OPINION OF ADVOCATE GENERAL

RANTOS

delivered on 27 January 2021 ( 1 )

Case C‑786/19

The North of England P & I Association Ltd., acting also as successor in law to Marine Shipping

Mutual Insurance Company

v

Bundeszentralamt für Steuern

(Request for a preliminary ruling from the Finanzgericht Köln (Finance Court, Cologne, Germany))

(Reference for a preliminary ruling – Freedom to provide services – Direct insurance other than life assurance – Directive 88/357/EEC – Second indent of Article 2(d) – Directive 92/49/EEC – Article 46(2) – Taxation of insurance premiums – Concept of ‘Member State in which the risk is situated’ – Vehicles of all types – Concept of ‘Member State of registration’ – Operation of a seagoing vessel – Vessel entered in the shipping register of one Member State but flying the flag of another Member State or of a non-member country)

I. Introduction

1. This reference for a preliminary ruling is made in the course of proceedings between an insurance company established in the United Kingdom (‘the applicant’) and the Bundeszentralamt für Steuern (Federal Central Tax Office, Germany), the competent tax authority in matters of insurance tax (‘the defendant’), concerning whether marine insurance premiums collected by the applicant are subject to the German tax on insurance premiums.

2. The case in the main proceedings concerns EU directives in the field of insurance, specifically, certain provisions on the collection of tax on insurance premiums. The request for a preliminary ruling relates to the interpretation of the second indent of Article 2(d) of Directive 88/357/EEC, ( 2 ) in conjunction with the first sentence of the first paragraph of Article 25 of that directive, and the first subparagraph of Article 46(2) of Directive 92/49/EEC, ( 3 ) for the purposes of determining the Member State in which the risk is situated, in the context of the insurance of risks in connection with the operation of seagoing vessels.

3. According to the rules in force at the time the tax on insurance premiums was collected, only the ‘Member State of registration’ could collect that tax in respect of the insurance of vehicles of any type, including ships. The vessels concerned in the present case were entered in a register of ownership in Germany but flew the flags of other States under special authorisation issued by the German authorities. The referring court asks how the concept of ‘Member State of registration’ is to be interpreted in such a context.

4. Specifically, by its reference for a preliminary ruling, the Finanzgericht Köln (Finance Court, Cologne, Germany) asks the Court whether the risk should be regarded as being situated in the Member State in whose territory the vessel is entered in an official register for the purposes of proof of ownership, or in the State whose flag is flown by the vessel.

5. The legal question raised in the present case has already been addressed in part by the case-law of the Court, in particular in the judgment of 14 June 2001, Kvaerner. ( 4 ) However, the specific application of the guidance deriving from that case-law requires more detailed analysis in the particular context of the present case, in which there has been a temporary change of flag, resulting in vessels being registered in two different registers and thus making it difficult to determine the Member State in which the risk is situated.

II. Legal framework

A. International law

6. The United Nations Convention on the Law of the Sea concluded in Montego Bay on 10 December 1982 (‘the Montego Bay Convention’), ( 5 ) which entered into force on 16 November 1994, was approved on behalf of the European Community by Decision 98/392/EC. ( 6 )

7. Article 91(1) of that convention provides: ‘Every State shall fix the conditions for the grant of its nationality to ships, for the registration of ships in its territory, and for the right to fly its flag. Ships have the nationality of the State whose flag they are entitled to fly. There must exist a genuine link between the State and the ship.’

8. Article 92 of that convention, entitled ‘Status of ships’, states, in paragraph 1: ‘Ships shall sail under the flag of one State only and, save in exceptional cases expressly provided for in international treaties or in this Convention, shall be subject to its exclusive jurisdiction on the high seas. …’

9. Article 94 of the Montego Bay Convention, entitled ‘Duties of the flag State’, provides: ‘1. Every State shall effectively exercise its jurisdiction and control in administrative, technical and social matters over ships flying its flag. 2. In particular every State shall: (a) maintain a register of ships containing the names and particulars of ships flying its flag, except those which are excluded from generally accepted international regulations on account of their small size; and (b) assume jurisdiction under its internal law over each ship flying its flag and its master, officers and crew in respect of administrative, technical and social matters concerning the ship. 3. Every State shall take such measures for ships flying its flag as are necessary to ensure safety at sea …’

B. EU law

10. Under Article 310 of Directive 2009/138/EC, ( 7 ) Directives 88/357 and 92/49 were repealed with effect from 1 November 2012. However, in view of the facts at issue in the main proceedings, the dispute in the main proceedings remains governed by those two directives.

1. Directive 88/357

11. Article 2(d) of Directive 88/357 provided: ‘For the purposes of this Directive: … (d) ‘Member State where the risk is situated’ means: – the Member State in which the property is situated, where the insurance relates either to buildings or to buildings and their contents, in so far as the contents are covered by the same insurance policy, – the Member State of registration, where the insurance relates to vehicles of any type, – the Member State where the policyholder took out the policy in the case of policies of a duration of four months or less covering travel or holiday risks, whatever the class concerned, – the Member State where the policyholder has his habitual residence or, if the policyholder is a legal person, the Member State where the latter’s establishment, to which the contract relates, is situated, in all cases not explicitly covered by the foregoing indents.’

