code

28 The Union Customs Code is applicable to the relevant imports made during the part of the infringement period commencing on 1 May 2016.

29 Article 3 of that code provides: ‘Customs authorities shall be primarily responsible for the supervision of the Union’s international trade, thereby contributing to fair and open trade, to the implementation of the external aspects of the internal market, of the common trade policy and of the other common Union policies having a bearing on trade, and to overall supply chain security. Customs authorities shall put in place measures aimed, in particular, at the following: (a) protecting the financial interests of the Union and its Member States; (b) protecting the Union from unfair and illegal trade while supporting legitimate business activity; (c) ensuring the security and safety of the Union and its residents, and the protection of the environment, where appropriate in close cooperation with other authorities; and (d) maintaining a proper balance between customs controls and facilitation of legitimate trade.’

30 Under Article 46 of that code, entitled ‘Risk management and customs controls’: ‘1. The customs authorities may carry out any customs controls they deem necessary. Customs controls may in particular consist of examining goods, taking samples, verifying the accuracy and completeness of the information given in a declaration or notification and the existence, authenticity, accuracy and validity of documents, examining the accounts of economic operators and other records, inspecting means of transport, inspecting luggage and other goods carried by or on persons and carrying out official enquiries and other similar acts. 2. Customs controls, other than random checks, shall primarily be based on risk analysis using electronic data-processing techniques, with the purpose of identifying and evaluating the risks and developing the necessary counter-measures, on the basis of criteria developed at national, Union and, where available, international level. 3. Customs controls shall be performed within a common risk management framework, based upon the exchange of risk information and risk analysis results between customs administrations and establishing common risk criteria and standards, control measures and priority control areas. Controls based upon such information and criteria shall be carried out without prejudice to other controls carried out in accordance with paragraph 1 or with other provisions in force. 4. Customs authorities shall undertake risk management to differentiate between the levels of risk associated with goods subject to customs control or supervision and to determine whether the goods will be subject to specific customs controls, and if so, where. The risk management shall include activities such as collecting data and information, analysing and assessing risk, prescribing and taking action and regularly monitoring and reviewing that process and its outcomes, based on international, Union and national sources and strategies. 5. Customs authorities shall exchange risk information and risk analysis results where: (a) the risks are assessed by a customs authority as being significant and requiring customs control and the results of the control establish that the event triggering the risks has occurred; or (b) the control results do not establish that the event triggering the risks has occurred, but the customs authority concerned considers the threat to present a high risk elsewhere in the Union. 6. For the establishment of the common risk criteria and standards, the control measures and the priority control areas referred to in paragraph 3, account shall be taken of all of the following: (a) the proportionality to the risk; (b) the urgency of the necessary application of the controls; (c) the probable impact on trade flow, on individual Member States and on control resources. 7. The common risk criteria and standards referred to in paragraph 3 shall include all of the following: (a) a description of the risks; (b) the factors or indicators of risk to be used to select goods or economic operators for customs control; (c) the nature of customs controls to be undertaken by the customs authorities; (d) the duration of the application of the customs controls referred to in point (c). 8. Priority control areas shall cover particular customs procedures, types of goods, traffic routes, modes of transport or economic operators which are subject to increased levels of risk analysis and customs controls during a certain period, without prejudice to other controls usually carried out by the customs authorities.’

31 Article 53 of the Union Customs Code, entitled ‘Currency conversion’, provides in paragraph 1: ‘The competent authorities shall publish and/or make available on the Internet the rate of exchange applicable where the conversion of currency is necessary for one of the following reasons: … (b) because the value of the euro is required in national currencies for the purposes of determining the tariff classification of goods and the amount of import and export duty, including value thresholds in the Common Customs Tariff.’

32 Articles 70 and 74 of the Union Customs Code lay down rules for determining the value of goods for customs purposes, the content of which is, in essence, identical to that of the rules laid down in Articles 29 to 31 of the Community Customs Code.

33 Article 103 of the Union Customs Code, entitled ‘Limitation of the customs debt’, provides, in paragraphs 1 and 2: ‘1. No customs debt shall be notified to the debtor after the expiry of a period of three years from the date on which the customs debt was incurred. 2. Where the customs debt is incurred as the result of an act which, at the time it was committed, was liable to give rise to criminal court proceedings, the three-year period laid down in paragraph 1 shall be extended to a period of a minimum of five years and a maximum of 10 years in accordance with national law.’

34 Article 105 of that code, entitled ‘Time of entry in the accounts’, states, in paragraph 3: ‘Where a customs debt is incurred in circumstances not covered by paragraph 1, the amount of import or export duty payable shall be entered in the accounts within 14 days of the date on which the customs authorities are in a position to determine the amount of import or export duty in question and take a decision.’

35 Article 191 of that code, entitled ‘Results of the verification’, provides: ‘1. The results of verifying the customs declaration shall be used for the application of the provisions governing the customs procedure under which the goods are placed. 2. Where the customs declaration is not verified, paragraph 1 shall apply on the basis of the particulars contained in that declaration. 3. The results of the verification made by the customs authorities shall have the same conclusive force throughout the customs territory of the Union.’

3. Implementing Regulation I

36 Implementing Regulation I is applicable to the relevant imports made during the part of the infringement period prior to 1 May 2016.

37 According to Article 181a of Implementing Regulation I: ‘1. The customs authorities need not determine the customs valuation of imported goods on the basis of the transaction value method if, in accordance with the procedure set out in paragraph 2, they are not satisfied, on the basis of reasonable doubts, that the declared value represents the total amount paid or payable as referred to in Article 29 of the [Community Customs] Code. 2. Where the customs authorities have the doubts described in paragraph 1 they may ask for additional information in accordance with Article 178(4). If those doubts continue, the customs authorities must, before reaching a final decision, notify the person concerned, in writing if requested, of the grounds for those doubts and provide him with a reasonable opportunity to respond. A final decision and the grounds therefor shall be communicated in writing to the person concerned.’

38 Article 248(1) of Implementing Regulation I provides: ‘The granting of release shall give rise to the entry in the accounts of the import duties determined according to the particulars in the declaration. Where the customs authorities consider that the checks which they have undertaken may enable an amount of import duties higher than that resulting from the particulars made in the declaration to be assessed, they shall further require the lodging of a security sufficient to cover the difference between the amount according to the particulars in the declaration and the amount which may finally be payable on the goods. However, the declarant may request the immediate entry in the accounts of the amount of duties to which the goods may ultimately be liable instead of lodging this security.’

4. Implementing Regulation II

39 Implementing Regulation II is applicable to the relevant imports made during the part of the infringement period commencing on 1 May 2016.

40 Article 48 of that implementing regulation, entitled ‘Provisions on tariff exchange rate’, provides in paragraph 1: ‘The value of the euro, where required in accordance with Article 53(1)(b) of the [Union Customs] Code, shall be fixed once a month. The exchange rate to be used shall be the most recent rate set by the European Central Bank [(ECB)] prior to the penultimate day of the month and shall apply throughout the following month. However, where the rate applicable at the start of the month differs by more than 5% from the rate set by the [ECB] prior to the 15th of that same month, the latter rate shall apply from the 15th until the end of the month in question.’

