Berlington Hungary Tanácsadó és Szolgáltató kft and Others v Magyar Állam.
Date: 2015-06-11
22. By order of 13 February 2014, the Fővárosi Törvényszék stayed the proceedings and referred the following questions to the Court for a preliminary ruling:
‘(1) Is non-discriminatory legislation of a Member State compatible with Article 56 TFEU if, by a single measure and with no transitional period, it introduces a five-fold increase in the previous amount of direct tax, known as gambling tax, to be paid on slot machines operated in amusement arcades and, in addition, introduces a tax on gambling at a percentage rate, in such a way that it restricts the activity of operators of games of chance who run amusement arcades?
(2) May Article 34 TFEU be interpreted as meaning that its scope covers non-discriminatory legislation of a Member State which, by a single measure and with no transitional period, introduces a five-fold increase in the previous amount of direct tax, known as gambling tax, to be paid on slot machines operated in amusement arcades and, in addition, introduces a tax on gambling at a percentage rate, in such a way that it restricts the importation of slot machines into Hungary from elsewhere in the European Union?
(3) If questions 1 and/or 2 are answered in the affirmative, may a Member State rely exclusively on the regularisation of the budgetary position in the context of the application of Article 36 TFEU, Article 52(1) TFEU and Article 61 TFEU or where there are overriding requirements?
(4) If questions 1 and/or 2 are answered in the affirmative, having regard to Article 6(3) TEU, must account be taken of the general principles of law, as regards the restrictions imposed by a Member State and the grant of a period of adjustment to new tax rules?
(5) If questions 1 and/or 2 are answered in the affirmative, must the judgment in Brasserie du pêcheur  and Factortame  (Joined Cases C‑46/93 and C‑48/93, EU:C:1996:79) be interpreted as meaning that infringement of Articles 34 TFEU and/or 56 TFEU may give rise to liability for damages on the part of the Member State on the ground that those provisions — because of their direct effect — confer rights on individuals in the Member States?
(6) Can Directive 98/34 be interpreted as meaning that a tax provision of a Member State which introduces, in a single step, a fivefold increase in the amount of a direct tax on gambling which has to be paid in respect of slot machines operated in amusement arcades and, in addition, introduces a tax at a percentage rate constitutes a “ de facto  technical regulation”?
(7) If question 6 is answered in the affirmative, may individuals of a Member State allege that the Member State has infringed Articles 8(1) and/or 9(1) of Directive 98/34, and therefore failed to fulfil its obligations, thereby giving rise to liability for damages; in other words, is that directive intended to confer rights on individuals? What matters must the national court take into account in order to determine whether the [Hungarian State] has committed a sufficiently serious infringement and what type of claim for damages can such an infringement give rise to?
(8) Is non-discriminatory legislation of a Member State compatible with Article 56 TFEU if it prohibits with immediate effect the use of slot machines in amusement arcades, without allowing the operators of games of chance affected a transitional or adjustment period or offering them appropriate compensation, and, at the same time, establishes in favour of casinos a monopoly in the operation of slot machines?
(9) Can Article 34 TFEU be interpreted as meaning that it must also be relevant and applicable in the event that a Member State adopts non-discriminatory legislation which, although it does not directly prohibit the purchase of slot machines from elsewhere in the European Union, restricts or prohibits the effective use and operation of such machines in the organisation of games of chance, without allowing the operators of games of chance affected who carry out that activity a transitional or adjustment period or any compensation?
(10) If questions 8 and/or 9 are answered in the affirmative, what criteria must the national court take into account to determine whether the restriction was necessary, appropriate and proportionate in the context of the application of Articles 36 TFEU, 52(1) TFEU and 61 TFEU or where there are overriding requirements?
(11) If questions 8 and/or 9 are answered in the affirmative, having regard to Article 6(3) TEU, must account be taken of the general principles of law, as regards the prohibitions laid down by a Member State and the grant of a period of adjustment? Must account be taken of fundamental rights — such as the right to property and the prohibition on depriving a person of property without compensation — in connection with the restriction arising in the present case and, if so, in what way?