2. Directive 92/49

12. Recitals 1, 2 and 30 of Directive 92/49 stated: ‘(1) Whereas it is necessary to complete the internal market in direct insurance other than life assurance from the point of view both of the right of establishment and of the freedom to provide services, to make it easier for insurance undertakings with head offices in the Community to cover risks situated within the Community; (2) Whereas [Directive 88/357] has already contributed substantially to the achievement of the internal market in direct insurance other than life assurance by granting policyholders who, by virtue of their status, their size or the nature of the risks to be insured, do not require special protection in the Member State in which a risk is situated complete freedom to avail themselves of the widest possible insurance market; … (30) Whereas some Member States do not subject insurance transactions to any form of indirect taxation, while the majority apply special taxes and other forms of contribution, including surcharges intended for compensation bodies; whereas the structures and rates of such taxes and contributions vary considerably between the Member States in which they are applied; whereas it is desirable to prevent existing differences leading to distortions of competition in insurance services between Member States; whereas, pending subsequent harmonisation, application of the tax systems and other forms of contribution provided for by the Member States in which risks are situated is likely to remedy that problem and it is for the Member States to make arrangements to ensure that such taxes and contributions are collected.’

13. The first subparagraph of Article 46(2) of Directive 92/49 provided: ‘Without prejudice to any subsequent harmonisation, every insurance contract shall be subject exclusively to the indirect taxes and parafiscal charges on insurance premiums in the Member State in which the risk is situated as defined in Article 2(d) of Directive 88/357 …’

3. Directive 2009/138

14. The definition of ‘Member State in which the risk is situated’ now appears in Article 13(13) of Directive 2009/138. The wording of Article 13(13)(b) of that directive is identical to that of the second indent of Article 2(d) of Directive 88/357.

15. Article 157 of Directive 2009/138, entitled ‘Taxes on premiums’, provides that ‘without prejudice to any subsequent harmonisation, every insurance contract shall be subject exclusively to the indirect taxes and parafiscal charges on insurance premiums in the Member State in which the risk is situated or the Member State of the commitment’.

16. Directive 2009/138 is not however applicable ratione temporis to the dispute in the main proceedings.

C. German law

17. Paragraph 1 of the Versicherungsteuergesetz (Law on insurance tax) in the version applicable in the case in the main proceedings (‘the VersStG’) ( 8 ) provides: ‘(1) Tax shall be payable on insurance premiums paid on the basis of an insurance relationship resulting from a contract or from some other source. (2) If the insurance relationship is with an insurer who is established in the territory of the Member States of the [European Union] or of other signatory States to the Agreement on the European Economic Area, [ ( 9 )] liability to tax shall arise, where the policyholder is a natural person, only if, at the time he pays the insurance premium, he has his domicile or habitual residence in the territory in which the present law applies, or, where the policyholder is not a natural person, if, at the time the premium is paid, the undertaking, permanent establishment or equivalent site to which the insurance relationship relates is located in the territory in which the present law applies. The tax liability is also conditional, where the following are insured: … 2. risks related to vehicles of any type, provided the vehicle is entered in an official or officially recognised register in the territory in which the present law applies and has an identification number; …’

18. Paragraph 1(1) of the Schiffsregisterordnung (Regulation governing registers of ships) in the version applicable in the main proceedings (‘the SchRegO’) ( 10 ) provides that registers of ships are to be maintained by the Amtsgerichte (district courts, Germany).

19. Paragraph 3(2) of the SchRegO provides that merchant vessels and other vessels intended for seafaring (seagoing vessels) are to be registered in a register of seagoing vessels (shipping register), where they are required or entitled to fly the German flag under Paragraph 1 or Paragraph 2 of the Gesetz über das Flaggenrecht der Seeschiffe und die Flaggenführung der Binnenschiffe (Flaggenrechtsgesetz) (Law on the right of seagoing and inland waterway vessels to fly the flag (Law on the right to fly the flag) (the ‘FlaggRG’). ( 11 )

20. The first sentence of Paragraph 9 of the SchRegO provides that any vessel which can be registered under Paragraph 3(2) or (3) of the SchRegO is to be registered in a shipping register where the owner has duly applied for such registration.

21. The first sentence of Paragraph 10(1) of the SchRegO states that the owner must register a seagoing vessel if the latter is required to fly the German flag under Paragraph 1 of the FlaggRG. ( 12 )

22. Paragraph 14(1) of the SchRegO provides that a vessel may not be registered in a German shipping register while it is registered in a foreign shipping register. If authorisation is granted for a vessel to flag out, suspension of entitlement to fly the German flag and the duration of such suspension must be recorded in the shipping register. Paragraph 17(2) of the SchRegO states that the prohibition on flying the German flag and the duration of that prohibition must be recorded in the shipping register.

23. Paragraph 1(1) of the FlaggRG provides that all merchant vessels and other vessels intended for seafaring (seagoing vessels) whose owners are German nationals and are domiciled in the territory coming within the scope of the Grundgesetz (Basic Law) are required to fly the German flag.

24. Paragraph 6(1) of the FlaggRG provides that seagoing vessels which are required to fly the German flag under Paragraph 1 of that law are not authorised to fly other flags as their national flag.