41 Article 140 of that implementing regulation, entitled ‘Non-acceptance of declared transaction values’, provides: ‘1. Where the customs authorities have reasonable doubts that the declared transaction value represents the total amount paid or payable as referred to in Article 70(1) of the [Union Customs] Code, they may ask the declarant to supply additional information. 2. If their doubts are not dispelled, the customs authorities may decide that the value of the goods cannot be determined in accordance with Article 70(1) of the [Union Customs] Code.’

42 Under Article 144 of that implementing regulation, entitled ‘Fall-back method’: ‘1. When determining the customs value under Article 74(3) of the [Union Customs] Code, reasonable flexibility may be used in the application of the methods provided for in Articles 70 and 74(2) of the [Union Customs] Code. The value so determined shall, to the greatest extent possible, be based on previously determined customs values. 2. Where no customs value can be determined under paragraph 1, other appropriate methods shall be used. In this case the customs value shall not be determined on the basis of any of the following: (a) the selling price within the customs territory of the Union of goods produced in the customs territory of the Union; (b) a system whereby the higher of two alternative values is used for customs valuation; (c) the price of goods on the domestic market of the country of exportation; (d) the cost of production, other than computed values which have been determined for identical or similar goods under Article 74(2)(d) of the Code; (e) prices for export to a third country; (f) minimum customs values; (g) arbitrary or fictitious values.’

43 Article 244 of Implementing Regulation II, entitled ‘Provision of a guarantee’, which is intended to implement Article 191 of the Union Customs Code, provides: ‘Where the customs authorities consider that the verification of the customs declaration may result in a higher amount of import or export duty or other charges to become payable than that resulting from the particulars of the customs declaration, the release of the goods shall be conditional upon the provision of a guarantee sufficient to cover the difference between the amount according to the particulars of the customs declaration and the amount which may finally be payable. However, the declarant may request the immediate notification of the customs debt to which the goods may ultimately be liable instead of lodging this guarantee.’

C. VAT law

44 Article 2(1) of Directive 2006/112 provides: ‘The following transactions shall be subject to VAT: … (b) the intra-Community acquisition of goods for consideration within the territory of a Member State by: (i) a taxable person acting as such, or a non-taxable legal person, where the vendor is a taxable person acting as such …; … … (d) the importation of goods.’

45 Under Article 83 of that directive: ‘In respect of the intra-Community acquisition of goods, the taxable amount shall be established on the basis of the same factors as are used in accordance with Chapter 2 to determine the taxable amount for the supply of the same goods within the territory of the Member State concerned. In the case of the transactions, to be treated as intra-Community acquisitions of goods, referred to in Articles 21 and 22, the taxable amount shall be the purchase price of the goods or of similar goods or, in the absence of a purchase price, the cost price, determined at the time of the supply.’

46 Article 85 of that directive provides: ‘In respect of the importation of goods, the taxable amount shall be the value for customs purposes, determined in accordance with the Community provisions in force.’

47 Article 86(1) of Directive 2006/112 reads as follows: ‘The taxable amount shall include the following factors, in so far as they are not already included: (a) taxes, duties, levies and other charges due outside the Member State of importation, and those due by reason of importation, excluding the VAT to be levied; (b) incidental expenses, such as commission, packing, transport and insurance costs, incurred up to the first place of destination within the territory of the Member State of importation as well as those resulting from transport to another place of destination within the Community, if that other place is known when the chargeable event occurs.’

48 Article 87 of that directive provides: ‘The taxable amount shall not include the following factors: (a) price reductions by way of discount for early payment; (b) price discounts and rebates granted to the customer and obtained by him at the time of importation.’

49 Under Article 138 of that directive: ‘1. Member States shall exempt the supply of goods dispatched or transported to a destination outside their respective territory but within the Community, by or on behalf of the vendor or the person acquiring the goods, for another taxable person, or for a non-taxable legal person acting as such in a Member State other than that in which dispatch or transport of the goods began. 2. In addition to the supply of goods referred to in paragraph 1, Member States shall exempt the following transactions: … (c) the supply of goods, consisting in a transfer to another Member State, which would have been entitled to exemption under paragraph 1 and points (a) and (b) if it had been made on behalf of another taxable person.’

50 Article 143 of that directive provides: ‘1. Member States shall exempt the following transactions: … (d) the importation of goods dispatched or transported from a third territory or a third country into a Member State other than that in which the dispatch or transport of the goods ends, where the supply of such goods by the importer designated or recognised under Article 201 as liable for payment of VAT is exempt under Article 138; 2. The exemption provided for in paragraph 1(d) shall apply in cases when the importation of goods is followed by the supply of goods exempted under Article 138(1) and (2)(c) only if at the time of importation the importer has provided to the competent authorities of the Member State of importation at least the following information: (a) his VAT identification number issued in the Member State of importation or the VAT identification number of his tax representative, liable for payment of the VAT, issued in the Member State of importation; (b) the VAT identification number of the customer, to whom the goods are supplied in accordance with Article 138(1), issued in another Member State, or his own VAT identification number issued in the Member State in which the dispatch or transport of the goods ends when the goods are subject to a transfer in accordance with Article 138(2)(c); (c) the evidence that the imported goods are intended to be transported or dispatched from the Member State of importation to another Member State. However, Member States may provide that the evidence referred to in point (c) be indicated to the competent authorities only upon request.’

II. Facts and pre-litigation procedure

A. Background to the dispute

51 With effect from 1 January 2005, the European Union abolished all quotas on imports of textiles and clothing from World Trade Organisation (WTO) countries, including China.

52 On 20 April 2007, the European Anti-Fraud Office (OLAF) sent mutual assistance message 2007/015 to Member States to inform them of the risk, inter alia, of extreme undervaluation of imports of textiles and footwear from China which in most cases were made by ‘shell companies’, undertakings registered for the sole purpose of giving a fraudulent transaction the appearance of legitimacy and which, upon investigation, were often found not to have a place of business at the address given to customs authorities. OLAF explained that, in most of the cases examined, the declared values were well below 0.50 United States dollars (USD) per kilogram (kg) and even below 0.10 USD per kilogram. In the light of that fraud mechanism (‘the undervaluation fraud at issue’), OLAF requested all Member States to monitor their imports of textiles and footwear from, inter alia, China for possible indications of undervalued imports, to carry out appropriate checks at customs clearance for such imports in order to verify the declared customs values to ensure that they reflected true market values, and to take appropriate safeguard measures where there was any suspicion of artificially low invoiced prices.

53 To that end, on the basis of scientific research undertaken by the Commission’s Joint Research Centre (JRC), OLAF developed a risk assessment tool based on EU-wide data (‘the OLAF-JRC method’).

