1 This request for a preliminary ruling concerns the interpretation of Articles 49, 56 and 63 TFEU and of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1; ‘the VAT Directive’), in particular Articles 135(1)(d) and 401 of that directive.
2 The request has been made in proceedings between Novo Banco SA and the Junta de Andalucía (Government of the Autonomous Community of Andalusia, Spain) concerning the levying on that company of the tax on deposits made by customers of credit institutions in Andalusia (‘the IDECA’).
3 Article 135(1)(d) of the VAT Directive provides: ‘Member States shall exempt the following transactions: … (d) transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection’.
4 Under Article 401 of that directive: ‘Without prejudice to other provisions of Community law, this Directive shall not prevent a Member State from maintaining or introducing taxes on insurance contracts, taxes on betting and gambling, excise duties, stamp duties or, more generally, any taxes, duties or charges which cannot be characterised as turnover taxes, provided that the collecting of those taxes, duties or charges does not give rise, in trade between Member States, to formalities connected with the crossing of frontiers.’
5 Article 6 of Ley 11/2010 de medidas fiscales para la reducción del déficit público y para la sostenibilidad (Law 11/2010 on fiscal measures concerning the reduction of the public deficit and sustainability) of the Autonomous Community of Andalusia of 3 December 2010 (BOE No 314, of 27 December 2010, p. 107193; ‘Law 11/2010’) established the IDECA. That article provides: ‘… 2. Nature and purpose of the tax The [IDECA] is a direct tax specific to the Autonomous Community of Andalusia which, in accordance with the terms of the present law, is imposed on the institutions referred to in paragraph 5 of the present article for the holding of customer deposits. 3. Chargeable event The chargeable event for the [IDECA] shall be the holding of customer deposits, with a restitution obligation. … 5. Taxable persons (1) Credit institutions shall be taxable persons, in their capacity as taxpayers, for the deposits made by customers of the registered office or agencies located in Andalusia. … (3) Taxable persons cannot pass the amount of the tax on to third parties. 6. Taxable base (1) The taxable base shall be the arithmetic mean of the final balance under section “4. Customer deposits” on the liabilities side of the balance sheet of the credit institutions for each calendar quarter of the tax period, appearing on the individual financial statements and corresponding to the deposits carried out in registered offices or agencies located in Andalusia. … 7. Calculation of the tax (1) The gross amount of the tax shall be obtained by applying to the taxable base the following tax scale: Taxable base up to (EUR) Gross amount of the tax (EUR) Amount of the taxable base remaining until the next level (EUR) Applicable rate (percentage) 150 000 000 0.3 150 000 000 450 000 450 000 000 0.4 600 000 000 2 250 000 thereafter 0.5 (2) General deductions. The gross amount of the tax shall be reduced, under conditions laid down by regulation, by the following amounts: (a) EUR 200000, where the registered office of the credit institution is based in Andalusia; (b) EUR 5000 per branch based in Andalusia; that amount shall be set at EUR 7500 where the branch is located in a municipality with a registered population of fewer than 2000 inhabitants. (3) Specific deductions. The following shall also be deductible: (a) the amount of credits, loans and investments intended, during the tax year, for projects in Andalusia in the context of an economic sustainability strategy, indicated in the budgetary laws of each year; (b) the sums intended for socially useful projects from savings banks and the fund for education and the promotion of credit unions, actually invested in Andalusia during the tax period. … (4) The net amount of the tax shall be obtained by applying the deductions established in paragraphs 2 and 3 of the present paragraph. The sum of the deductions shall be limited to the gross amount of the tax, while the net amount of the tax cannot be less than EUR 0.00. Where the deductions are not applicable, the net amount of the tax shall be equal to its gross amount. … 8. Taxation and chargeability period (1) The taxation period of the present tax shall be the calendar year … …’
6 Adopted following the establishment by the Spanish Government of a tax on deposits made with credit institutions, which came into force on 1 January 2013, the sixteenth Additional Provision of Ley 7/2013, del Presupuesto de la Comunidad Autónoma de Andalucía para el año 2014 (Law 7/2013, establishing the budget of the Autonomous Community of Andalusia for the year 2014) of 23 December 2013 (BOE No 18, of 21 January 2014, p. 3380) provides: ‘Article 6 of [Law 11/2010], which regulates the IDECA, shall be rendered ineffective as of 1 January 2013 and for as long as a State tax levy is imposed on the same chargeable event.’
