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On January 21, 2020, the Court of Justice of the European Union (“CJEU”) ruled that the Spanish tax appeal boards are not a “court or tribunal” in the meaning of Article 267 of the Treaty on the Functioning of the European Union (“TFEU”) (case C-274/14).
Article 267 TFEU states that “The Court of Justice of the European Union shall have jurisdiction to give preliminary rulings concerning: (a) the interpretation of the Treaties; (b) the validity and interpretation of acts of the institutions, bodies, offices or agencies of the Union;” and adds that “Where such a question is raised before any court or tribunal of a Member State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court to give a ruling thereon.”
In this case, the Spanish Central Tax Tribunal (Tribunal Económico-Administrativo Central, “TEAC”) asked the CJEU, in the context of a litigation over the rules relating to the Spanish tax amortization of financial goodwill for foreign shareholding acquisitions, which the European Commission had declared unlawful, to rule on the annulment of the amortization and its consequences.
However, following the findings of Advocate General Hogan, the CJEU refused to address the TEAC’s questions because it considered that it did not pass the admissibility filter because of its lack of standing under Article 267 TFEU.
CJEU’s case law has repeatedly ruled that to determine whether the body requesting a preliminary ruling is a “court or tribunal” for the purposes of article 267, the following factors must be considered: i) whether the body is established by law; ii) whether it is permanent; iii) whether its jurisdiction is compulsory; iv) whether its procedure is inter partes; v) whether it applies rules of law; and vi) whether it is independent. The CJEU finds that “there is no doubt that it satisfies the criteria,”except for the criterion of independence, which is where the question arises.
On the one hand, the CJEU pointed out that the concept of “independence” entails an external aspect, meaning that the body exercises its functions completely autonomously, not subject to any hierarchical constraint or receiving orders or instructions, “being thus protected against external interventions or pressure liable to impair the independent judgment of its members and to influence their decisions.” The CJEU added that the irremovability of the members of the body in question would be an inherent guarantee of judicial independence.
On the other hand, there is an internal aspect linked to the concept of “impartiality,” which requires “objectivity and the absence of any interest in the outcome of the proceedings, apart from the strict application of the rule of law.”
The CJEU, explicitly departing from existing case law, rejects that the TEAC can be considered an independent court or tribunal in the meaning required by the TFEU.
Thus, in the Gabalfrisa case (judgment of March 21, 2000, joint cases C-110/98 to C-147/98), the CJEU admitted a request for a preliminary ruling from the Catalonia Regional Tax Tribunal on the basis that the Spanish legislation that applied to tax appeal boards guaranteed the separation of functions between the services of the tax authorities responsible for management, settlement and collection, and the central tax appeal board, which rules on claims lodged against the decisions of those services, with no instruction whatsoever from the tax authorities. For the CJEU, that granted the tax appeal boards the necessary independence to be considered a “court or tribunal” for the purposes of Article 267, even if its members were appointed (and removed) by the Minister of the Economy.
However, the CJEU now indicates that “those considerations must be re-examined” and, based on the two aspects contained in the concept of “independence,” it concludes that the TEAC does not fulfill that requirement. The CJEU finds that the applicable national legislation does not guarantee that the president and members of the TEAC are protected against direct or indirect external pressures (its members are chosen by the Council of Ministers, and their removal is not limited to certain exceptional cases, as required by the principle of irremovability). On the other hand, the organic and functional ties between the TEAC and the Ministry of the Economy make it impossible to regard this tax appeal board as a third party in relation to that administration. Specifically, the fact that the Director-General of Taxation is in charge of filing special appeals for doctrine unification, while being part of the Court that hears those appeals, casts doubt on the TEAC being a third party in reference to the disputed interests.
The CJEU notes that the independence of national courts or tribunals “is essential to the proper working of the judicial cooperation system embodied by the preliminary ruling mechanism” (paragraph 56 of the judgment). In addition, it upholds that the existence of appeals before the National High Court and the Supreme Court against decisions of tax appeal boards ensures the effectiveness of the mechanism to request a preliminary ruling provided in Article 267 TFEU and the uniform interpretation of EU law.
The concept of “courts or tribunals” for the purposes of Article 267 TFEU is continually evolving and will require analysis of legal standing on a case-by-case basis, as this case demonstrates.
In fact, on previous occasions, the flexibility with which the CJEU treats this concept has even been criticized (Advocate General Colomer, in his conclusions on case C-17/00, found that case law is “ casuistic, very elastic and not very scientific,” and joked that it would even be possible to allow a “question referred for a preliminary ruling by Sancho Panza as governor of the island of Barataria”).
In line with the above, the CJEU has considered national competition authorities to be “courts or tribunals” for the purposes of Article 267, but, as it rules in this last judgment, this issue depends solely on EU law and can vary according to the specific case.
The Spanish National Commission for Markets and Competition recently made a request for a preliminary ruling on the Framework Stowage Agreement in the context of sanctioning proceedings (the Commission’s decision to refer the question can be seen here), so we will keep an eye out for how it progresses before the CJEU and inform you on this blog.
Authors: María López Ridruejo and Marta Simón
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