European Commission v Kingdom of Sweden.
Date: 2013-04-25
15. It must be borne in mind that the essential points of law and of fact on which a case is based must be indicated coherently and intelligibly in the application itself (see, inter alia, Case C‑400/08 Commission  v Spain  [2011] ECR I‑1915, paragraph 36 and the case-law cited). In the present case, the Commission’s application, from which it is clear that the Commission relies, in support of its action, not on an infringement of the principle of fiscal neutrality, but on an infringement of the principle of equal treatment, meets that requirement.
16. It must also be borne in mind that, in accordance with settled case-law, the subject-matter of proceedings under Article 258 TFEU is delimited by the pre‑litigation procedure governed by that provision. Accordingly, the action must be based on the same grounds and pleas in law as those raised in the reasoned opinion. However, that requirement cannot be stretched so far as to mean that in every case the statement of the objections expressly set out in the reasoned opinion and the form of order sought in the application must be exactly the same, provided that the subject-matter of the proceedings as defined in the reasoned opinion has not been extended or altered (see Case C‑139/00 Commission  v Spain  [2002] ECR I‑6407, paragraphs 18 and 19, and Case C‑458/08 Commission  v Portugal  [2010] ECR I‑11599, paragraphs 43 and 44).
17. Furthermore, it is settled case-law that the principle of fiscal neutrality was intended to reflect, in matters relating to VAT, the general principle of equal treatment, which requires that comparable situations must not be treated differently unless such treatment is objectively justified. However, although infringement of the principle of fiscal neutrality may be envisaged only as between competing traders, infringement of the general principle of equal treatment may be established, in matters relating to tax, by other kinds of discrimination which affect traders who are not necessarily in competition with each other but who are nevertheless in a similar situation in other respects (see, to that effect, Case C‑309/06 Marks & Spencer  [2008] ECR I‑2283, paragraphs 49 and 51).
18. It follows that the principle of equal treatment, in matters relating to tax, does not coincide with the principle of fiscal neutrality. Accordingly, by submitting in its application, in particular, that the ML, by restricting the possibility of forming a VAT group to undertakings in the financial and insurance sectors, is incompatible with the principle of equal treatment, when it relied in that regard on the principle of fiscal neutrality in the reasoned opinion, the Commission has extended the subject-matter of the dispute.
33. Since the existence of the Kingdom of Sweden’s failure, alleged by the Commission, to fulfil its obligations depends on the interpretation to be made of Article 11 of the VAT Directive, on which the parties have stated divergent views, it must be borne in mind at the outset that, in determining the scope of a provision of European Union law, its wording, context and objectives must all be taken into account. Furthermore, it follows from the need for uniform application of European Union law and from the principle of equality that the terms of a provision of European Union law which makes no express reference to the law of the Member States for the purpose of determining its meaning and scope must normally be given an autonomous and uniform interpretation throughout the European Union (Case C‑174/08 NCC Construction Danmark  [2009] ECR I‑10567, paragraphs 23 and 24).
35. In that regard, it is apparent from the wording of the first paragraph of Article 11 of the VAT Directive that that directive permits each Member State to regard a number of persons as a single taxable person if they are established in the territory of that Member State and if, although they are legally independent, they are closely bound to one another by financial, economic and organisational links. The application of that article is not, according to its wording, made subject to other conditions (Case C‑85/11 Commission  v Ireland  [2013] ECR I–0000, paragraph 36). Nor does it provide that the Member States are able to impose other conditions on economic operators in order to form a VAT group, such as carrying out a certain type of activity or being part of a particular sector of activity.
37. As regards the objectives pursued by Article 11 of the VAT Directive, it is apparent from the Commission Proposal which resulted in the adoption of Directive 77/388 that, by adopting the second subparagraph of Article 4(4) of the Sixth Directive, which was replaced by Article 11 of the VAT Directive, the European Union legislature intended, either in the interests of simplifying administration or with a view to combating abuses such as, for example, the splitting-up of one undertaking among several taxable persons so that each might benefit from a special scheme, to ensure that Member States would not be obliged to treat as taxable persons those whose ‘independence’ is purely a legal technicality ( Commission  v Ireland , paragraph 47).
38. The second paragraph of Article 11 of the VAT Directive also permits Member States to adopt any measures needed to prevent tax evasion or avoidance through the use of the first paragraph of the article. Such measures may, however, be taken only in compliance with European Union law. Thus, with that reservation, it is permissible for Member States to restrict the application of the scheme provided for under Article 11 to combat tax evasion or avoidance.
39. In the present case, as has been stated in paragraph 26 of this judgment, the Kingdom of Sweden submits that, in order to prevent tax evasion and avoidance, in accordance with the second paragraph of Article 11 of the VAT Directive, it decided to restrict the possibility of forming a VAT group to those undertakings which are placed, directly or indirectly, under the supervision of the Finance Inspectorate and which are therefore covered by a public monitoring system. The Commission has failed to show convincingly that, in the light of the need to combat tax evasion and avoidance, that measure is not well founded.