7 Novo Banco, a credit institution with its registered office in Portugal and with a branch in Spain, has been the subject of a number of tax assessment notices for the 2012 tax year in respect of the IDECA.
8 Novo Banco’s administrative complaints against those tax assessment notices were rejected by decisions of the Junta Superior de Hacienda de Andalucía (Superior Treasury Board, Andalusia, Spain) of 12 March 2015. Similarly, the action brought against those decisions was dismissed by a judgment of the Tribunal Superior de Justicia de Andalucía (High Court of Justice, Andalusia, Spain) of 27 February 2017.
9 Novo Banco brought an appeal on a point of law against that judgment before the Tribunal Supremo (Supreme Court, Spain), the referring court.
10 Before that court, Novo Banco claimed, first, that the provisions governing the IDECA, in particular the deduction system relating to that tax, infringe Articles 49, 56 and 63 TFEU, in that they establish an unjustified difference in treatment between credit institutions, based on whether or not they have their registered office in the Autonomous Community of Andalusia. Secondly, that company considers that the IDECA must be categorised as an indirect tax which charges deposits received by credit institutions and, therefore, the financial activity conducted by means of those deposits. Such a tax is, according to Novo Banco, incompatible with Article 135(1)(d) and Article 401 of the VAT Directive.
11 As regards the compatibility of the IDECA with Articles 49, 56 and 63 TFEU, the referring court notes that the assessment of that tax and of its essential elements, the relationship between the tax rate and the scope of deductions and, in particular, the general deduction of EUR 200000 enjoyed by credit institutions with their registered office in the Autonomous Community of Andalusia, leads it to consider that the IDECA is, de facto, a tax on credit institutions with their registered office outside that Autonomous Community and, in particular, in other Member States. The same assessment applies, in its view, to the specific deductions referred to in Article 6(7)(3) of Law 11/2010.
12 The referring court is also uncertain whether, despite the direct nature ascribed to it by Law 11/2010, the IDECA must be categorised as an indirect tax, in so far as it charges, in its view, commercial transactions. Accordingly, the question arises whether the IDECA is compatible with Article 135(1)(d) and Article 401 of the VAT Directive, since that tax charges the holding of deposits, whereas transactions concerning deposits of funds are exempt from value added tax (VAT), in accordance with Article 135(1)(d).
13 In those circumstances, the Tribunal Supremo (Supreme Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling: ‘(1) Must Articles 49, 56 and 63 TFEU, which guarantee the freedom of establishment, the freedom to provide services and the free movement of capital, respectively, be interpreted as precluding, inter alia, a system of deductions like that laid down for the IDECA in points 2 and 3 of Article 6(7) of [Law 11/2010]? (2) Must the [IDECA] be categorised as an indirect tax despite the fact that Article 6(2) of [that law] classifies it as a direct tax, and, in that case, are its existence and chargeability compatible with VAT, in the light of the provisions of Articles 401 and 135(1)(d) of the VAT Directive?’
14 By its first question, the referring court asks, in essence, whether the fundamental freedoms enshrined in Articles 49, 56 and 63 TFEU must be interpreted as meaning that they preclude a system of general or specific deductions laid down by national legislation which imposes a tax on deposits made by customers of credit institutions established in the territory of an autonomous community.
15 The IDECA is a tax on deposits made by customers of credit institutions with their registered offices or agencies located in Andalusia. Two types of deductions are provided for in Article 6(7) of Law 11/2010, namely (i) general deductions, in point 2 of that provision, and (ii) specific deductions, in point 3.
16 In respect of general deductions, it should be observed that the first, referred to in Article 6(7)(2)(a) of Law 11/2010, lays down a deduction of EUR 200000 of the gross amount of the IDECA for credit institutions with their registered office in Andalusia. The second, provided for in Article 6(7)(2)(b) of that law, lays down a deduction of the gross amount of the IDECA of EUR 5000 per agency established in Andalusia, that amount being set at EUR 7500 for every agency located in a municipality with fewer than 2000 inhabitants.