(12) If questions 8 and/or 9 are answered in the affirmative, must the judgment in Brasserie du pêcheur  and Factortame  (C‑46/93 and C‑48/93, EU:C:1996:79) be interpreted as meaning that infringement of Articles 34 TFEU and/or 56 TFEU may give rise to liability for damages on the part of the Member State on the ground that those provisions — because of their direct effect — confer rights on individuals in the Member States?
(13) Can Directive 98/34/EC be interpreted as meaning that a provision of a Member State which, by restricting the use of slot machines to casinos, prohibits their use in amusement arcades constitutes “other requirements”?
(14) If question 13 is answered in the affirmative, may individuals of a Member State allege that the Member State has infringed Articles 8(1) and/or 9(1) of Directive 98/34/EC and therefore failed to fulfil its obligations, thereby giving rise to liability for damages; in other words, is that directive intended to confer rights on individuals? What matters must the national court take into account in order to determine whether the defendant has committed a sufficiently serious infringement and what type of claim for damages can such an infringement give rise to?
(15) Is the principle of EU law applicable according to which the Member States are obliged to pay compensation to individuals for damage resulting from infringements of EU law attributable to the Member States also where the Member State has sovereignty in the area which the adopted legislation concerns? In such a case do fundamental rights and the general principles of law derived from the common constitutional traditions of the Member States also serve as a guide?’
Consideration of the questions referred
The jurisdiction of the Court
24. In that regard, it should be noted that national legislation such as that at issue in the main proceedings — which applies to Hungarian nationals and the nationals of other Member States alike — is, generally, capable of falling within the scope of the provisions relating to the fundamental freedoms established by the TFEU only to the extent that it applies to situations connected with trade between the Member States (see, to that effect, judgments in Anomar and Others , C‑6/01, EU:C:2003:446, paragraph 39, and Garkalns , C‑470/11, EU:C:2012:505, paragraph 21).
25. In the present case, it is stated in the decision to refer that a number of the customers of the applicants in the main proceedings were European Union citizens holidaying in Hungary.
26. Services which a provider carries out without moving from the Member State in which he is established for recipients established in other Member States constitute the provision of cross-border services for the purposes of Article 56 TFEU (see, to that effect, judgments in Alpine Investments , C‑384/93, EU:C:1995:126, paragraphs 21 and 22; Gambelli and Others , C‑243/01, EU:C:2003:597, paragraph 53, and Commission v Spain , C‑211/08, EU:C:2010:340, paragraph 48).
27. Furthermore, it is far from inconceivable that operators established in Member States other than Hungary have been or are interested in opening amusement arcades in Hungary (see, to that effect, judgments in Blanco Pérez and Chao Gómez , C‑570/07 and C‑571/07, EU:C:2010:300, paragraph 40, and Garkalns , C‑470/11, EU:C:2012:505, paragraph 21).
31. Without there being any need to regard the importation of slot machines as ancillary to their use, it must be noted that, even though the use of such devices is linked to operations to import them, the former activity comes under the provisions of the Treaty relating to the freedom to provide services and the latter under those relating to the free movement of goods (judgment in Anomar and Others , C‑6/01, EU:C:2003:446, paragraph 55).
32. However, even assuming that national legislation such as the amending Law of 2011 hinders the importation of slot machines in so far as it limits the opportunities for their use, the Court is unable, in the present proceedings, to rule on the question whether Article 34 TFEU precludes the application of such legislation in the absence of adequate detailed information concerning the practical effect which that legislation has on the importation of slot machines (see, to that effect, judgment in Läärä and Others , C‑124/97, EU:C:1999:435, paragraph 26).
34. In that regard, it must be stated at the outset that, although direct taxation falls within the competence of the Member States, they must none the less exercise that competence consistently with EU law and, in particular, the fundamental freedoms guaranteed in the Treaty (see, to that effect, judgment in Blanco and Fabretti , Joined Cases C‑344/13 and C‑367/13, EU:C:2014:2311, paragraph 24 and the case-law cited).
35. Article 56 TFEU requires not only the elimination of all discrimination on grounds of nationality against providers of services who are established in another Member State, but also the abolition of any restriction on the freedom to provide services, even if that restriction applies without distinction to national providers of services and to those of other Member States, which is liable to prohibit, impede or render less attractive the activities of a service provider established in another Member State where it lawfully provides similar services (see, to that effect, judgments in Sporting Exchange , C‑203/08, EU:C:2010:307, paragraph 23 and the case-law cited, and HIT and HIT LARIX , C‑176/11, EU:C:2012:454, paragraph 16).