25. Under Paragraph 7(1)(1) of the FlaggRG, the Bundesamt für Seeschifffahrt und Hydrographie (Federal Maritime and Hydrographic Agency, Germany) may, on application, grant the owner or operator of a seagoing vessel that is registered in the shipping register revocable authorisation to fly, for a maximum period of two years, another flag instead of the German flag (authorisation to flag out). Under Paragraph 7a(3) of the FlaggRG, a vessel may not fly the German flag whilst the authorisation to flag out is in force.

III. Facts and procedure in the main proceedings

26. The applicant is an insurer established in the United Kingdom, which offers marine insurance worldwide and which, since 2 November 2011, is the successor in law to an undertaking that concluded the insurance contracts which gave rise to the dispute in the main proceedings.

27. The insurance contracts in question were concluded with 14 shipping companies to underwrite risks in respect of civil liability, legal protection, physical damage (covering various types of damage to ships) and war risks incurred by the vessels operated by those companies. The companies are established in Germany and are listed in the register of companies maintained by the Amtsgericht Hamburg (District Court, Hamburg, Germany) as limited liability companies governed by German law (GmbH). Each has as its company objects the operation of seagoing vessels. Those shipping companies’ vessels are entered in the shipping register maintained by the Amtsgericht Hamburg (District Court, Hamburg).

28. Other parties to the insurance contracts between the applicant and the 14 shipping companies, as policyholders or co-insured, are the shipping undertaking whose business is the management of those shipping companies and whose fleet includes all the seagoing vessels at issue in the main proceedings, and also certain bareboat charterers established in Liberia and Malta.

29. Under Paragraph 7(1) of the FlaggRG, the vessels belonging to the shipping companies were authorised to fly, instead of the German flag, another national flag (‘flagging out’), namely the flag of Liberia or of Malta. During the flagging out period, those vessels remained listed in the German shipping register.

30. The applicant collected, under the insurance contracts in question, payments in the form of insurance premiums, on which it did not pay insurance premium tax.

31. During 2012, the defendant carried out tax inspections of the ship-owning undertaking and a number of shipping companies in relation to the insurance premium tax. It concluded, on the basis of the findings made during those inspections, that the insurance premium payments collected by the applicant during the period in question in respect of the vessels to which the dispute in the main proceedings relates were subject to that tax and that the applicant was liable to pay it.

32. Accordingly, the defendant issued the applicant with an assessment notice dated 11 November 2014 in respect of tax on the insurance premiums, claiming payment of the insurance tax in respect of the month of December 2009, at the standard rate of tax.

33. The applicant submitted an unsuccessful complaint against that notice, and subsequently brought an action before the referring court, the Finanzgericht Köln (Finance Court, Cologne).

34. The applicant takes the view that the insurance payments it collected are not subject to insurance premium tax on the ground that the risks associated with the seagoing vessels owned by the shipping companies are not situated in Germany. According to the second indent of Article 2(d) of Directive 88/357, the power to tax those insurance premiums is determined solely by the Member State of registration of the vehicle. ‘State of registration’ means the State whose law determines whether a vehicle, in the light of its type of construction, its condition and its technical equipment, complies with the statutory requirements. The applicant submits that in the case of ships that provision means the State whose flag a vessel is authorised to fly. In its view, there is no such registration for the vessels covered by the insurance contracts in question, since following the flagging out they are no longer authorised to fly the German flag under Paragraph 7(1) of the FlaggRG.

35. The defendant, for its part, takes the view that the insurance payments collected by the applicant in respect of the insurance contracts in question are subject to insurance premium tax under Paragraph 1(2), second sentence, subparagraph 2, of the VersStG. It contends that the statutory requirement of entry in an official or officially recognised register is met by the entry of the vessels in the shipping register maintained by the Amtsgericht Hamburg (District Court, Hamburg). According to the defendant, the national legislature, for the sake of clarity, construed registration to mean entry in an official or officially recognised register with the assignment of an identification number. It contends that that legislation is in accordance with EU law, namely the second indent of Article 2(d) of Directive 88/357.

IV. The question referred for a preliminary ruling

36. In those circumstances, the Finanzgericht Köln (Finance Court, Cologne) stayed the proceedings and referred the following question to the Court of Justice for a preliminary ruling: ‘Is the second indent of Article 2(d) in conjunction with the first clause of Article 25(1) of Directive 88/357/EEC and/or Article 46(2) of Directive 92/49/EEC with regard to the determination of the Member State where the risk is situated to be interpreted as meaning that, in the case of safeguarding against risks associated with the operation of a seagoing vessel, the State concerned is the State in whose territory a seagoing vessel is entered in an official register for the purposes of proof of ownership, or the State whose flag is flown by the seagoing vessel?’