17 Since the referring court is asking the Court to interpret Article 49 TFEU, concerning the freedom of establishment, Article 56 TFEU, concerning the freedom to provide services and Article 63 TFEU, concerning the free movement of capital, it must be determined whether the provisions of the legislation of the Autonomous Community of Andalusia at issue in the main proceedings concerning general deductions are capable of falling within the scope of those freedoms.
18 As regards the question of whether national legislation falls within the scope of one or other of the freedoms of movement, it is clear from well-established case-law that the purpose of the legislation concerned must be taken into consideration (judgment of 10 February 2011, Haribo Lakritzen Hans Riegel and Österreichische Salinen, C‑436/08 and C‑437/08, EU:C:2011:61, paragraph 34 and the case-law cited).
19 In so far as the general deductions set out in Article 6(7)(2) of Law 11/2010 are enjoyed only by credit institutions with their registered office or agencies in Andalusia, they cover the place of establishment of those entities and are therefore capable of affecting predominantly the freedom of establishment. Those general deductions must therefore be examined solely in the light of Article 49 TFEU.
20 Freedom of establishment, which Article 49 TFEU grants to European Union nationals and which includes the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, under the conditions laid down for its own nationals by the law of the Member State where such establishment is effected, entails, in accordance with Article 54 TFEU, for companies or firms formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business within the European Union, the right to exercise their activity in the Member State concerned through a subsidiary, a branch or agency (judgment of 6 September 2012, Philips Electronics UK, C‑18/11, EU:C:2012:532, paragraph 12 and the case-law cited).
21 With regard to companies, it should be noted that it is their registered office, within the meaning of Article 54 TFEU, that serves as the connecting factor with the legal system of a Member State, like nationality in the case of natural persons. To accept that the Member State of establishment may freely apply different treatment solely because the registered office of a company is situated in another Member State would deprive Article 49 TFEU of its substance. Freedom of establishment is thus designed to guarantee the benefit of national treatment in the host Member State, by prohibiting all discrimination on the basis of the place where the registered office of a company is situated (judgment of 18 July 2007, Oy AA, C‑231/05, EU:C:2007:439, paragraph 30 and the case-law cited).
22 In order for a difference in treatment between companies based on the location of their registered office to be compatible with freedom of establishment, it must either relate to situations which are not objectively comparable - in which case the comparability of a cross-border situation with an internal situation must be examined having regard to the aim pursued by the national provisions at issue - or be justified by an overriding reason in the public interest (see judgments of 1 April 2014, Felixstowe Dock and Railway Company and Others, C‑80/12, EU:C:2014:200, paragraph 25, and of 22 February 2018, X and X, C‑398/16 and C‑399/16, EU:C:2018:110, paragraph 32).
23 In order for a restriction on the freedom of establishment to be justified by overriding reasons in the public interest, it is also necessary that its application be appropriate to ensuring the attainment of the objective pursued and not go beyond what is necessary to attain it (judgments of 18 July 2007, Oy AA, C‑231/05, EU:C:2007:439, paragraph 44 and the case-law cited, and of 12 December 2013, Imfeld and Garcet, C‑303/12, EU:C:2013:822, paragraph 64).
24 As regards the first deduction, referred to in Article 6(7)(2)(a) of Law 11/2010, it should be noted that it imposes a difference in treatment between, on the one hand, credit institutions with their registered office in Andalusia, which benefit from the tax advantage resulting from the deduction at issue, and on the other hand, those which have their registered office in another part of Spain or in another Member State, which do not benefit from that deduction and are therefore subject to higher taxation.
25 Contrary to the arguments put forward by the Government of the Autonomous Community of Andalusia, it cannot be considered that that difference in treatment is mitigated or offset by the general deduction laid down by Article 6(7)(2)(b) of Law 11/2010, in accordance with which all credit institutions benefit from deductions relative to the number of agencies established in Andalusia, regardless of the location of their registered office.