54 That method consists, first of all, in calculating a ‘cleaned average price’ (‘CAP’), also called the ‘fair price’ or ‘fair value’, for each eight-digit product code of the Combined Nomenclature in Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ 1987 L 256, p. 1), as amended by Commission Implementing Regulation (EU) 2016/1821 of 6 October 2016 (OJ 2016 L 294, p. 1) (‘CN’), falling within Chapters 61 to 64 of that nomenclature (‘relevant products’).

55 CAPs are calculated on the basis of the monthly import prices of the relevant products from China taken from Comext, a reference database for detailed statistics on international trade in goods that is managed by Eurostat, over a period of 48 months. Those prices express a per kilogram value for each of the 495 eight-digit CN product codes concerned, specifying the country of origin and the country of destination in the European Union.

56 Next, an average is calculated for the entire European Union based on the arithmetical average, that is to say, a non-weighted average, of the CAPs of all the Member States. In calculating that arithmetical average, outliers, namely values that are unusually high or low, are excluded, which is why the average price is referred to as ‘cleaned’.

57 Lastly, a value corresponding to 50% of the CAP is calculated, which constitutes the ‘lowest acceptable price’ (‘LAP’). The LAP, also expressed as a per kilogram price, is used as a risk profile or threshold enabling the customs authorities of Member States to detect particularly low values declared on importation and, consequently, imports presenting a significant risk of undervaluation.

58 Mutual assistance message 2009/001, issued by OLAF on 23 January 2009, concerned ‘Operation Argus’, a six-month operation in the context of which OLAF had undertaken to monitor trade in the relevant products from a number of third countries, mainly Asian countries, and to forward to Member States every month a list of imports from the previous month which it had identified as being at risk in terms of customs value. In that mutual assistance message, OLAF asked Member States to report to it, within four weeks, on the implementation of risk profiles, to identify imports presenting a significant risk of undervaluation and to carry out pre-clearance checks of the goods concerned, on the basis of its communications.

59 In 2011, during priority control action ‘Discount’ (‘PCA Discount’), coordinated by the Commission’s Directorate-General for Taxation and Customs Union and in which all Member States participated, LAPs calculated in accordance with the OLAF-JRC method were used, as a risk profile, according to the recommendations in the guidelines drawn up for the purposes of that action, to detect and check imports of the relevant products from China with a customs value so unusually low as to be suspect. The United Kingdom participated in that action, albeit that it did not use that risk profile.

60 In 2014, OLAF coordinated the joint customs operation ‘Operation Snake’ (‘JCO Snake’), the operational phase of which took place between 17 February and 17 March of that year and in which all Member States and the Chinese customs authorities participated. The purpose of the latter authorities’ involvement was to secure export declarations so that the declared customs value of the relevant products on importation into the European Union could be verified. In the final report on JCO Snake, Member States were asked to continue to use the risk profiles based on the LAPs that had been applied during that operation.

61 After checks were carried out by the United Kingdom authorities as part of that operation on the basis of those risk profiles, those authorities established that additional customs duties had to be applied in the case of 24 traders in respect of their imports over a three-year period from November 2011 to November 2014.

62 Between November 2014 and February 2015, the United Kingdom authorities sent corresponding payment demands to the traders concerned by issuing 24 post-clearance duty recovery demands, known as ‘demand notes’ or ‘C18s’ (‘the Snake C18s’). However, in the period from June to November 2015, the United Kingdom authorities cancelled those C18s.

63 On 16 January 2015, OLAF opened an investigation specifically directed at certain Member States, including the United Kingdom, covering a period beginning in 2013.

64 In addition, ‘Operation Badminton’ was conducted by HMRC and the United Kingdom’s Border Force between 2013 and 2016. That operation, which mainly concerned VAT fraud, was the basis for a criminal investigation of four major traders importing textiles from China under the customs procedure assigned code 42 in the list of EU customs procedures, under which customs duties are paid on importation and VAT must be paid at a later stage in the Member State of destination (‘customs procedure 42’).

65 Between February 2015 and July 2016, the United Kingdom participated in several meetings organised by OLAF concerning the undervaluation fraud at issue.

66 On 19 and 20 February 2015, OLAF organised a first bilateral meeting with HMRC to take stock of the follow-up to JCO Snake and the use of CAPs as customs undervaluation risk indicators.

67 At that first meeting, OLAF pointed out that the volume of imports likely to be fraudulently undervalued had not decreased and that statistics showed that the United Kingdom was attracting more fraudulent trade in the relevant products on account of the measures that had been taken by other Member States to counter the undervaluation fraud at issue. HMRC stated that it intended to issue duty recovery demands for evaded VAT and customs duties to the undertakings identified during JCO Snake and following its own analyses, those demands amounting in total to more than 800 million pounds sterling (GBP) (approximately EUR 939760000).

68 At an ad hoc meeting on 25 and 26 February 2015 concerning the undervaluation fraud at issue, a meeting organised by OLAF and attended by Member States’ authorities, the United Kingdom reiterated its intention to proceed with those demands. During that meeting, OLAF explained that the use of national averages in risk profiles prevented identification of clear cases of undervaluation, and ‘strongly recommended’, in particular, that Member States implement appropriate risk profiles in order to identify potentially undervalued imports, that they require the provision of security for imports identified as being suspect in that regard, and that they carry out investigations in order to establish the real customs values of the goods concerned. OLAF also emphasised that while the LAP is an important risk indicator, the EU rules on determining value for customs purposes had to be applied. It also outlined the potential loss of traditional EU own resources arising from imports likely to be undervalued, particularly the relevant imports. The United Kingdom reported potential losses of traditional own resources, for the period from May 2013 to March 2015, of a total of EUR 589676121 for a volume of close to 1.5 billion kilograms of relevant products.

69 On 16 June 2015, OLAF issued mutual assistance message 2015/013 in which it asked Member States to take all safeguard measures necessary to protect the financial interests of the European Union against the undervaluation fraud at issue. In that message, OLAF reiterated the conclusions of the ad hoc meeting on 25 and 26 February 2015.

70 In May 2015, the United Kingdom authorities launched ‘Operation Breach’, the first operation carried out on the territory of the United Kingdom that was specifically aimed at combating the undervaluation fraud at issue (‘Operation Breach’).

71 According to the United Kingdom, one of the aims of that operation, which is ongoing, was to determine – following the cancellation of the 24 Snake C18s – the customs value of the undervalued imports detected during JCO Snake and to claim the corresponding amounts of traditional own resources evaded.

72 That operation involved, among other things, pre-clearance checks and post-clearance visits in relation to those suspect imports, documentary analysis, audits and inspections, reviewing the commerciality of sales of the relevant products and examining relationships between the importer, freight agents and other undertakings, as well as educational activities for importers on how to identify fraudulent activity. There were also approximately 30 pre-clearance inspections of 13 consignments which were the subject of physical checks with samples being taken. In connection with the same operation, several post-clearance customs duty recovery demands were issued (‘the Breach C18s’).