36. By contrast, measures, the only effect of which is to create additional costs in respect of the service in question and which affect in the same way the provision of services between Member States and that within one Member State, do not fall within the scope of Article 56 TFEU (judgment in Mobistar and Belgacom Mobile , Joined Cases C‑544/03 and C‑545/03, EU:C:2005:518, paragraph 31).
38. Moreover, it is not apparent, from the decision to refer or the observations submitted by the parties to the proceedings, that companies operating amusement arcades in the Hungarian market are mainly established in other Member States, in which case the legislation at issue would be liable to constitute indirect discrimination against service providers established in other Member States (see, to that effect, judgments in Spotti , C‑272/92, EU:C:1993:848, paragraph 18, and Hervis Sport- és Divatkereskedelmi , C‑385/12, EU:C:2014:47, paragraphs 39 and 41).
41. That would be the case if the referring court found that the tax increase provided for by the amending Law of 2011 had the effect of restricting the operation of slot machines to casinos, to which that increase did not apply. Thus, it is claimed, that increase produced an effect comparable to that of prohibiting the operation of slot machines outside casinos, which settled case-law considers to be a restriction on the freedom to provide services (see, inter alia, judgments in Anomar and Others , C‑6/01, EU:C:2003:446, paragraph 75, and Commission v Greece , C‑65/05, EU:C:2006:673, paragraph 53).
48. In that regard, it should be stated that it is for the national court alone to determine the subject-matter of the questions which it wishes to refer to the Court. The Court cannot, at the request of one party to the main proceedings, examine questions which have not been submitted to it by the national court. If, in view of the course of the proceedings, the national court were to consider it necessary to obtain further interpretations of EU law, it would be for it to make a fresh reference to the Court (see, to that effect, judgments in CBEM , 311/84, EU:C:1985:394, paragraph 10; Syndesmos Melon tis Eleftheras Evangelikis Ekklisias and Others , C‑381/89, EU:C:1992:142, paragraph 19, and Slob , C‑236/02, EU:C:2004:94, paragraph 29). There is therefore no need for the Court to examine the arguments referred to in paragraph 46 above.
56. It should be noted at the outset that legislation on games of chance is one of the areas in which there are significant moral, religious and cultural differences between the Member States. In the absence of harmonisation at EU level, the Member States are, in principle, free to set the objectives of their policy on betting and gaming and, where appropriate, to define in detail the level of protection sought (see, to that effect, judgments in Dickinger and Ömer , C‑347/09, EU:C:2011:582, paragraph 47, and in Digibet and Albers , C‑156/13, EU:C:2014:1756, paragraph 24).
57. The identification of the objectives in fact pursued by the national legislation is, in the context of a case referred to the Court under Article 267 TFEU, within the jurisdiction of the referring court (judgment in Pfleger and Others , C‑390/12, EU:C:2014:281, paragraph 47).
58. However, it must be stated that the declared objectives pursued by the legislation at issue in the main proceedings, namely the protection of consumers against gambling addiction and the prevention of crime and fraud linked to gambling, constitute overriding reasons in the public interest capable of justifying restrictions on gambling (see, to that effect, judgments in Carmen Media Group , C‑46/08, EU:C:2010:505, paragraph 55, and in Stanley International Betting and Stanleybet Malta , C‑463/13, EU:C:2015:25, paragraphs 48 and 49 and the case-law cited).
60. In that regard, the Court has repeatedly held that the objective of maximising public revenue alone cannot permit a restriction of the freedom to provide services (see, inter alia, judgments in Dickinger and Ömer , C‑347/09, EU:C:2011:582, paragraph 55, and in Pfleger and Others , C‑390/12, EU:C:2014:281, paragraph 54).
61. However, the fact that a restriction on gambling activities incidentally benefits the budget of the Member State concerned does not prevent that restriction from being justified in so far as it actually pursues objectives relating to overriding reasons in the public interest (see, to that effect, judgments in Zenatti , C‑67/98, EU:C:1999:514, paragraph 36, and Gambelli and Others , C‑243/01, EU:C:2003:597, paragraph 62), which is for the national court to determine.