37. The parties to the main proceedings propose that the question should be answered as follows: – In the applicant’s view, the second indent of Article 2(d) of Directive 88/357, in conjunction with Article 46(2) of Directive 92/49 (or the first sentence of the first paragraph of Article 25 of Directive 88/357) does not preclude, in accordance with an interpretation that is consistent with EU law, a provision stating that a Member State’s right to impose taxation in relation to risks associated with vehicles of any type is conditional on the fact that those vehicles are, or are required to be, entered in an official or officially recognised register and must be given an identification number. The second indent of Article 2(d) of Directive 88/357, in conjunction with Article 46(2) of Directive 92/49 (or the first sentence of the first paragraph of Article 25 of Directive 88/357) does, however, preclude an administrative practice whereby Paragraph 1(2)(2) of the VersStG is construed as meaning that, for the purposes of locating the risk associated with a ship, entry in the German shipping register is a determining factor also where that vessel no longer flies the German flag, under Paragraph 7 of the FlaggRG. – According to the German Government, the answer to the question referred should be that, in the context of the insurance of ships, the Member State in which the risk is situated, and hence the right for a Member State to levy tax, must not be determined according to the flag that is actually flown by the vessel but according to the Member State in which the vessel is registered. The German Government considers that, in order to determine the Member State in which the risk is situated in the context of the insurance of ships, the entry of the vessel in a national shipping register should be the deciding factor. That position is, in its view, in accordance with the provisions of EU law, as laid down in the second indent of Article 2(d) of Directive 88/357. – The European Commission proposes that the answer to the question should be that Article 46(2) of Directive 92/49, in conjunction with the second indent of Article 2(d) of Directive 88/357, should be interpreted as meaning that, in the case of risks associated with the operation of a seagoing vessel, the Member State in whose territory that vessel is entered in an official register for the purposes of proof of ownership must be regarded as ‘the Member State of registration’.

V. Legal analysis

38. My analysis will focus on the interpretation of the second indent of Article 2(d) of Directive 88/357, in order to provide an answer to the question referred that is in accordance with the wording of that provision, the objectives pursued by the EU legislature and the Court’s case-law on this subject.

A. Literal interpretation of the second indent of Article 2(d) of Directive 88/357

39. First, Article 2(d) of Directive 88/357 defines ‘Member State in which the risk is situated’ in relation to four specific cases.

40. The first indent of that provision concerns the insurance of buildings and defines the ‘Member State in which the risk is situated’ by reference to the place in which the property is situated.

41. The second indent concerns insurance of vehicles and defines ‘Member State in which the risk is situated’ by reference to the place of registration of such vehicles.

42. The third indent concerns insurance of travel or holiday risks and defines ‘Member State in which the risk is situated’ as being the Member State where the policyholder took out the policy.

43. The fourth indent is a residual category which applies ‘in all cases not explicitly covered by the foregoing indents’ in which the risk is situated in ‘the Member State where the policyholder has his habitual residence or, if the policyholder is a legal person, the Member State where the latter’s establishment, to which the contract relates, is situated’.

44. The specific cases referred to in the first, third and fourth indents of Article 2(d) of Directive 88/357 are unambiguous as to the location of the risk since it is associated with a physical and unique factor which allows the risk to be determined precisely in geographical terms. For example, in the case of buildings, they are physically connected to the land on which they are built. They are therefore in the territory of a particular Member State, so the risk can be located without the slightest doubt in that Member State. Likewise, location of the risk by reference to the Member State in which the policyholder has taken out the insurance contract for the specific cases provided for in the third and fourth indents of Article 2(d) of Directive 88/357 also makes precise and unequivocal location possible.

45. Since it has not been defined by the EU legislature, the concept of ‘Member State of registration’, contained in the second indent of Article 2(d) of Directive 88/357, is based on a criterion with a less direct connection with the physical location of the risk. That concept may therefore, in theory, give rise to various interpretations, as the case in the main proceedings shows. It should also be pointed out that the law governing shipping registers has not been the subject of any harmonisation, at the level of either international law or EU law. As the Court has observed, as EU law stands at present, it is for Member States to determine, in accordance with the general rules of international law, the conditions required in order to authorise the registration of a vessel in their registers and to grant that vessel the right to fly their flags, but in the exercise of that competence, Member States must comply with the rules of EU law. ( 13 )

46. Secondly, since the wording of the second indent of Article 2(d) of Directive 88/357 makes no express reference to the law of the Member States for the purpose of determining its meaning and scope, it must be given an autonomous and uniform interpretation. ( 14 ) Such uniformity is especially important because the objective of that provision is to identify the Member State which has the exclusive power to tax insurance premiums under the first subparagraph of Article 46(2) of Directive 92/49.

47. In the present case, the ambiguity seems to stem from the fact that the German language version of the relevant provisions of Directives 88/357 and 2009/138 differs from the other language versions, in that the term used in the German language version is ‘authorising Member State’ (‘Zulassungsmitgliedstaat’).

48. The applicant takes the concept of the ‘authorising Member State’ (‘Zulassungsmitgliedstaat’) as its basis for inferring that special authorisation is required to bring ships into service, in addition to entering them in the registers maintained by the competent courts. In so doing, the applicant considers that vessels are ‘authorised’ by the flag State where that State lays down quality standards for vessels flying its flag, and that it therefore bears the risk related to those vessels. Entry in a register solely for the purposes of providing proof of ownership of the vessel, as in the present case, does not mean that the State maintaining that register is the ‘authorising Member State’ (‘Zulassungsmitgliedstaat’). In its view, Germany no longer has the status of State of registration when the vessel is flying a foreign flag.