73 On 28 July 2015, OLAF organised a second bilateral meeting with HMRC, at which HMRC reported, inter alia, that it was continuing to pursue the recovery of customs duties of more than GBP 800 million and would have recourse to the courts, if necessary. It also stated that it had set up a multidisciplinary task force as part of Operation Breach to examine the background of the importers involved in the fraudulent trade. However, according to HMRC, using risk indicators derived from CAPs would be ‘counterproductive and disproportionate’ given the volume of the relevant imports. OLAF indicated that the implementation of those indicators in certain Member States had resulted in a considerable reduction in the volume of fraudulent traffic, although that traffic had been diverted to other Member States, in particular to the United Kingdom.

74 On 3 February 2016, OLAF organised a third bilateral meeting with HMRC. HMRC announced that the United Kingdom had audited the 16 undertakings identified in JCO Snake. OLAF again recommended that HMRC use EU-wide risk indicators, namely the LAPs. It highlighted the high percentage of relevant imports regarded as being undervalued and resulting in significant losses of customs duties.

75 On 22 and 23 March 2016, OLAF organised a fourth bilateral meeting with HMRC. OLAF reiterated the utility of implementing EU-wide risk indicators as a pre-importation measure and proposed practical ways in which the United Kingdom authorities could progressively implement them. OLAF again gave an update of the prevailing situation, which showed the increasing loss of traditional own resources in the United Kingdom, mainly through abuse of customs procedure 42.

76 At a meeting held in July 2016, OLAF presented a report showing that the loss of traditional own resources was increasing in the United Kingdom.

77 During a meeting held on 18 and 19 September 2016, the French authorities presented the results of ‘Operation Octopus’, an operation led by them with the participation of 10 other Member States, including the United Kingdom, and the support of OLAF.

78 It is apparent from the final report on that operation that organised criminal networks were behind the undervaluation fraud at issue. The consignee entered in the customs declarations concerned was almost always a phoenix undertaking. The great majority of transported goods checked in Calais (France) on the basis of predefined criteria involved the fraudulent understatement of value in the United Kingdom under customs procedure 42.

79 In October 2016, the United Kingdom authorities carried out a test operation, known as ‘Operation Samurai’, which targeted imports made by two traders who stopped their activity immediately after HMRC challenged their customs declarations.

80 On 1 March 2017, OLAF closed its investigation into the implementation of the undervaluation fraud at issue in the United Kingdom and delivered its report (‘the OLAF report’), from which it is apparent that, in the United Kingdom, importers had evaded large amounts of customs duty by submitting false and fictitious invoices and incorrect customs declarations on importation.

81 In that report, OLAF indicated that there had been a substantial increase in the scale of the undervaluation fraud at issue in the United Kingdom in the period from 2013 to 2016. That substantial increase coincided with the implementation by other Member States of risk profiles established using the risk assessment tool based on LAPs, in accordance with OLAF’s recommendations.

82 According to that report, during that period, fraudulent imports into the United Kingdom increased significantly on account of the inadequate nature of the checks made by the United Kingdom customs authorities. In its report OLAF noted that, in 2016, more than 50% of relevant products imported into the United Kingdom from China were declared below the LAPs and some 80% of total losses of traditional EU own resources were attributable to the operation in the United Kingdom of the undervaluation fraud at issue.

83 In the report, OLAF further stated that organised criminal networks operating throughout the European Union were behind that fraud. Most of the relevant imports into the United Kingdom, a large majority of which were made by the abuse of customs procedure 42, were goods intended for illegal and clandestine trade in other Member States. Consequently, OLAF took the view in its report that there was also substantial VAT fraud in the Member States of final destination of the goods concerned, in particular in Germany, Spain, France and Italy.

84 It is apparent from the OLAF report that, in 2016, 87% of low-value imports of the relevant products into the United Kingdom were made under customs procedure 42, whereas, in the same year, that procedure was used for only 15% of imports of the relevant products from China in the Member States overall. According to OLAF, that disparity confirmed the shift of fraudulent operations from other Member States to the United Kingdom.

85 Again according to that report, the United Kingdom failed to apply risk profiles based on the LAPs, contrary to OLAF’s recommendations, and did not carry out appropriate customs checks on importation, except in a one-month period during JCO Snake, from 17 February to 17 March 2014.

86 Consequently, according to that report, the United Kingdom released the relevant products from China involved in the undervaluation fraud at issue for free circulation without conducting appropriate customs controls, with the result that a substantial proportion of the customs duties due were not collected or made available to the Commission.

87 In its report, OLAF calculated the resulting amounts of traditional own resources lost for the period from 2013 to 2016. It fixed the total amount of those losses at EUR 1987429 507.96, broken down as follows: – EUR 325230 822.55 in 2013; – EUR 480098 912.45 in 2014; – EUR 535290 329.16 in 2015; – EUR 646809 443.80 in 2016.

88 The amounts of those losses were calculated by determining, for each CN product code concerned, the quantity in kilograms of the goods involved in the relevant imports that were considered to be undervalued, namely the goods declared at a value below the LAP concerned, then by applying the applicable rate of customs duty to the difference between the value thus declared and the CAP of the product code concerned.

89 Lastly, in its report, OLAF recommended that HMRC take all appropriate measures to recover the customs duties evaded in the amount of EUR 1987429 507.96 and to implement customs undervaluation risk indicators.

90 In the context of the implementation of Regulation No 608/2014, Commission agents carried out five inspections in the United Kingdom between November 2016 and October 2018, in relation, inter alia, to the undervaluation fraud at issue.

91 During inspection 16-11-1, which took place between 14 and 18 November 2016, the Commission found that the amounts of customs duty which had been removed from the separate account provided for in the second subparagraph of Article 6(3) of Regulation No 609/2014, commonly known as the ‘B account’ (‘the B account’), corresponded to the additional debts initially claimed by the issuing of the 24 Snake C18s that were subsequently cancelled, and invited the United Kingdom authorities to establish the customs values corresponding to all the customs declarations concerned, to recalculate the additional duties due based on those values, to enter the corresponding debts in the B account and to recover the amounts concerned as soon as possible. It also asked the United Kingdom authorities to provide it with the advice of HMRC’s legal department which, according to those authorities, had led to the cancellation of those C18s.

92 The Commission also asked those authorities whether they applied the LAP tool developed by OLAF in order to identify imports presenting a significant risk of undervaluation, whether they performed physical controls of the goods concerned at clearance and whether they consistently requested the lodging of security covering the duties likely to be required, in accordance with Article 248(1) of Implementing Regulation I.

93 During inspection 17-11-1, which took place between 8 and 12 May 2017, the Commission selected 12 customs declarations submitted during the first quarter of 2017 with particularly low values for the purpose of on-the-spot checks. The examination of those declarations confirmed that the 12 corresponding consignments had been released for free circulation in the European Union without being checked and without any security being lodged. The United Kingdom authorities admitted that they had not implemented the measures requested by OLAF following JCO Snake in 2014 and again in the report drawn up following inspection 16-11-1. They explained that this was mainly due to advice from their legal department, according to which no acceptable valuation method was available. However, the relevant imports were to be examined by the task force established as part of Operation Breach. The Commission again asked the United Kingdom authorities to provide it with a copy of the advice of HMRC’s legal department which, according to those authorities, had led to the cancellation of the Snake C18s.