The proportionality of the restrictions to Article 56 TFEU
62. As a preliminary point, it should be noted that the choice of methods for organising and controlling the operation and playing of games of chance or gambling, such as the conclusion with the State of an administrative licensing contract or the restriction of the operation and playing of certain games to places duly licensed for that purpose, falls within the margin of discretion which the national authorities enjoy (see judgments in Anomar and Others , paragraph 88 and Carmen Media Group , C‑46/08, EU:C:2010:505, paragraph 59).
63. A limited authorisation of those games on the basis of special or exclusive rights granted or assigned to certain bodies, which has the advantage of confining the desire to gamble and the exploitation of gambling within controlled channels, is capable of falling within the pursuit of the public interest objectives of protecting the consumer and public order (see, inter alia, judgments in Läärä , C‑124/97, EU:C:1999:435, paragraph 37; Zenatti , C‑67/98, EU:C:1999:514, paragraph 35, and Anomar and Others , C‑6/01, EU:C:2003:446, paragraph 74).
64. The restrictions imposed by the Member States must, nevertheless, satisfy the conditions laid down in the case-law of the Court as regards their proportionality, that is to say, be suitable for ensuring attainment of the objective pursued and not go beyond what is necessary in order to attain that objective. It should also be recalled in this connection that national legislation is appropriate for ensuring attainment of the objective relied on only if it reflects a concern to attain it in a consistent and systematic manner (see judgment in HIT and HIT LARIX , C‑176/11, EU:C:2012:454, paragraph 22 and the case-law cited).
65. It is the Member State wishing to rely on an objective capable of justifying the restriction of the freedom to provide services which must supply the court called on to rule on that question with all the evidence of such a kind as to enable the court to be satisfied that the measure does indeed comply with the requirements deriving from the principle of proportionality (see judgments in Dickinger and Ömer , C‑347/09, EU:C:2011:582, paragraph 54, and in Pfleger and Others , C‑390/12, EU:C:2014:281, paragraph 50).
69. The Court has held that such a policy may be consistent both with the objective of preventing the use of gambling activities for criminal or fraudulent purposes and with that of preventing incitement to squander money on gambling and of combating addiction to gambling, by directing consumers towards the offer emanating from authorised operators, that offer being deemed to be protected from criminal elements and also designed to safeguard consumers more effectively against squandering of money and addiction to gambling (see, to that effect, judgments in Stoß and Others , Joined Cases C‑316/07, C‑358/07 to C‑360/07, C‑409/07 and C‑410/07, EU:C:2010:504, paragraphs 101 and 102, and in Zeturf , C‑212/08, EU:C:2011:437, paragraph 67).
70. In order to achieve that objective of channelling into controlled circuits, the authorised operators must provide a reliable, but at the same time attractive, alternative to a prohibited activity, which may necessitate, inter alia, the use of new distribution techniques (see, to that effect, judgments in Placanica and Others , C‑338/04, C‑359/04 and C‑360/04, EU:C:2007:133, paragraph 55; Ladbrokes Betting & Gaming and Ladbrokes International , C‑258/08, EU:C:2010:308, paragraph 25, and Dickinger and Ömer , C‑347/09, EU:C:2011:582, paragraph 64).
71. However, a policy of controlled expansion of gambling activities can only be regarded as being consistent if, first, criminal and fraudulent activities linked to gambling and, secondly, addiction to gambling could have been a problem in Hungary at the material time and if the expansion of authorised and regulated activities could have solved that problem (see, to that effect, judgments in Ladbrokes Betting & Gaming and Ladbrokes International , C‑258/08, EU:C:2010:308, paragraph 30; Zeturf , C‑212/08, EU:C:2011:437, paragraph 70, and in Dickinger and Ömer , C‑347/09, EU:C:2011:582, paragraph 67).
72. It is for the referring court to determine, in the context of the case before it, whether those conditions are satisfied and, if applicable, whether the expansion in question is on such a scale as to make it impossible to reconcile with the objective of curbing addiction to gambling (see, to that effect, judgment in Ladbrokes Betting & Gaming and Ladbrokes International , C‑258/08, EU:C:2010:308, paragraph 38).