49. That argument is not, however, supported by the other language versions of the second indent of Article 2(d) of Directive 88/357. All the other versions use the concept of the Member State of ‘registration’. ( 15 )

50. In that context, it should be borne in mind that, according to the Court’s settled case-law, the wording used in one language version of a provision of EU law cannot serve as the sole basis for the interpretation of that provision or be made to override the other language versions. ( 16 )

51. It should be noted that, unlike the other vehicles referred to in Directive 88/357, such as land vehicles and aircraft, there are no regulations at EU level concerning the licensing or authorisation of the movement of ships. Registration alone is sufficient for a vessel to be allowed to sail, since in most cases it is accompanied by the granting of flag rights.

52. In the light of the foregoing, the second indent of Article 2(d) of Directive 88/357 should be considered as referring, as the majority of language versions of that provision do, to the Member State ‘of registration’, and not to the Member State ‘authorising’ the actual operation.

53. That interpretation would also appear to be supported by the wording of the provisions of international law, and in particular by the Montego Bay Convention, in which ‘l’enregistrement’ (‘registration’) and the synonym ‘l’immatriculation’ of a vessel appear as interchangeable expressions in the French text. In particular, the first sentence of Article 91(1) of that convention provides that ‘every State shall fix the conditions for the grant of its nationality to ships, for the registration [‘immatriculation’] of ships in its territory, and for the right to fly its flag’.

B. Contextual interpretation of the second indent of Article 2(d) of Directive 88/357

54. First, according to the Court’s settled case-law, the origins of a provision of EU law may also provide information relevant to its interpretation. ( 17 ) It is therefore appropriate to look at the situation as it was at the time Directive 88/357 was adopted, in order to see whether there is any information that might shed light on its content and facilitate its interpretation.

55. In that regard, the Commission contends that it is clear from the origins of Article 2(d) of Directive 88/357 that the ‘Member State of registration’, within the meaning of that provision, must be regarded, specifically in the case of ships, as being the State with which the policyholder who has an interest in the vessel as its owner, or some similar interest, has a link.

56. With regard to vehicles, the original Commission proposal of 22 December 1975 ( 18 ) provided that ‘the Member State in which the risk is situated’ means either ‘the Member State of registration, where the insurance covers land vehicles’ or ‘the Member State in which the policyholder habitually resides in so far as he is the owner of the vehicle in question, has a financial interest therein or operates the said vehicle, or, failing this, the Member State in which the vehicle is registered, where the insurance covers railway rolling stock, aircraft or sea, lake, river and canal vessels’. In the amended Commission proposal of 16 February 1978, ( 19 ) those two criteria were retained but their order was reversed, so the criterion of the Member State of residence of the policyholder concerned was applicable only in the event that the vehicle had not been registered (default criterion).

57. The final version of the second indent of Article 2(d) of Directive 88/357 refers merely to the ‘Member State of registration’ for all vehicles, including ships, and in all situations, so in the absence of ‘registration’ it is necessary to apply not the specific rules relating to vehicles, but the general default rule contained in the last indent of Article 2(d).

58. The fact that the Union legislature retained only the criterion of ‘Member State of registration’ in the final version of Directive 88/357, without formally linking location of the risk to the head office of the owner of the vehicle or of the policyholder, which would unquestionably identify location, is, according to the applicant, an indication of the legislature’s intention to introduce a special rule for risks related to vehicles.

59. However, the fact that only the criterion of ‘Member State of registration’ was adopted in the final version of that directive does not mean that the Union legislature rejected the criterion of the location of the policyholder. That change in the wording of Article 2(d) of Directive 88/357 seems rather to indicate that the intention of the Union legislature was to provide a certain amount of flexibility as regards the identification of the tax regime applicable to the insurance of vehicles. Thus, the Union legislature finally adopted, for vehicles of all types, the clear and simple criterion of the ‘Member State of registration’, which does not require concrete location of the risk.

60. That finding would appear to be confirmed by the general default rule contained in the last indent of Article 2(d) of Directive 88/357, which applies also to unregistered vehicles, whereby the risk is located at the place of the head office of the policyholder. In principle, therefore, there is no justification for the same category of insured assets to be treated differently depending on whether or not they are registered.

61. As the Commission contends, those origins might indicate that the ‘Member State of registration’ criterion refers implicitly to the link that exists between, on the one hand, a person or a company having the right of ownership or a similar right or interest in a vessel and, on the other hand, the State in whose territory the vessel is entered in a register certifying ownership or a similar interest, such as the shipping register. That wording might imply that it is the Member State in whose territory a vessel is entered in a register for the purposes of proof of ownership of that vessel which is referred to in the second indent of Article 2(d) of Directive 88/357.

62. Secondly, it is also clear that Article 157 of Directive 2009/138 on taxation of insurance premiums provides that ‘without prejudice to any subsequent harmonisation, every insurance contract shall be subject exclusively to the indirect taxes and parafiscal charges on insurance premiums in the Member State in which the risk is situated or the Member State of the commitment’. This means that the Union legislature added to the existing criterion of a connection to the location of the risk, the criterion of ‘Member State of the commitment’, which is defined in Article 13(14) of that directive as meaning ‘the Member State in which either of the following is situated: (a) the habitual residence of the policyholder; (b) if the policyholder is a legal person, that policy holder’s establishment, to which the contract relates’. It would appear therefore that the Union legislature intended to ‘reintroduce’ the criterion of the head office of the policyholder in order to identify the tax regime applicable to insurance contracts. Even though the dispute in the main proceedings is governed by Directives 88/357 and 92/49, Article 157 of Directive 2009/138, which sets out the current law on this subject, appears to confirm the intention of the Union legislature to link liability to pay tax on insurance premiums formally with the head office of the insurance policyholder, thus enabling it to be located precisely.

