Edward Cussens and Others v T. G. Brosman.
Date: 2017-11-22
26


First of all, it should be noted that those questions are worded in terms that call to mind the case-law relating to the direct effect of directives. According to that case-law, provisions of a directive that appear, so far as their subject matter is concerned, to be unconditional and sufficiently precise may be relied on directly against the State, but cannot of themselves impose obligations on an individual and cannot therefore be relied on as such against such a person before a national court (see to that effect, inter alia, judgment of 12 December 2013, Portgás, C‑425/12, EU:C:2013:829, paragraphs 18 and 22 and the case-law cited). Thus, obligations arising from a directive must be transposed into national law in order to be capable of being relied on directly against an individual.
27


By contrast, the principle that abusive practices are prohibited, as applied in the sphere of VAT by the case-law stemming from the judgment in Halifax, is not a rule established by a directive, but is based on the settled case-law, cited in paragraphs 68 and 69 of that judgment, that, first, EU law cannot be relied on for abusive or fraudulent ends (see, inter alia, judgments of 12 May 1998, Kefalas and Others, C‑367/96, EU:C:1998:222, paragraph 20; of 23 March 2000, Diamantis, C‑373/97, EU:C:2000:150, paragraph 33; and of 3 March 2005, Fini H, C‑32/03, EU:C:2005:128, paragraph 32) and, secondly, the application of EU legislation cannot be extended to cover abusive practices by economic operators (see to that effect, inter alia, judgments of 11 October 1977, Cremer, 125/76, EU:C:1977:148, paragraph 21; of 3 March 1993, General Milk Products, C‑8/92, EU:C:1993:82, paragraph 21; and of 14 December 2000, Emsland-Stärke, C‑110/99, EU:C:2000:695, paragraph 51).
28


Whilst the Court held, in paragraphs 70 and 71 of the judgment in Halifax, that the principle that abusive practices are prohibited also applies to the sphere of VAT, pointing out that preventing possible tax evasion, avoidance and abuse is an objective recognised and encouraged by the Sixth Directive, it does not follow that the application of that principle in that sphere is subject to a requirement of transposition, as the provisions of the Sixth Directive are.
30


Secondly, it is apparent from the Court’s case-law that the principle that abusive practices are prohibited is applied to the rights and advantages provided for by EU law irrespective of whether those rights and advantages have their basis in the Treaties (see, so far as concerns the fundamental freedoms, inter alia judgments of 3 December 1974, van Binsbergen, 33/74, EU:C:1974:131, paragraph 13, and of 9 March 1999, Centros, C‑212/97, EU:C:1999:126, paragraph 24), in a regulation (judgments of 6 April 2006, Agip Petroli, C‑456/04, EU:C:2006:241, paragraphs 19 and 20, and of 13 March 2014, SICES and Others, C‑155/13, EU:C:2014:145, paragraphs 29 and 30) or in a directive (see, in relation to VAT, inter alia judgment of 3 March 2005, Fini H, C‑32/03, EU:C:2005:128, paragraph 32; judgment in Halifax, paragraphs 68 and 69; and judgment of 13 March 2014, FIRIN, C‑107/13, EU:C:2014:151, paragraph 40). It is thus apparent that that principle is not of the same nature as the rights and advantages to which it applies.
31


The principle that abusive practices are prohibited, as applied to the sphere of VAT by the case-law stemming from the judgment in Halifax, thus displays the general, comprehensive character which is naturally inherent in general principles of EU law (see, by analogy, judgment of 15 October 2009, Audiolux and Others, C‑101/08, EU:C:2009:626, paragraph 50).
32


It should also be added that, according to the Court’s case-law, refusal of a right or an advantage on account of abusive or fraudulent acts is simply the consequence of the finding that, in the event of fraud or abuse of rights, the objective conditions required in order to obtain the advantage sought are not, in fact, met, and accordingly such a refusal does not require a specific legal basis (see, to that effect, judgment of 14 December 2000, Emsland-Stärke, C‑110/99, EU:C:2000:695, paragraph 56; judgment in Halifax, paragraph 93; and judgment of 4 June 2009, Pometon, C‑158/08, EU:C:2009:349, paragraph 28).
33