74. Moreover, it should be noted that, where a Member State relies on overriding requirements in the public interest in order to justify rules which are liable to obstruct the exercise of the freedom to provide services, such justification must also be interpreted in the light of the general principles of EU law, in particular the fundamental rights now guaranteed by the Charter of Fundamental Rights of the European Union (‘the Charter’). Thus, the national rules in question can fall under the exceptions provided for only if they are compatible with the fundamental rights the observance of which is ensured by the Court (see, to that effect, judgments in ERT , C‑260/89, EU:C:1991:254, paragraph 43; Familiapress , C‑368/95, EU:C:1997:325, paragraph 24, and Ålands Vindkraft , C‑573/12, EU:C:2014:2037, paragraph 125).
77. In that regard, it must be pointed out that the principle of legal certainty, the corollary of which is the principle of the protection of legitimate expectations, requires, inter alia, that rules of law be clear and precise and predictable in their effect, especially where they may have negative consequences on individuals and undertakings (see, to that effect, judgments in VEMW and Others , C‑17/03, EU:C:2005:362, paragraph 80 and the case-law cited; ASM Brescia , C‑347/06, EU:C:2008:416, paragraph 69, and Test Claimants in the Franked Investment Income Group Litigation , C‑362/12, EU:C:2013:834, paragraph 44).
78. The Court has also held that a trader cannot place reliance on there being no legislative amendment whatever, but can only call into question the arrangements for the implementation of such an amendment (see, to that effect, judgment in Gemeente Leusden and Holin Groep , Joined Cases C‑487/01 and C‑7/02, EU:C:2004:263, paragraph 81).
79. Likewise, the principle of legal certainty does not require that there be no legislative amendment, requiring as it does, rather, that the national legislature take account of the particular situations of traders and provide, where appropriate, adaptations to the application of the new legal rules (judgments in VEMW and Others , C‑17/03, EU:C:2005:362, paragraph 81, and Plantanol , C‑201/08, EU:C:2009:539, paragraph 49; see, to that effect, judgment in Gemeente Leusden and Holin Groep , Joined Cases C‑487/01 and C‑7/02, EU:C:2004:263, paragraph 70).
80. In accordance with settled case-law, it is for the referring court alone to determine whether national legislation complies with the principles of legal certainty and the protection of legitimate expectations, the Court, in a reference for a preliminary ruling under Article 267 TFEU, being solely competent to provide the referring court with all the criteria for the interpretation of EU law which may enable it to determine the issue of compatibility (see, inter alia, Plantanol , C‑201/08, EU:C:2009:539, paragraph 45 and the case-law cited, and Ålands Vindkraft , C‑573/12, EU:C:2014:2037, paragraph 126).
81. The referring court may take into account, for that purpose, all relevant elements which emerge from the terms, objectives or general scheme of the legislation concerned (see, to that effect, Ålands Vindkraft , C‑573/12, EU:C:2014:2037, paragraph 129).
85. In that regard, it should be noted that, when the national legislature revokes licences that allow their holders to exercise an economic activity, it must provide, for the benefit of those holders, a transitional period of sufficient length to enable them to adapt or reasonable compensation system (see, to that effect, European Court of Human Rights, Vékony v . Hungary , no. 65681/13, §ì34 and 35, 13 January 2015).
87. In that regard, it must be noted that a trader who has made costly investments in order to comply with the scheme adopted previously by the legislature could see his interests considerably affected by the withdrawal of that scheme before the date announced, all the more so if that withdrawal takes place suddenly and unforeseeably, without leaving him enough time to adapt to the new legal situation (see, to that effect, Plantanol , C‑201/08, EU:C:2009:539, paragraph 52).
90. In that regard, it should be noted that national legislation that is restrictive from the point of view of Article 56 TFEU is also capable of limiting the right to property enshrined in Article 17 of the Charter. Likewise, the Court has already held that an unjustified or disproportionate restriction of the freedom to provide services under Article 56 TFEU is also not permitted under Article 52(1) of the Charter, in relation to Article 17 thereof ( Pfleger and Others , C‑390/12, EU:C:2014:281, paragraphs 57 and 59).