26 As regards the comparability of the situations of credit institutions with their registered office in Andalusia and those which, while having their registered office in a Member State other than the Kingdom of Spain, have agencies in Andalusia, it should be noted that, for all credit institutions, the taxable base of the IDECA consists of the arithmetic mean of the balance of deposits made at the registered offices or agencies located in Andalusia. By treating those two categories of credit institutions identically for the purposes of taxation, the legislature recognises that, with regard to the detailed rules and conditions for that taxation, there is no objective difference between their situations which could justify a difference in treatment (see, to that effect, judgments of 28 January 1986, Commission v France, 270/83, EU:C:1986:37, paragraph 20, and of 12 June 2018, Bevola and Jens W. Trock, C‑650/16, EU:C:2018:424, paragraph 34).
27 As regards the possibility of justifying the restriction of freedom of establishment for an overriding reason in the public interest, the Government of the Autonomous Community of Andalusia contends that the general deductions are intended to encourage financial inclusion in rural areas and the establishment and effectiveness of credit institutions in Andalusia. In that regard, it is sufficient to state that such an objective cannot justify the limitation in granting favourable treatment, namely a deduction of EUR 200000 from the gross amount of the IDECA, solely to those credit institutions with their registered office in Andalusia, given that, unlike the number and location of agencies, the presence of only the registered office in a given territory does not seem capable of contributing to the coverage of that territory by local financial services. In any event, it has not been demonstrated that such a limitation would be necessary in order to attain those aims.
28 Consequently, it can be concluded that Article 49 TFEU must be interpreted as meaning that it precludes a provision such as Article 6(7)(2)(a) of Law 11/2010, in accordance with which a general deduction relating to a tax on deposits made by customers of credit institutions which are active in the territory of a given region of a Member State, of up to EUR 200000, is granted solely to those credit institutions which have their registered office in the territory of that region.
29 The second general deduction, referred to in Article 6(7)(2)(b) of Law 11/2010, provides for a deduction of the gross amount of the IDECA in the sum of EUR 5000 per agency established in the territory of the Autonomous Community of Andalusia, that amount being set at EUR 7500 for every agency located in a municipality with fewer than 2000 inhabitants.
30 In that regard, it should be noted that every credit institution subject to the IDECA can benefit from that second general deduction, regardless of whether its registered office is located in Andalusia, in another region of Spain, or in another EU Member State. A provision laying down such a deduction does not, therefore, give rise to overt discrimination in relation to the location of that registered office.
31 As regards the question of whether such a provision can be considered to constitute indirect discrimination, it should be noted that it is not only overt discrimination based on the location of the registered offices of companies that is forbidden, but also all covert forms of discrimination which, by the application of other criteria of differentiation, lead in fact to the same result (see, to that effect, judgment of 5 February 2014, Hervis Sport - és Divatkereskedelmi, C‑385/12, EU:C:2014:47, paragraph 30).
32 In this instance, while it is apparent from the request for a preliminary ruling that the referring court is of the opinion such a deduction helps to ensure that the IDECA taxes, de facto, only those credit institutions with their registered offices outside the territory of the Autonomous Community of Andalusia, neither the referring court nor the parties which have submitted written observations have put forward sufficient information on that point; therefore the Court is not in a position to give a ruling in that regard.
33 It must accordingly be concluded that Article 49 TFEU must be interpreted as meaning that it does not preclude a provision such as Article 6(7)(2)(b) of Law 11/2010, in accordance with which, as regards a tax on deposits made by customers of credit institutions which are active in the territory of a given region of a Member State, a deduction of the gross amount of that tax, of up to EUR 5000, is granted for every agency established in the territory of that region, that amount being set at EUR 7500 for each agency located in a municipality with fewer than 2000 inhabitants, unless that deduction, in fact, gives rise to discrimination based on the location of the registered office of the credit institutions concerned, which is unjustified, this being a matter for the referring court to determine.
34 As a preliminary point, it should be noted that while, as was recalled in paragraph 14 above, the first question referred refers to Articles 49, 56 and 63 TFEU, it is necessary to examine the specific deductions established in Article 6(7)(3) of Law 11/2010 solely in the light of the free movement of capital. Those deductions do not require any link with the place of establishment of the credit institutions concerned. Furthermore, in so far as those deductions apply only with regard to credits, loans and investments intended for projects carried out in Andalusia, they are intended to guide the flow of capital and, accordingly, they fall, primarily, within the scope of free movement of capital, their effect on the free movement of services being merely secondary.