Therefore, the principle that abusive practices are prohibited may be relied on against a taxable person to refuse him, inter alia, the right to exemption from VAT, even in the absence of provisions of national law providing for such refusal (see, to that effect, judgment of 18 December 2014, Schoenimport Italmoda Mariano Previti and Others, C‑131/13, C‑163/13 and C‑164/13, EU:C:2014:2455, paragraph 62).
37


The judgments of 13 February 2014, Maks Pen (C‑18/13, EU:C:2014:69), and of 12 February 2015, Surgicare (C‑662/13, EU:C:2015:89), on which the appellants in the main proceedings rely in that context, also concern — like the case-law, stemming from the judgment in Halifax, cited in the preceding paragraph — the procedural rules relating to implementation of that principle, on the power or obligation of a national court to review of its own motion whether there is tax evasion (judgment of 13 February 2014, Maks Pen, C‑18/13, EU:C:2014:69, paragraph 39) and on the possibility of making application of the national rules for preventing abuse of rights and fraud subject to a preliminary procedure characterised, in particular, by the hearing of the person concerned (judgment of 12 February 2015, Surgicare, C‑662/13, EU:C:2015:89, paragraph 34).
40


However, such application of EU law is consistent with the principles of legal certainty and of the protection of legitimate expectations (see to that effect, inter alia, judgments of 22 January 2015, Balazs, C‑401/13 and C‑432/13, EU:C:2015:26, paragraphs 49 and 50 and the case-law cited, and of 19 April 2016, DI, C‑441/14, EU:C:2016:278, paragraphs 38 to 40).
41


The interpretation which the Court, in the exercise of the jurisdiction conferred upon it by Article 267 TFEU, gives to EU law clarifies and defines, where necessary, the meaning and scope of that law as it must be, or ought to have been, understood and applied from the date of its entry into force. It follows that, unless there are truly exceptional circumstances, which is not however claimed to be the case here, EU law as thus interpreted must be applied by the courts even to legal relationships which arose and were established before the judgment ruling on the request for interpretation, provided that in other respects the conditions for bringing a dispute relating to the application of that law before the courts having jurisdiction are satisfied (see, inter alia, judgments of 29 September 2015, Gmina Wrocław, C‑276/14, EU:C:2015:635, paragraphs 44 and 45 and the case-law cited, and of 19 April 2016, DI, C‑441/14, EU:C:2016:278, paragraph 40).
42


In addition, it is to be noted that in the judgment in Halifax the Court did not restrict the temporal effects of the interpretation which it gave to the principle that abusive practices are prohibited in the sphere of VAT. Such a restriction can be allowed only in the actual judgment ruling upon the interpretation requested, a requirement which guarantees the equal treatment of the Member States and of other persons subject to EU law, under that law, and thereby fulfils the requirements arising from the principle of legal certainty (see, to that effect, judgments of 6 March 2007, Meilicke and Others, C‑292/04, EU:C:2007:132, paragraph 36, and of 23 October 2012, Nelson and Others, C‑581/10 and C‑629/10, EU:C:2012:657, paragraph 91).
43


So far as concerns, furthermore, the question whether the appellants in the main proceedings may, in the context of those proceedings, invoke the principles of legal certainty and of the protection of legitimate expectations in order to contest the refusal to exempt them from VAT, it is settled case-law that a taxable person who has created the conditions for obtaining a right in a fraudulent or abusive manner is not justified in relying on those principles in order to oppose the refusal to grant the right in question pursuant to the principle that abusive practices are prohibited (see, to that effect, judgment of 8 June 2000, Breitsohl, C‑400/98, EU:C:2000:304, paragraph 38; judgment in Halifax, paragraph 84; and judgment of 18 December 2014, Schoenimport Italmoda Mariano Previti and Others, C‑131/13, C‑163/13 and C‑164/13, EU:C:2014:2455, paragraph 60).
46


