Transcript www.vatclub.com

Direct effect of EU (VAT)
Directives
Cyprus, April 2011
The EU Legal system
• The Founding Treaties (as amended) as the primary source of
Law.
• The EU Legal instruments as secondary source (Art. 288 TFEU):
• Regulations: Directly applicable, they confer rights and impose
obligations as national law (no need for transposition).
• Directives: Binding on the Member States as regards the objective
to be achieved, it leaves to the national authority the form and
method to achieve it.
• Decisions: Order to take a specific measure, it is binding for its
addressees. Directly applicable.
• Unwritten Law: The General Principles
The direct effect of Directives
• Despite the fact that Directives are solely addressed to Member
States, they may confer rights to EU citizens; they may have
direct effect where:
• They confer rights with sufficient clarity and precision.
• The exercise of the rights is not conditional.
• The national legislative authorities may not be given any margin
regarding the content of the rules to be enacted.
• The time allowed for implementation of the Directive has elapsed.
The direct effect of Directives
• In these cases, if transposition into the national Law is not correct (or the
Directive has not been transposed), the Directive may be invoked before the
Courts.
• As addressed to Member States, these cannot invoke Directives against
citizens in case of incorrect (or no) transposition: No inverse direct effect
allowed. Marshall, case C-152/84.
• Horizontal effect (effects between citizens):
• Not allowed (see, however, the interpretation in the light of EU Law)
• AG Lenz supported its application (on the basis of non-discrimination,
competition… and EU citizenship) in Faccini Dori case (C-91/92).
• The Court has stated that it is the responsibility of the national court, hearing a
dispute involving the principle of non-discrimination (…), to provide the legal
protection which individuals derive from the rules of Community law and to
ensure that those rules are fully effective, setting aside any provision of national
law which may conflict with that law (Werner Mangold C-144/04).
EU Law vs. National Law
• In case of conflict between national legislation and EU Law, the
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latter must prevail.
The Member States have limited their sovereign rights and
they cannot apply unilateral and subsequent measures over a
legal system accepted by them.
The "principle" of primacy of EU Law has been developed by
the ECJ (e.g. van Gend en Loos, C-26/62; Costa-ENEL, C-6/64).
Although not expressly included in the Treaties, it is now
stated in a Declaration attached to the Treaty of Lisbon.
EU Law vs. National Law
• The Community loyalty (art. 4 TUE): Member States cooperation to facilitate the achievement of EU objectives.
• The principle of reconciliatory interpretation: national
administrations and courts must apply national law in the light
of EU Law.
• Wider scope than direct effect (even if there is no direct effect of
EU provisions)
• May be applied against individuals or horizontally.
• “The national court that has to interpret that law must do so, as
far as possible, in the light of the wording and the purpose of the
directive so as to achieve the result” (Faccini Dori C-91/92).
Jurisprudence (Case Law). Protection of EU Law
• The ECJ ensures that in the interpretation and application of
the Treaties, the Law is observed (Art. 19.1 TUE). Basically
through:
• Infringement procedures (Art. 258 TFEU).
• Preliminary rulings (Art. 267 TFEU):
• The national courts interpret EU Law (as national law) but may refer
questions on interpretation of EU Law to the ECJ.
• Referral is compulsory for the last instance unless the issue is “clear”
(so that the same interpretation would be given by any other EU
court or the ECJ) or the has been already solved by the ECJ.
The general principles
• Developed in the search for consistency in the EU legal system.
• They provide assistance in the interpretation of EU Law (and
national transposition).
• Some are “constitutional” in nature (subsidiarity,
proportionality);
• Others derive from EU Law (effectiveness, equivalence),
• Others refer to fundamental rights (equality), and
• Others refer to governance and administrative justice (legal
certainty, protection of legitimate expectations, nonretroactivity).
State Liability
• Corollary of the direct effect of EU provisions whose breach
causes a damage where:
• The EU provisions grants rights to individuals
• There is a serious infringement of EU Law
• Direct casual link between the infringement and the harm
caused.
• The infringement may be caused by any of the three central
powers.
EU Law in (some) Member States: The UK (*)
• Parliamentary supremacy.
• International treaties must be incorporated by an Act of Parliament
so as to have domestic effects. It is the case of Founding (and
amending) Treaties.
• The European Communities Act (1972) provides for the application
of EU Law and Case Law by British Courts and incorporates EU Law
into domestic Law by delegated legislation (not, amongst others,
when taxation is imposed).
• EU Law = National Law. Primacy (and reconciliatory interpretation)
acknowledged by UK Courts.
(*) Margot Horspool & Mathew Humphreys. European Union Law. Oxford University
Press. 6th Edition.
EU Law in (some) Member States: France (*)
• Two different jurisdictional systems (administrative, judicial).
• The judicial system (Cour de cassation) tends to accept
primacy of EU Law.
• The administrative (Conseil d’Etat) “not that much”. Primacy
may be accepted unless there is a conflict with the
Constitution.
(*) Margot Horspool & Mathew Humphreys. European Union Law. Oxford University
Press. 6th Edition.
EU Law in (some) Member States: Germany (*)
• Five independent court systems each headed by a Supreme
court, all of them subject, as concerns constitutional matters,
to the Federal Constitutional Court.
• Autonomy of EU Law as a separate (independent) law sphere.
• The FCC considered that EU Law could be set aside if against
fundamental rights contained in the Basic Law; later on, the EU
legal system was considered comparable as regards these
rights. It retains its scrutiny role but does not apply it in
practice.
(*) Margot Horspool & Mathew Humphreys. European Union Law. Oxford University
Press. 6th Edition.
EU Law in (some) Member States: Italy (*)
• At first, EU Law treated as an ordinary law (subordinated to
subsequent national legislation).
• Later, the Constitutional Court has expressed reservations as
to the primacy of EU Law (subject to the ultimate scrutiny of
protection of constitutional rights by national courts).
• As an example, it has questioned the application of a principle
of Community Law as set out by the ECJ if it infringed
fundamental rights.
(*) Margot Horspool & Mathew Humphreys. European Union Law. Oxford University
Press. 6th Edition.
EU Law in (some) Member States: Spain
• The Spanish Constitution foresees the transfer of sovereign
powers to international organisations.
• The Constitutional Court has recognised both the autonomy
and primacy of EU Law in several judgments and opinions (the
latest opinion re the Constitutional Treaty).
• It has also recognised that if a court does not make a reference
to the ECJ is a breach of the right to a fair trial.
• The position of the courts (at least when dealing with VAT
matters) is far from that, although the Supreme Court is
recently changing its approach.