63. That interpretation is also consistent with international law, in particular Article 91(1) of the Montego Bay Convention, which requires a ‘genuine link’ between the State of registration and the ship.

C. The teleological interpretation of the second indent of Article 2(d) of Directive 88/357

1. Taking the location of the risk into consideration as the criterion determining the State having the power to impose taxes and making possible the elimination of distortion of competition between the undertakings of different Member States offering insurance services

64. First, according to the Court’s settled case-law, in interpreting a provision of EU law, it is necessary to consider not only its wording but also the context in which it occurs and the objects of the rules of which it forms part. ( 20 )

65. As regards the purpose of the second indent of Article 2(d) of Directive 88/357, reference should be made to the case-law of the Court, in particular the Kvaerner judgment. ( 21 )

66. The criteria referred to in Article 2(d) of that directive are determinative for the application of the first subparagraph of Article 46(2) of Directive 92/49, which reserves the power to tax insurance premiums to the Member State where the risk is situated. ( 22 )

67. The choice of the location of the risk as the criterion for determining the State that has the power to impose taxes is liable to eliminate distortions of competition between undertakings of different Member States providing insurance services. ( 23 ) That choice also makes it possible, specifically with regard to the last indent of Article 2(d) of Directive 88/357, to avoid the danger of double taxation and the possibility of tax avoidance, since there is an establishment, and therefore a Member State, corresponding to each risk. ( 24 )

68. The Union legislature thus restricts itself, subject to subsequent harmonisation, to awarding, on the basis of general criteria, competence in the matter of taxation of insurance contracts to a single Member State. Initially, harmonisation therefore concerns, not the tax laws of the Member States, but solely the rules that determine which Member State has the right to impose tax.

69. As regards the risk of double taxation, it would appear that the registration criterion cannot on its own preclude such a risk, since, as the case in the main proceedings shows, a vessel may be entered in two or more different registers and, therefore, be linked more or less directly to at least two States. It is also true that up until now there has been no harmonisation of the law governing registers of ships, either at the level of international law or at the level of EU law, so as to exclude the same vessel being entered in the register of two different States. Consequently, in the event of dual registration within the Union, each of the two States could be regarded as a ‘Member State of registration’, which might result in double taxation.

70. On the other hand, since a vessel can fly only one flag, endorsing the choice of the flag State to establish location of the risk would have the advantage of constituting a simple, unambiguous solution.

71. However, as stated in the Kvaerner judgment, ( 25 ) the last indent of Article 2(d) of Directive 88/357 is intended not only to preclude double taxation but also to eliminate the possibility of tax avoidance.

72. It is clear that using the flag State in order to locate the risk would not appear to preclude the possibility of tax avoidance, in view of the less direct and concrete links provided by the flag State in certain situations, as the present case shows. In contrast, the shipping register, since its essential purpose is to identify the owner of the vessel, would make it possible in all cases to identify the court having jurisdiction in matters of taxation of insurance services.

73. Therefore, using the State of registration in order to locate the risk would make it easier to meet all the objectives of Directive 88/357 regarding the risk of double taxation and of tax avoidance. As the case in the main proceedings shows, it would appear that that choice cannot entirely exclude the possibility of double taxation. However, that risk appears to be hypothetical or limited to very specific situations, such as that giving rise to the case in the main proceedings, in which concurrent entry in the Maltese and Liberian registers, so that the vessels in question can fly both flags, took place after special authorisation was granted on the basis of one of the exceptions to the principle laid down by German law that vessels registered in Germany must fly the German flag.

74. It should also be pointed out that the Maltese Government has not submitted written observations in the present case, even though its flag is flown by some of the vessels in question.

75. Thus, it should be noted that, in principle, concurrent registration or dual entry in more than one register would appear to be excluded in the majority of cases in the light of the rules in force in most Member States, whereby a permanent change of flag is accompanied or would result in removal from the shipping register. ( 26 ) That principle has also been adopted in German law, which does not allow vessels that are registered in a foreign shipping register to be registered in the German shipping register. ( 27 ) Thus, if a vessel applies for entry in the German shipping register but is already entered in a foreign shipping register, the owner must arrange for the entry in that foreign register to be removed. ( 28 ) Furthermore, according to the rules in force in German law, vessels that must fly the German flag are not authorised to fly other flags as their national flag. ( 29 ) It is only by way of an exception and for a limited period that temporary flagging out may be authorised. In the light of the foregoing, it must be held that the issue of a concurrent entry seems to arise only in certain exceptional cases.