94 During inspection 17-11-2, which took place between 13 and 17 November 2017, five particularly low-value customs declarations relating to importers already identified as potential fraudsters in JCO Snake were examined on the basis of one of the Snake C18s, in relation to a total customs debt of GBP 62003 025.23 (approximately EUR 72834954). However, without details of how that debt was calculated, it was not possible to establish a link between the debt and the customs declarations concerned, which, according to HMRC, justified the cancellation of that debt. In addition, the Commission’s agents had again asked the United Kingdom authorities to provide a copy of the advice of HMRC’s legal department that led to the cancellation of those C18s, but the authorities refused to comply with that request on the grounds that the document was confidential and subject to legal professional privilege.

95 During that inspection, the United Kingdom authorities informed the Commission’s agents that HMRC had launched ‘Operation Swift Arrow’ on 12 October 2017.

96 It was explained that the risk profiles used in that operation were based not on the thresholds defined using the OLAF-JRC method, but on national risk thresholds or profiles defined by HMRC on the basis of United Kingdom imports only, and that those thresholds or profiles were applied only to certain traders identified beforehand as being involved in illegal and clandestine trade. The containers detected by those risk thresholds or profiles were subject to physical checks by the United Kingdom authorities at customs clearance of the goods concerned. If those authorities took the view that the declared value of those goods was not justified, they would require security to be lodged before the goods were released.

97 During inspection 18-11-1, which took place between 16 and 20 April 2018, 25 customs declarations concerning the period from 12 October 2017, the date on which Operation Swift Arrow was launched, to 31 December 2017 were examined. It was established that only 7 of those customs declarations with an extremely low value had been identified by those risk thresholds or profiles and that the other 18 containers had been released for free circulation without the customs value having been challenged. The United Kingdom authorities stated that since the launch of Operation Swift Arrow, HMRC’s risk thresholds or profiles had been adjusted in order to include more traders, CN codes and points of entry, so that if the relevant imports had occurred in April 2018, those risk thresholds or profiles would have enabled 11 additional declarations to be identified.

98 Furthermore, according to those authorities, several of the selected traders stopped importing as soon as they were included in those risk thresholds or profiles, subjected to pre-release customs controls and requested to provide security before the goods concerned were released.

99 However, those authorities refused to disclose to the Commission details of the method used by HMRC to calculate the securities required within the framework of Operation Swift Arrow and to draw up the post-clearance duty recovery demands in that context.

100 In May 2018, eight Breach C18s were issued and entered in the B account in respect of imports made from 1 May 2015 that were considered to be undervalued, for a total amount of approximately GBP 25 million (approximately EUR 30 million).

101 During inspection 18-11-2, which took place between 8 and 12 October 2018, the United Kingdom authorities continued to refuse the requests that had already been made and refused during inspection 18-11-1. By contrast, they confirmed that they had established additional duties for seven traders – a number of which had already been identified during JCO Snake – in April 2018, amounting in total to GBP 19434 197.73 (approximately EUR 22829352).

B. Pre-litigation procedure

102 By letters of 24 March and 28 July 2017, the Commission asked the United Kingdom about the action taken in response to the OLAF report. It noted that it had not received any specific additional information from the United Kingdom and that there was no reason to believe that the latter had taken appropriate steps to prevent the undervaluation fraud at issue. In the absence of information to the contrary, the Commission stated that it would be obliged to call on the United Kingdom to make available an amount of traditional own resources corresponding to the losses identified by OLAF, after deducting collection costs.

103 In one of the three letters of 28 July 2017, the Commission also asked for information about the action taken by the United Kingdom authorities in response to inspection report 16-11-1, reiterating in this connection its request to be provided with the advice of HMRC’s legal department that had resulted in cancellation of the 24 Snake C18s, and also the list of entries relating to each of the 24 cases, including details of the calculations performed to establish the corresponding customs debts.

104 By letters of 8 August and 12 October 2017, the United Kingdom replied to the Commission’s letters.

105 As regards, first of all, the OLAF report, the United Kingdom stated that measures had been taken to address the undervaluation fraud at issue, such as the launch of Operation Breach. It observed that, since EU law does not impose a specific type of control, it is for each Member State to decide on the best way to enforce that law. In addition, customs controls prior to the release of the goods concerned, such as the provision of security, are not inherently more effective than post-release measures such as those implemented by the United Kingdom. The OLAF-JRC method is neither reliable nor appropriate, according to the United Kingdom, in so far as it is based, in particular, on the application of EU-wide data. That method is therefore questionable, which is why the United Kingdom developed its own method which is not affected by the shortcomings of that recommended by OLAF.

106 As regards, next, the action taken in response to inspection report 16-11-1, the United Kingdom stated that the 24 Snake C18s had been cancelled and the corresponding amounts removed from the B account because it was impossible to prove the actual value of the imported goods, but that that would be addressed by a group of experts as part of Operation Breach.

107 Lastly, the United Kingdom reiterated its view that it was impossible to accede to the request for disclosure of the content of the advice of HMRC’s legal department that led to the cancellation of the 24 Snake C18s, citing confidentiality and legal professional privilege.

108 On 9 March 2018, the Commission sent the United Kingdom a letter of formal notice.

109 The United Kingdom replied to the Commission by letter of 22 June 2018. In an annex to that letter, the United Kingdom requested that a full version of the OLAF report be sent to it, as it had only an incomplete version of that report, and asked the Commission to provide it with answers to its detailed questions concerning the method used to calculate the amounts of traditional own resources claimed.

110 On 24 September 2018, the Commission sent a reasoned opinion to the United Kingdom (‘the reasoned opinion’) in which, in particular, it responded to the requests made by the United Kingdom in the annex to its letter of 22 June 2018. The United Kingdom was given a time limit in the reasoned opinion of two months within which to reply.

111 On 19 December 2018, having received no reply from the United Kingdom to the reasoned opinion within that time limit, the Commission decided to bring an action for failure to fulfil obligations before the Court, having informed the United Kingdom beforehand on 18 December 2018 of its intention to adopt such a decision the following day.

112 At the request of the United Kingdom authorities and following various informal exchanges between those authorities and the Commission’s services, a technical meeting between those authorities and those services was held on 9 January 2019. At that technical meeting, a consultancy firm presented the findings of a report commissioned by the United Kingdom.

113 On 11 February 2019, the United Kingdom sent the Commission its reply to the reasoned opinion; the annex to the reply contained that report.

114 On 7 March 2019, having considered that reply, the Commission brought the present action for failure to fulfil obligations.