Where an abusive practice has been found to exist, the transactions involved must be redefined so as to re-establish the situation that would have prevailed in the absence of the transactions constituting that abusive practice. That redefinition must, however, go no further than is necessary for the correct charging of the VAT and the prevention of tax evasion (see, to that effect, judgment in Halifax, paragraphs 92, 94 and 98, and judgment of 22 December 2010, Weald Leasing, C‑103/09, EU:C:2010:804, paragraphs 48 and 52).
49


In the present instance, in the event that the referring court were to find that the leases preceding the sales of the properties at issue in the main proceedings constituted an abusive practice, any liability of those sales to VAT would have to be based on the relevant provisions of national legislation providing for such liability. The Sixth Directive cannot of itself impose obligations on an individual and cannot therefore be relied on as such against such a person before a national court (see, to that effect, judgment of 21 September 2017, DNB Banka, C‑326/15, EU:C:2017:719, paragraph 41 and the case-law cited).
53


It should be pointed out at the outset that, contrary to what the appellants in the main proceedings contend in their written observations submitted to the Court, the case-law stemming from the judgment in Halifax does not require it to be established that the accrual of a tax advantage is the only objective of the transactions at issue. Whilst transactions pursuing exclusively such an objective may fulfil the requirement resulting from that case-law, the Court explained in paragraph 45 of its judgment of 21 February 2008, Part Service (C‑425/06, EU:C:2008:108), that the same is true when the accrual of a tax advantage constitutes the essential aim of the transactions at issue.
55


It follows from Article 2 of the Sixth Directive that every supply must normally be regarded as distinct and independent (judgments of 21 February 2008, Part Service, C‑425/06, EU:C:2008:108, paragraph 50 and the case-law cited, and of 27 September 2012, Field Fisher Waterhouse, C‑392/11, EU:C:2012:597, paragraph 14).
56


When the Court is prompted to define the examination necessary to determine the essential aim of the transactions at issue, it takes into account only the objective of the transaction or transactions whose abusiveness is to be assessed and not that of the supplies which, as a result of those initial transactions, formally satisfy the conditions for obtaining a tax advantage (see, inter alia, judgments of 22 December 2010, Weald Leasing, C‑103/09, EU:C:2010:804, paragraphs 10 to 15 and 31, and of 17 December 2015, WebMindLicenses, C‑419/14, EU:C:2015:832, paragraphs 20 and 43 to 45).
59


Accordingly, it is for the national court to determine, in accordance with the rules of evidence of national law, provided that the effectiveness of EU law is not undermined, whether the constituent elements of an abusive practice are present in the case before it. However, the Court, when giving a preliminary ruling, may, where appropriate, provide clarification designed to give the national court guidance in its interpretation (see, inter alia, judgment in Halifax, paragraphs 76 and 77, and judgment of 17 December 2015, WebMindLicenses, C‑419/14, EU:C:2015:832, paragraph 34).
60


In order to determine the substance and real significance of the leases at issue in the main proceedings, the referring court may, in particular, take account of the purely artificial nature of those transactions and the links of a legal, economic and/or personal nature between the operators at issue (see, to that effect, judgment in Halifax, paragraphs 75 and 81). Such aspects are capable of demonstrating that the accrual of a tax advantage constitutes the essential aim pursued, notwithstanding the possible existence, in addition, of economic objectives (judgment of 21 February 2008, Part Service, C‑425/06, EU:C:2008:108, paragraph 62).
64


It should be recalled that, in the context of the cooperation between the Court and national courts provided for in Article 267 TFEU, the need to provide an interpretation of EU law which will be of use to the national court means that the national court is bound to observe scrupulously the requirements concerning the content of a request for a preliminary ruling, expressly set out in Article 94 of the Rules of Procedure, of which the national court is supposed to be aware (see, to that effect, judgments of 5 July 2016, Ognyanov, C‑614/14, EU:C:2016:514, paragraphs 18 and 19 and the case-law cited, and of 27 October 2016, Audace and Others, C‑114/15, EU:C:2016:813, paragraph 35).