2. Taking concrete and physical criteria into consideration for the interpretation of the second indent of Article 2(d) of Directive 88/357

76. Secondly, according to the Court’s case-law, it is clear also from Article 2(d), first to fourth indents, of Directive 88/357 that the Union legislature intended to propose, for all types of risk insured, a solution enabling the State where the risk is situated to be determined on the basis of concrete and physical, rather than legal, criteria. The purpose was that there should be a concrete factor corresponding to each risk which would allow it to be localised in a specific Member State. ( 30 )

77. Thus, it follows, for example, from the second indent of Article 2(d) of Directive 88/357 that, if the contract relates to a vehicle, the Member State where the risk is situated is the Member State in which the vehicle is registered, even if that is not the Member State in which the vehicle is used. ( 31 )

78. Supporting location of the risk on the basis of the registration of the vessel would in fact make it possible to establish a direct and concrete link between, on the one hand, the policyholder and owner of the vessel and, on the other hand, the vessel insured. The shipping register, since its essential purpose is to identify the vessel’s owner – who is ultimately liable for the risks posed by the vessel and its operation – which is the reason why the owner takes out an insurance contract covering those risks, also makes it possible to locate the vessel’s risks in a specific Member State on the basis of a concrete and physical factor. That factor is the link between the owner of the vessel and the Member State in whose territory the vessel is registered, which may in some cases be the Member State of which the owner is a national and/or the Member State in which he resides or is established.

79. This simple and uniform connecting criterion also makes it possible to cover complex situations that often occur in the area of marine insurance. First of all, it is not unusual for a marine insurance contract to cover different types of risks related to a particular vessel. As in the case in the main proceedings, it may also be that the shipping company which owns a vessel does not operate it itself, but entrusts its operation to a third party, under a bareboat charter. In all those situations, the rule locating the risk in the ‘Member State of registration’ provides a clear, simple and predictable solution.

80. Moreover, that criterion can be applied uniformly to vehicles of any type, such as those referred to in the second indent of Article 2(d) of Directive 88/357.

81. The link between the owner of the vessel and the flag State, however, is not always based on concrete criteria and may be indirect and temporary, as is shown by the case in the main proceedings. As the Commission also observed, there will not necessarily be a relevant link between a vessel’s flag State and liability arising from the risk presented by the vessel, which will enable that risk to be located in the territory of that State. Although it is true that the flag State exercises regulatory power and supervision over a vessel flying its flag, including with regard to its safety, those factors do not, as such, relate to the risk that operation of the vessel involves for its owner.

82. A clear distinction should be drawn at this point between the legal and tax regime applicable to ships, which is unequivocally determined by the State whose flag a ship flies, and the regime applicable to insurance contracts in connection with such ships. So far as the latter are concerned, liability to pay tax on insurance premiums should be determined on the basis of more concrete criteria establishing a direct link between the owner of the vessel, the owner’s head office and the vessel that is covered by the insurance contract.

D. Taking the risks covered by insurance contracts into consideration for the interpretation of the second indent of Article 2(d) of Directive 88/357

83. Lastly, the Court has stated that in order to identify the Member State in which the risk covered by an insurance contract is situated it is necessary to identify, in particular, the precise activity whose risks are covered by the various insurance contracts. ( 32 )

84. The contracts in the main proceedings are insurance contracts covering, under a single policy, the various types of risks associated with the vessels, that is to say, ‘Protection and Indemnity’ contracts. That means risks covered in respect of civil liability, legal protection, damage caused by the vessel to other vessels and risks associated with the loss or damage of the vessel as a result of acts of war.

85. The contracts entered into by the owner therefore cover various risks associated with the operation of the vessels, whether the vessels are operated by their owner or by a third party under a bareboat charter, and whatever flag or flags are flown by the vessels in question. Those contracts had been concluded between the owner of the vessels and the applicant before the owner obtained authorisation to flag out, that is to say, while those vessels were entered in German registers of ships and were required to fly the German flag. It would appear that those contracts remained in place for the period during which the vessels flew the Maltese and Liberian flags without the parties concerned making any amendments to the contracts in the light of the change of flag. Thus, from the point of view of the risks that were incurred by the owner of the vessels and covered by the insurance contracts, and their owner, who was liable for the risks associated with those vessels, the change of flag for a limited period does not appear to affect the contractual relationship between the policyholder and the applicant. The change in the location of the risk as argued for by the applicant, which is based on the change of flag of its vessels, does not appear to be justified in view of the above.

VI. Conclusion

86. In the light of the foregoing considerations, I propose that the Court should answer the question referred by the Finanzgericht Köln (Finance Court, Cologne, Germany) for a preliminary ruling as follows: The first subparagraph of Article 46(2) of Council Directive 92/49/EEC of 18 June 1992 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and amending Directives 73/239/EEC and 88/357/EEC (third non-life insurance Directive), in conjunction with the second indent of Article 2(d) of Second Council Directive 88/357/EEC of 22 June 1988 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and laying down provisions to facilitate the effective exercise of freedom to provide services and amending Directive 73/239/EEC, must be interpreted as meaning that, in the context of the insurance of ships, the ‘Member State of registration’ is the Member State in whose territory the ship is entered in an official register for the purposes of proof of ownership.

( 1 ) Original language: French.

( 2 ) Second Council Directive of 22 June 1988 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and laying down provisions to facilitate the effective exercise of freedom to provide services and amending Directive 73/239/EEC (OJ 1988 L 172, p. 1).