III. Procedure before the Court

115 By decision of the President of the Court of Justice of 26 September 2019, the Kingdom of Belgium, the Republic of Estonia, the Hellenic Republic, the Republic of Latvia, the Portuguese Republic and the Slovak Republic (together, ‘the intervening Member States’) were granted leave to intervene in support of the form of order sought by the United Kingdom.

116 By letter of 11 April 2019, the United Kingdom asked the Court to order the Commission to answer the questions put by the United Kingdom in its ‘refocused’ information request in its letter of 22 March 2019, which expanded on the questions contained in the request for information that it had sent to the Commission by the letter of 22 June 2018.

117 By letter of 6 June 2020, the United Kingdom applied for measures of inquiry or measures of organisation of procedure seeking an order from the Court requiring the Commission to answer a list of questions, some of which had already been submitted in the abovementioned requests for information in the letters of 22 June 2018 and 22 March 2019.

118 In the context of its preparatory enquiries in the case, the Court took into consideration those requests by the United Kingdom in formulating questions for written reply which it sent to the Commission and to the United Kingdom by letter of 14 October 2020. In addition, at the Court’s request, the replies to those questions were subsequently the subject of oral argument at the hearing.

IV. The action

119 As a preliminary point it must be recalled that, by Decision (EU) 2020/135 of 30 January 2020 on the conclusion of the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (OJ 2020 L 29, p. 1), the Council of the European Union approved that agreement, the text of which is attached to that decision (OJ 2020 L 29, p. 7, ‘the Withdrawal Agreement’), on behalf of the European Union and of the European Atomic Energy Community (EAEC).

120 It is apparent from Article 86 of that agreement that the Court is to continue to have jurisdiction in any proceedings brought against the United Kingdom before the end of the transition period within the meaning of Article 2(e) of that agreement, read in conjunction with Article 126 thereof, that is to say, before 1 January 2021 (‘the transition period’). Since the present action for failure to fulfil obligations was brought on 7 March 2019, the Court continues to have jurisdiction in these proceedings.

121 It may also be noted that, as regards the interpretation and application of EU law on EU own resources relating to financial years until 2020, it follows from Articles 136 and 160 of the Withdrawal Agreement that the Court is to continue to have jurisdiction under Article 258 TFEU after 31 December 2020, and therefore even beyond the period of four years after the end of the transition period referred to in Article 87(1) of that agreement within which a new action may be brought under Article 258 TFEU in relation to a failure to fulfil obligations before the end of the transition period.

A. Admissibility

122 It is appropriate to examine, in the first place, the arguments invoked by the United Kingdom to challenge, in whole or in part, the admissibility of the present action for failure to fulfil obligations.

1. Infringement of the United Kingdom’s rights of defence during the pre-litigation procedure and in the proceedings before the Court

(a) Arguments of the parties

123 The United Kingdom submits that the present action for failure to fulfil obligations is inadmissible in so far as its rights of defence have not been respected either during the pre-litigation procedure or in the proceedings before the Court.

124 In the first place, the United Kingdom argues that its rights of defence were infringed in so far as the Commission failed to respond either to its information request in the letter of 22 June 2018 or to its ‘refocused’ information request in the letter of 22 March 2019, even though the information was needed by the United Kingdom in order for it to be able to understand the failure to fulfil obligations alleged and to be in a position to defend itself.

125 Thus, having failed to obtain a response to those information requests, the United Kingdom did not have the information necessary to be able to replicate the amount of traditional own resources claimed by the Commission. In addition, even after the explanations provided by the Commission in the reply regarding the calculation of that amount, areas of uncertainty remain, in particular as to the method used to clean average prices or the question whether the non-aggregated data held by the United Kingdom match the daily aggregated data used by the Commission in that calculation. In any event, even on the assumption that those explanations contain some of the information requested, it was communicated belatedly and, therefore, in breach both of the United Kingdom’s rights of defence and of the Commission’s duty of sincere cooperation.

126 The United Kingdom submits that its rights of defence were also infringed in so far as the Commission refused to reply to the information requests contained in the letters of 22 June 2018 and 22 March 2019 by which information was sought from the Commission regarding the measures taken by other Member States to combat the undervaluation fraud at issue.

127 The United Kingdom states that it needed that information in order to defend itself against the Commission’s claims that appropriate measures had been taken in other Member States and had produced results in combating that fraud. The information was also relevant for the purposes, first, of determining whether the measures taken by the United Kingdom fell within its discretion and were therefore a reasonable way to combat that fraud and, secondly, of invoking arguments concerning the causal link between the United Kingdom’s alleged conduct and the losses of traditional own resources alleged by the Commission.

128 In the second place, the United Kingdom claims that its rights of defence were infringed in so far as the Commission undermined its ability to access all the data necessary for its defence, inasmuch as customs declarations prior to 2014 had been destroyed, having been stored for only four years. Access to the data was necessary because the Commission extended the infringement period beyond that indicated in the OLAF report, to run from 2011. This change in the Commission’s position and expanded challenge were prejudicial to the United Kingdom’s rights of defence.

129 In the third place, the United Kingdom argues that the Commission failed to respect its rights of defence in that it did not produce evidence of the nature of the goods concerned and of the Member State of their destination.

130 The Commission disputes the United Kingdom’s arguments.

(b) Findings of the Court

131 The Court has consistently held that the purpose of the pre-litigation procedure is to give the Member State concerned an opportunity, on the one hand, to comply with its obligations under EU law and, on the other, to avail itself of its right to defend itself against the objections formulated by the Commission. The proper conduct of that procedure constitutes an essential guarantee required by the FEU Treaty not only in order to protect the rights of the Member State concerned, but also so as to ensure that any contentious procedure will have a clearly defined dispute as its subject matter (judgment of 19 September 2017, Commission v Ireland (Registration tax), C‑552/15, EU:C:2017:698, paragraphs 28 and 29 and the case-law cited).

132 In addition, it is apparent from settled case-law in relation to Article 120(c) of the Rules of Procedure of the Court of Justice that an application initiating proceedings must state clearly and precisely the subject matter of the proceedings and set out a summary of the pleas in law relied on, so as to enable the defendant to prepare a defence and the Court to rule on the application. It follows that the essential points of law and of fact on which such an action is based must be indicated coherently and intelligibly in the application itself and that the forms of order sought must be set out unambiguously so that the Court does not rule ultra petita or indeed fail to rule on one of the heads of claim (judgment of 31 October 2019, Commission v Netherlands, C‑395/17, EU:C:2019:918, paragraph 52 and the case-law cited).

133 The Court has also held that, where an action is brought under Article 258 TFEU, the application must set out the complaints coherently and precisely, so that the Member State and the Court can know exactly the scope of the alleged infringement of EU law, a condition that must be satisfied if the Member State is to be able to present an effective defence and the Court to determine whether there has been a breach of obligations, as alleged (judgment of 31 October 2019, Commission v Netherlands, C‑395/17, EU:C:2019:918, paragraph 53 and the case-law cited).