91. It follows that, in the present case, the examination, carried out in paragraphs 56 to 73 of the present judgment, of the restriction represented by legislation such as that at issue in the main proceedings from the point of view of Article 56 TFEU also covers possible limitations of the exercise of the right to property guaranteed by Article 17 of the Charter, so that a separate examination is not necessary (see, to that effect, Pfleger and Others , C‑390/12, EU:C:2014:281, paragraph 60).
Answers to questions 3, 4, 10 and 11
97. Accordingly, tax legislation such as that at issue in the main proceedings, which is not accompanied by any technical specification or any other requirement with which it is purportedly intended to ensure compliance, cannot be described as a ‘ de facto  technical regulation’.
98. As regards, in the second place, national provisions such as those of the amending Law of 2012, the Court has already held that a national measure which restricts the organisation of certain games of chance to casinos only constitutes a ‘technical regulation’, within the meaning of Article 1(11) of the directive, in so far as it can significantly influence the nature or the marketing of the products used in that context (see, to that effect, judgments in Commission v Greece , C‑65/05, EU:C:2006:673, paragraph 61, and Fortuna and Others , Joined Cases C‑213/11, C‑214/11 and C‑217/11, EU:C:2012:495, paragraphs 24 and 40).
99. However, a prohibition on operating slot machines outside casinos, such as the one introduced by the amending Law of 2012, can significantly influence the nature or the marketing of those machines, which constitute goods that may be covered by Article 34 TFEU (see judgment in Läärä and Others , C‑124/97, EU:C:1999:435, paragraphs 20 and 24), by reducing the outlets in which they can be used.
103. It should be noted at the outset that the principle of Member State liability for loss and damage caused to individuals as a result of infringements of EU law for which the Member State can be held responsible applies to any case in which a Member State infringes EU law, whichever is the authority of the Member State whose act or omission was responsible for the infringement (judgments in Brasserie du pêcheur and Factortame , Joined Cases C‑46/93 and C‑48/93, EU:C:1996:79, paragraph 32, and in Köbler , C‑224/01, EU:C:2003:513, paragraph 31 and the case-law cited). That principle is therefore applicable, inter alia, where the national legislature was responsible for the infringement ( Brasserie du pêcheur  and Factortame , Joined Cases C‑46/93 and C‑48/93, EU:C:1996:79, paragraph 36).
104. According to settled case-law, EU law confers a right to compensation where three conditions are met: the rule of law infringed must be intended to confer rights on individuals; the infringement must be sufficiently serious; and there must be a direct causal link between the breach of the obligation resting on the State and the damage sustained by the injured parties (see, inter alia, judgments in Brasserie du pêcheur  and Factortame , Joined Cases C‑46/93 and C‑48/93, EU:C:1996:79, paragraph 51; Danske Slagterier , C‑445/06, EU:C:2009:178, paragraph 20, and Commission v Italy , C‑379/10, EU:C:2011:775, paragraph 40).
105. With regard to the first of those conditions, which falls within the scope of the questions raised by the referring Court, it is apparent from the case-law that the provisions of the Treaty relating to fundamental freedoms gives rise to rights for individuals which the national courts must protect (see, to that effect, Brasserie du pêcheur  and Factortame , Joined Cases C‑46/93 and C‑48/93, EU:C:1996:79, paragraph 54).
108. In that regard, it is apparent from the case-law that, although Directive 98/34 is intended to ensure the free movement of goods by organising a preventive control the effectiveness of which requires the disapplication, in the context of a dispute between individuals, of a national measure adopted in breach of Articles 8 and 9 thereof, that directive does not in any way define the substantive scope of the legal rule on the basis of which the national court must decide the case before it. Thus, that directive creates neither rights nor obligations for individuals (judgment in Unilever , C‑443/98, EU:C:2000:496, paragraph 51).
113. In those circumstances, the justifications put forward by a Member State in support of a restriction on those freedoms must be interpreted in the light of the fundamental rights, even where that restriction concerns an area falling within the competence of that Member State, provided that the situation at issue falls within the scope of EU law (see, to that effect, judgment in Åkerberg Fransson , C‑617/10, EU:C:2013:105, paragraph 21).