35 As to those specific deductions, it should be noted that Article 6(7)(3) of Law 11/2010 permits the credit institutions concerned to deduct from the gross amount of the IDECA the amount of credits, loans and investments intended for projects carried out in Andalusia in the context of an economic sustainability strategy, mentioned in the budgetary laws adopted each year by that Autonomous Community, and amounts intended for socially useful projects and the fund for education and the promotion of credit unions, which are actually invested in Andalusia during the tax period concerned.
36 As regards the procedure for implementation and the objectives pursued by the specific deductions at issue in the main proceedings, the request for a preliminary ruling merely refers, without further details, to an economic sustainability strategy, and to socially useful projects and a fund for education and the promotion of credit unions. In that regard, inter alia, the referring court does not specify further what types of projects are capable of giving rise to a right to those deductions, in the application of that provision in the budgetary laws adopted annually by the Autonomous Community of Andalusia, the substance of which has not been made known to the Court. Thus, the information referred to in the request for a preliminary ruling concerning the procedure for implementation and the objectives pursued by the specific deductions at issue in the main proceedings does not permit the Court to give an informed ruling on the compatibility of those specific deductions with Article 63 TFEU.
37 Nonetheless, in so far as, in its written observations, the Government of the Autonomous Community of Andalusia contends that the main objective of the specific deductions is to encourage investment in that Autonomous Community and to promote regional savings, it is appropriate to provide the following details in order to give a useful answer to the first question referred.
38 In that regard, if those specific deductions should be construed as pursuing a purely economic objective, which is for the referring court to determine, it should be noted first of all that, in so far as those deductions result in the IDECA taxing only the deposits covered by Law 11/2010 which are not invested in projects carried out in Andalusia, while the deposits used for those ends benefit from those deductions, Article 6(7)(3) of Law 11/2010 constitutes a difference of treatment capable of dissuading the credit institutions which are subject to the IDECA from investing in other Member States.
39 Next, the place of investment cannot, by definition, be a valid criterion for finding that there is an objective difference between the situations at issue and for consequently ruling out the existence of discrimination prohibited by Article 63 TFEU (see, to that effect, judgments of 16 June 2011, Commission v Austria, C‑10/10, EU:C:2011:399, paragraph 35, and of 18 June 2020, Commission v Hungary(Transparency of associations), C‑78/18, EU:C:2020:476, paragraph 63).
40 Finally, in accordance with consistent case-law, an objective of a purely economic nature cannot justify a restriction on a fundamental freedom guaranteed by the FEU Treaty (see judgment of 7 April 2011, Commission v Portugal, C‑20/09, EU:C:2011,214, paragraph 65 and the case-law cited).
41 In the light of all the foregoing considerations, the answer to the first question is that the freedom of establishment enshrined in Article 49 TFEU must be interpreted as meaning that, in respect of deductions applied to the gross amount of a tax on deposits made by customers of credit institutions with their registered offices or agencies in the territory of a region of a Member State, - it precludes a deduction of EUR 200000 applied to the gross amount of that tax for credit institutions with their registered office in the territory of that region; - it does not preclude deductions applied to the gross amount of that tax of EUR 5000 per agency established in that region, that amount being set at EUR 7500 for each agency located in a municipality with fewer than 2000 inhabitants, unless those deductions, in fact, give rise to discrimination based on the location of the registered office of the credit institutions concerned, which is unjustified, this being a matter the referring court to determine. Article 63(1) TFEU must be interpreted as meaning, in respect of a tax on deposits made by customers of credit institutions with their registered office or agencies in the territory of a region of a Member State, that it precludes deductions to the gross amount of that tax equal to credits, loans and investments intended for projects carried out in that region, in so far as those deductions pursue a purely economic objective.
42 By its second question, the referring court asks whether Article 135(1)(d) and Article 401 of the VAT Directive must be interpreted as meaning that they preclude a national tax such as the IDECA.