134 In the present case, as regards, in the first place, the Commission’s refusal to provide the United Kingdom with certain information which the latter had requested by its letters of 22 June 2018 and 22 March 2019 when these were allegedly essential for its defence, it must first be noted that, in paragraphs 301 to 326 of the reasoned opinion, the Commission responded appropriately to the complaint made in the letter of 22 June 2018 that the copy of Annex 2 to the OLAF report that was attached to the letter of formal notice was incomplete because several pages of Annex 2 were missing.

135 The Commission explained, in essence, in those paragraphs of the reasoned opinion that Annex 2 had been superseded by Annex 7 to that report, which was available to the United Kingdom authorities and contained two technical documents with detailed information regarding the OLAF-JRC method, the method which the Commission also used to calculate the amount of traditional own resources losses over the infringement period which the Commission claimed, in the reasoned opinion and in the application, should have been made available to it.

136 In those circumstances, the fact that the copy of Annex 2 to the OLAF report, as enclosed with the letter of formal notice, was incomplete did not undermine the United Kingdom’s ability to avail itself of its right to defend itself against the objections formulated by the Commission.

137 Next, according to the United Kingdom, its rights of defence were infringed because the Commission refused to provide certain information, in response to the ‘refocused’ information request in the letter of 22 March 2019, in relation to the detailed calculation of the CAP and the amount of traditional own resources losses claimed in the reasoned opinion and in the application, even though it was essential for the United Kingdom’s defence. In that regard, it must be noted that, as the Advocate General also stated in essence in point 126 of his Opinion, the Commission showed, in paragraphs 132 to 141 of the reply, that both the data used and the method applied to perform that calculation were always known to the United Kingdom which, therefore, at all times both during the pre-litigation procedure and in the proceedings before the Court had all the information necessary to enable it to reconstitute that amount and, therefore, to take issue with it.

138 Furthermore, although the United Kingdom contends that areas of uncertainty remain in relation to certain aspects of that calculation, it must be observed that, both during the pre-litigation procedure and in the proceedings before the Court, the United Kingdom seized the opportunity to criticise that calculation in detail, as well as the data and the OLAF-JRC method underlying it. The replies given by the United Kingdom to the questions put by the Court, in particular those relating to the impact of certain adjustments to the CAP calculation on the amounts of the losses of traditional own resources, confirm, moreover, that the United Kingdom had full access at all times to all the databases and technical documents used by the Commission to perform that calculation.

139 It also follows that, contrary to the United Kingdom’s contention, the information provided by the Commission in the reply does not in any way constitute new information; therefore the Commission cannot be accused of having belatedly remedied a lack of information that was prejudicial to the United Kingdom’s rights of defence.

140 It must be concluded from this that, in the case of the data and method used by the Commission to calculate the CAP and the losses of traditional own resources claimed by that institution from the United Kingdom, the latter had, both during the pre-litigation procedure and in the proceedings before the Court, all the factual information necessary to enable it to avail itself of its right to defend itself against the objections formulated by the Commission.

141 Lastly, as regards the Commission’s refusal to provide the United Kingdom, in response to the letters of 22 June 2018 and 22 March 2019, with information relating to the measures taken by the other Member States to combat the undervaluation fraud at issue, it is sufficient to recall that, according to the Court’s settled case-law, a Member State may not rely on the fact that other Member States have also failed to perform their obligations in order to justify its own failure to fulfil its obligations under the Treaties. In fact, in the EU legal order established by the FEU Treaty, the implementation of EU law by the Member States cannot be made subject to a condition of reciprocity. Articles 258 and 259 TFEU provide the appropriate remedies in cases where Member States fail to fulfil their obligations under the FEU Treaty (judgment of 11 July 2018, Commission v Belgium, C‑356/15, EU:C:2018:555, paragraph 106 and the case-law cited).

142 Even if, as the United Kingdom claims, other Member States had arrangements in place during all or part of the infringement period for customs controls to combat the undervaluation fraud at issue that were similar in certain respects to those employed by the United Kingdom at that time, that in itself is irrelevant for the purposes of determining whether the United Kingdom’s arrangements complied with the provisions of EU law concerning the protection of the financial interests of the European Union against such fraud, such as Article 325 TFEU.

143 It must also be noted that, as attested to by, inter alia, the various documents annexed to the United Kingdom’s letter of 6 June 2020 by which it asked the Court to adopt certain measures of inquiry or measures of organisation of procedure, the United Kingdom was aware of the various measures taken, during all or part of the infringement period, by a number of other Member States to combat the undervaluation fraud at issue, notably those that had been adopted in France, and of the Commission’s assessment of those measures, notably as regards their conformity with EU law, and moreover that the United Kingdom used that information in its defence submissions. In addition, the Court put questions on that point to the Commission for written reply. The replies to those questions then confirmed the detailed information which the United Kingdom already had at its disposal.

144 As regards, in the second place, the arguments of the United Kingdom that its rights of defence were infringed because the Commission undermined its ability to access all the data necessary for its defence, inasmuch as the customs declarations prior to 2014 had been destroyed, having been stored for only four years, these arguments also cannot succeed.

145 As the Advocate General also noted, in essence, in point 130 of his Opinion, it is apparent from the file submitted to the Court that, as regards the part of the period of the infringement prior to 2014 that is covered by the present action, an infringement which, as is noted in paragraph 455 of the present judgment, concerns only the customs debts established in the post-clearance duty recovery demands contained in the Snake C18s, the United Kingdom annexed to the rejoinder a table of those C18s which it issued in respect of imports made during that part of the infringement period, together with copies of those C18s and tables setting out the details of supporting calculations. Those tables refer to the customs declarations concerning those imports. In addition, the United Kingdom does not dispute having those customs declarations in so far as they were the subject of post-clearance demand notes that were challenged in administrative review proceedings.

146 As regards, in the third place, the United Kingdom’s complaint that the Commission failed to respect its rights of defence in that it did not produce evidence of the nature of the goods concerned and the Member State of their destination, that complaint does not concern the admissibility of the present action for failure to fulfil obligations; rather, it concerns its substance, since it concerns the question whether the Commission, which bears the burden of proving the infringements which it alleges, has demonstrated to the requisite legal standard that the pleas put forward in relation to the estimate of the amount of traditional own resources lost and infringement of provisions relating to own resources accruing from VAT are well founded, in the light in particular of the nature and destination of those goods.

147 In the light of the foregoing considerations, the plea of inadmissibility claiming infringement of the United Kingdom’s rights of defence during the pre-litigation procedure and in the proceedings before the Court must be rejected.

2. Insufficiency of the factual and legal basis of the complaint relating to an infringement of EU law on VAT, particularly as regards customs procedure 42

(a) Arguments of the parties

148 The United Kingdom contends that the Commission failed to respect its rights of defence both during the pre-litigation procedure and in the proceedings before the Court in so far as it did not provide sufficient information in the reasoned opinion and in the application regarding the factual and legal basis of the alleged infringement of EU law on VAT and EU law on VAT-based own resources. That omission precluded the United Kingdom from understanding, in particular, the complaint that it should be held liable for the failure to collect the full VAT due in another Member State for goods imported into its territory under customs procedure 42 and, therefore, for the failure to make available to the Commission own resources accruing from VAT. Without that information, the United Kingdom was, it is claimed, unable to avail itself of its right to defend itself against that complaint.