( 3 ) Council Directive of 18 June 1992 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and amending Directives 73/239/EEC and 88/357/EEC (third non-life insurance Directive) (OJ 1992 L 228, p. 1).

( 4 ) C‑191/99, EU:C:2001:332.

( 5 ) United Nations Treaty Series, Vol. 1834, p. 3.

( 6 ) Council Decision of 23 March 1998 concerning the conclusion by the European Community of the United Nations Convention of 10 December 1982 on the Law of the Sea and the Agreement of 28 July 1994 relating to the implementation of Part XI thereof (OJ 1998 L 179, p. 1).

( 7 ) Directive of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ 2009 L 335, p. 1).

( 8 ) BGBl. I, p. 22.

( 9 ) OJ 1994 L 1, p. 3.

( 10 ) BGBl. I, p. 1133.

( 11 ) BGBl. I, p. 1342.

( 12 ) The second sentence of that subparagraph provides for exceptions to the requirement to register a seagoing vessel that are not relevant in the case in the main proceedings.

( 13 ) Judgment of 25 July 1991, Factortame and Others (C‑221/89, EU:C:1991:320, paragraphs 13 and 14).

( 14 ) See, to that effect, judgments of 19 December 2013, Fish Legal and Shirley (C‑279/12, EU:C:2013:853, paragraph 42), and of 21 February 2013, RVS Levensverzekeringen (C‑243/11, EU:C:2013:85, paragraph 23 and the case-law cited).

( 15 ) Specifically, 10 other language versions of that provision all refer to the Member State ‘of registration’, inter alia the versions in Danish (‘den medlemsstat, hvor registreringen er sket’), Greek (‘το κράτος μέλος καταχώρισης’), English (‘the Member State of registration’), Dutch (‘Lid-Staat van registratie’), Finnish (‘rekisteröintijäsenvaltiota’), Swedish (‘medlemsstat där registrering’), Maltese (‘Istat Membru tar- reġistrazzjoni’) or a synonym of ‘registration’, inter alia the versions in Spanish (‘Estado miembro de matriculación’), French (‘État membre d’immatriculation’), Italian (‘Stato membro di immatriculazione’) and Portuguese (‘Estado-membro de matrícula’).

( 16 ) See judgment of 12 September 2019, A and Others (C‑347/17, EU:C:2019:720, paragraph 38 and the case-law cited).

( 17 ) See judgment of 12 December 2019, G.S. and V.G. (Threat to public policy) (C‑381/18 and C‑382/18, EU:C:2019:1072, paragraph 55 and the case-law cited).

( 18 ) Proposal for a second Council Directive on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and laying down provisions to facilitate the effective exercise of freedom to provide services (COM(75) 516 final).

( 19 ) Amendment to the proposal for a second Council Directive on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and laying down provisions to facilitate the effective exercise of freedom to provide services (COM(78) 63 final).

( 20 ) Judgments of 17 November 1983 (Merck, 292/82, EU:C:1983:335, paragraph 12); of 14 June 2001, Kvaerner (C‑191/99, EU:C:2001:332, paragraph 30); of 1 March 2007, Schouten (C‑34/05, EU:C:2007:122, paragraph 25); of 19 July 2012, ebookers.com Deutschland (C‑112/11, EU:C:2012:487, paragraph 12); and of 21 February 2013, RVS Levensverzekeringen (C‑243/11, EU:C:2013:85, paragraph 23).

( 21 ) Judgment of 14 June 2001 (C‑191/99, EU:C:2001:332).

( 22 ) Judgment of 14 June 2001, Kvaerner (C‑191/99, EU:C:2001:332, paragraph 48).

( 23 ) See recital 30 of Directive 92/49 and judgment of 14 June 2001, Kvaerner (C‑191/99, EU:C:2001:332, paragraph 50).

( 24 ) See recitals 1 and 2 of Directive 92/49 and judgment of 14 June 2001, Kvaerner (C‑191/99, EU:C:2001:332, paragraph 51).

( 25 ) Judgment of 14 June 2001 (C‑191/99, EU:C:2001:332, paragraph 51).

( 26 ) See, for example, the provisions of the Greek Public Shipping Code (nomothetiko diatagma 187/1973 peri kodikos dimosiou naytikou dikaiou (Legislative Decree No 187/1973 concerning the Public Shipping Code (FEK A’261/3.19.1973)), as amended by Law No 4256/2014 (FEK A’92,14.4.2014)), and in particular Article 18(3) of that code, under which a change of flag (at the request of the ship’s owner) results in the ship in question being removed from the Greek shipping register.

( 27 ) See Paragraph 14(1) of the SchRegO.

( 28 ) See Paragraph 14(2) of the SchRegO.

( 29 ) See Paragraph 6 of the FlaggRG.

( 30 ) Judgment of 14 June 2001, Kvaerner (C‑191/99, EU:C:2001:332, paragraph 44).

( 31 ) Judgment of 14 June 2001, Kvaerner (C‑191/99, EU:C:2001:332, paragraph 45).

( 32 ) Judgment of 17 January 2019, A (C-74/18, EU:C:2019:33, paragraph 31).