43 As a preliminary point, it should be noted that subjecting deposits made by customers of credit institutions to the IDECA does not contradict the exemption applicable to those deposits under Article 135(1)(d) of the VAT Directive. Therefore, that article is not relevant for the present case.
44 Under Article 401 of the VAT Directive, its provisions do not prohibit a Member State from maintaining or introducing taxes on insurance contracts, taxes on betting and gambling, excise duties, stamp duties or, more generally, any taxes, duties or charges which cannot be characterised as turnover taxes, provided that the collecting of those taxes, duties or charges does not give rise, in trade between Member States, to formalities connected with the crossing of frontiers.
45 It follows that, in accordance with the Court’s settled case-law, the maintenance or introduction by a Member State of taxes, duties or charges is authorised only on condition that they cannot be assimilated to a turnover tax (judgments of 20 March 2014, Caixa d’Estalvis i Pensions de Barcelona, C‑139/12, EU:C:2014:174, paragraph 28, and of 12 June 2019, Oro Efectivo, C‑185/18, EU:C:2019:485, paragraph 21 and the case-law cited).
46 In order to decide whether a tax, duty or charge can be characterised as a turnover tax within the meaning of Article 401 of the VAT Directive, it is necessary, in particular, to determine whether it has the effect of jeopardising the functioning of the common system of VAT by being levied on the movement of goods and services and on commercial transactions in a way comparable to VAT. The Court has stated in this regard that taxes, duties and charges must in any event be regarded as being imposed on the movement of goods and services in a way comparable to VAT if they exhibit the essential characteristics of VAT, even if they are not identical to it in every way (judgments of 7 August 2018, Viking Motors and Others, C‑475/17, EU:C:2018:636, paragraphs 36 and 37, and of 3 March 2020, Vodafone Magyarország, C‑75/18, EU:C:2020:139, paragraphs 59 and 60).
47 By contrast, Article 401 of the VAT Directive does not preclude the maintenance or introduction of a tax which does not display one of the essential characteristics of VAT (judgment of 3 March 2020, Vodafone Magyarország, C‑75/18, EU:C:2020:139, paragraph 61 and the case-law cited).
48 It is apparent from the case-law that there are four such characteristics: VAT applies generally to transactions relating to goods or services; it is proportional to the price charged by the taxable person in return for the goods and services which he or she has supplied; it is charged at each stage of the production and distribution process, including that of retail sale, irrespective of the number of transactions which have previously taken place; the amounts paid during the preceding stages of the process are deducted from the VAT payable by a taxable person, with the result that the tax applies, at any given stage, only to the value added at that stage and the final burden of the tax rests ultimately on the consumer (judgment of 3 March 2020, Vodafone Magyarország, C‑75/18, EU:C:2020:139, paragraph 62 and the case-law cited).
49 In the present case, it should be noted that the IDECA does not display the essential characteristics of VAT.
50 First of all, that tax is levied on credit institutions on the basis of the holding of deposits made by customers and not on the basis of commercial transactions consisting in deposits of funds, and as such the view cannot be taken that it can be applied to transactions for the purpose of goods or services. Next, as the taxable base of the IDECA corresponds to the arithmetic mean of the quarterly balance on the liabilities side of the balance sheet of credit institutions, relative to their customer deposits, the amount of that tax is not set in a manner proportional to the consideration imposed by the credit institutions. Furthermore, the IDECA is not charged at each stage of the process of production and distribution of financial services. Finally, since Article 6(5)(3) of Law 11/2010 expressly forbids credit institutions from passing on the amount of the IDECA to third parties, the final burden of that tax does not finally rest on the consumers.
51 In those circumstances, the IDECA constitutes neither a turnover tax, nor a tax that can be assimilated to such a tax, within the meaning of Article 401 of the VAT Directive.
52 In the light of the foregoing considerations, the answer to the second question is that Article 401 of the VAT Directive must be interpreted as meaning that it does not preclude a national law establishing a tax due from credit institutions on the basis of the holding of customer deposits, the taxable base of which corresponds to the arithmetic mean of the quarterly balance of those deposits and which cannot be passed on to third parties by the taxpayer.
53 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.