149 The Commission, in particular, did not raise anything that would demonstrate that, in so far as the United Kingdom did not adopt the appropriate measures to counter the undervaluation fraud at issue, it undermined VAT collection in other Member States or hindered other Member States from collecting VAT and making available the corresponding own resources to the Commission.

150 Thus, nothing was claimed in respect of losses of VAT-based own resources allegedly due to the failure to collect VAT and no information was provided in relation to the traders concerned, the Member States of destination of the goods concerned, how those traders were regulated by those Member States before and after the goods were despatched, or the measures taken or not taken by those Member States of destination to collect the VAT from those traders.

151 The Commission disputes the United Kingdom’s arguments.

(b) Findings of the Court

152 It is sufficient to note that the arguments relied on by the United Kingdom concern the question whether the complaint alleging an infringement of Directive 2006/112 and of the provisions of EU law on the making available of own resources accruing from VAT, referred to in the first two paragraphs of the first head of claim in the application, has any basis in law, and whether the truth of legally relevant facts has been demonstrated by the Commission to the requisite legal standard in the context of the present proceedings. However, those arguments concern the substance of that complaint, not its admissibility.

153 Consequently, the plea of inadmissibility relating to the insufficiency of the factual and legal basis of the complaint of an infringement of EU law on VAT, particularly as regards customs procedure 42, must be rejected.

3. Breach of the principles of the protection of legitimate expectations, legal certainty, estoppel and sincere cooperation

(a) Arguments of the parties

154 The United Kingdom contends that the Commission breached the principles of the protection of legitimate expectations, legal certainty, estoppel and sincere cooperation, by resiling from certain assurances given to the United Kingdom, when it brought the present action for failure to fulfil obligations in so far as the action covers the period before the end of February 2015, and therefore, to that extent, the action should be dismissed.

155 The United Kingdom relies in that regard on certain statements made by Commission or OLAF agents during meetings with its administration, particularly HMRC, in 2014 and in 2015 concerning measures taken by the United Kingdom to counter the undervaluation fraud at issue.

156 It argues that it follows from those statements that, until the end of February 2015, the United Kingdom was legitimately entitled to believe that the Commission and OLAF regarded its customs controls, characterised by their focus on post-clearance measures, such as duty recovery demands, rather than on measures such as the application of risk thresholds prior to clearance of the goods concerned or the provision of security, as being in conformity with EU law and that the United Kingdom would not therefore be the subject of infringement proceedings on account of those customs controls.

157 The United Kingdom refers, in particular, to three assurances given by OLAF or Commission agents during the infringement period which, in its view, could create such a legitimate expectation.

158 As regards, in the first place, the statement which, according to a meeting note of United Kingdom officials, was made by an OLAF agent in a meeting held on 13 June 2014, that OLAF was ‘pleased with the progress the UK have made and the actions that have and are planned’, that statement is, it is claimed, an unequivocal assurance that OLAF did not regard the United Kingdom as being in breach of its obligations to protect the financial interests of the European Union and to combat fraud.

159 As regards, in the second place, the statement made in October 2014 by a Commission agent, informing the United Kingdom that its participation in PCA Discount was ‘satisfactory’ and that the actions required for the proper conduct of that operation ‘[had been] implemented in a timely and effective manner’, that statement was, in the United Kingdom’s submission, a clear and unequivocal assurance that the United Kingdom had not failed to fulfil its obligations under EU law so far as its participation in that operation was concerned.

160 As regards, in the third place, the statement made by an OLAF agent at the first bilateral meeting between OLAF and HMRC, held on 19 and 20 February 2015, according to which, in the words of the note of that meeting drawn up by United Kingdom officials, the United Kingdom had ‘done the right thing to now’, the United Kingdom claims that that statement is an assurance with regard to all the measures it had taken up to that point and not only as regards the issuing of the Snake C18s.

161 The Commission disputes the United Kingdom’s arguments.

(b) Findings of the Court

162 In the first place, it should be noted that, according to the settled case-law of the Court, the objective of the procedure provided for in Article 258 TFEU is an objective finding that a Member State has failed to fulfil its obligations under the FEU Treaty or secondary legislation and that procedure also makes it possible to establish an infringement by a Member State of EU law in a given case (judgment of 27 March 2019, Commission v Germany, C‑620/16, EU:C:2019:256, paragraph 40 and the case-law cited).

163 The Court has also ruled that the principles of protection of legitimate expectations and sincere cooperation cannot be relied on by a Member State in order to preclude an objective finding of a failure, on its part, to fulfil its obligations under the FEU Treaty, since to admit that justification would run counter to the objective of the procedure under Article 258 TFEU in relation to such an objective finding (see, to that effect, judgment of 6 May 2010, Commission v Poland, C‑311/09, not published, EU:C:2010:257, paragraph 18 and the case-law cited).

164 To admit such a justification would also run counter not only to the requirement that the European Union respect the equality of Member States before the Treaties, laid down in Article 4(2) TEU, but also to the principle, established in the settled case-law of the Court, that the Commission has a discretion to determine whether it is expedient to take action against a Member State and what provisions, in its view, the Member State has infringed, and to choose the time at which it will bring an action for failure to fulfil obligations; the considerations which determine that choice cannot affect the admissibility of the action (judgment of 19 September 2017, Commission v Ireland (Registration tax), C‑552/15, EU:C:2017:698, paragraph 34 and the case-law cited).

165 In the second place, it is apparent from the case-law of the Court that the Commission may not, except where such powers are expressly conferred upon it, give guarantees concerning the compatibility of particular practices with EU law, and in no circumstances does it have the power to authorise practices which are contrary to EU law (see, to that effect, judgment of 15 June 2000, Commission v Germany, C‑348/97, EU:C:2000:317, paragraph 45 and the case-law cited).

166 It must be noted that even if the statements invoked by the United Kingdom mentioned in paragraphs 158 to 160 of the present judgment were such that OLAF’s and the Commission’s agents had intended thereby to give guarantees concerning the compatibility with EU law of the United Kingdom’s arrangements for combating the undervaluation fraud at issue, the Commission did not, at the time when those statements were made, have any power to give such guarantees, so that those agents were not in any event entitled to give assurances to that effect that could now be relied upon by the United Kingdom in order to challenge the admissibility of the present action for failure to fulfil obligations.

167 In the third place, it should be noted that, according to the settled case-law of the Court, the right to rely on the principle of protection of legitimate expectations presupposes that precise, unconditional and consistent assurances originating from authorised, reliable sources have been given to the person concerned by the competent authorities of the European Union. That right applies to any individual in a situation in which an EU institution, b