Op-Ed: “Can the Spanish Central Tax Tribunal make a preliminary reference under Article 267 TFEU? A ‘final’ tribute to Advocate General Saggio and Ruiz-Jarabo Colomer” by Ricardo García Antón
The notion of ‘court or tribunal’ entitled to refer a question for preliminary ruling under Article 267 TFEU has been a recurring issue in the case law of the CJEU since the landmark case Vaassen-Göbbels (C-61/65). The criteria used by the CJEU to classify the referring body as a court under Article 267 TFEU – namely,
“whether the body is established by law, whether it is permanent, whether it applies rules of law, whether its jurisdiction is compulsory, whether it is independent, whether it is called upon to give judgment in proceedings intended to lead to a decision of a judicial nature and, finally, whether its procedure is inter partes”
– have been subject to a casuistic scrutiny by the Court leading to contradictory results. Such flexibility was even ridiculed by Advocate General Colomer in De Coster (C-17/00), who concluded that a question referred for a preliminary ruling by Sancho Panza as governor of the island of Barataria would be accepted.
In the realm of taxation, such debate acquires extraordinary relevance due to the wide variety of administrative bodies in charge of tax disputes, including administrative tax tribunals, courts of arbitration and tax advisory boards.
The CJEU has a well-known precedent, most recently applied in Gabalfrisa and Others (Joined Cases C‑110/98 to C‑147/98), handed down in 2000, concerning a question referred to the CJEU by the Regional Tax Tribunal of Catalonia (Tribunal Económico-Administrativo Regional de Cataluña). Gabalfrisa echoed the strong disagreement between the Advocate General Saggio – who concluded that a Regional Tax Tribunal of Catalonia was not entitled to refer the question under Article 267 TFEU, and the Court – which reached the opposite conclusion.
The same disagreement occurred between the Court and Advocate General Ruiz-Jarabo Colomer in De Coster (C-17/00) in relation to a question referred by a Belgian administrative tax tribunal (Collège juridictionnel de la Région de Bruxelles-capitale).
Both Advocates General in their Opinions concluded that administrative tax tribunals did not comply with the independence requirement as their members were employed by the administration and appointed by the Ministry. In this sense, Banco Santander serves as a deserved tribute to both Advocate General Saggio and Ruiz-Jarabo Colomer.
In the case Banco de Santander (C-274/14), delivered by the Grand Chamber of the Court of Justice yesterday on 21 January 2020, the question was whether the Spanish Central Tax Tribunal (Tribunal-Económico Administrativo Central), (‘TEAC’) was entitled to refer a question for preliminary ruling.
In that case, Advocate General Hogan’s Opinion of 1 October 2019 and the CJEU’s judgment of 21 January 2020 came to the same conclusion: the TEAC is not entitled to refer a question for a preliminary ruling owing to its lack of independence.
I will focus on two issues arising from this case. First, I will shed light on the requirement of independence of administrative tax tribunals to be classified as a ‘court or tribunal’ within Article 267 TFEU, and second, I will draw some conclusions on the impact of this case in the context of judicial dialogue between the CJEU and national courts.
In assessing whether an administrative tax tribunal was independent to refer a question for preliminary ruling, the Court initially focused on the organisational links of the body at stake with the executive power. A logical move, I would say. For example, in Corbiau (C-24/92), the CJEU rejected a reference on the grounds that there was a clear organisational link between the referring body, a French administrative tax tribunal (Directeur des Contributions Directes et des Accises) and the body that made the tax assessment that was under dispute. Nevertheless, Gabalfrisa reversed this finding, thereby introducing an assessment of functional links. The fact that the presidents and members of the Tribunal Económico-Administrativo de Catalunya in Gabalfrisa were civil servants appointed with the approval of the Minister of Economic Affairs, coupled with the power conferred on the Ministry to remove them, did not prevent the Court from accepting these administrative tax tribunals as independent parties.
Under the functional links framework in Gabalfrisa, the Court concluded that the separation of functions was respected between, on the one hand, the departments of the tax authority responsible for management, clearance and recovery of taxes and, on the other hand, the Regional Tax Tribunal of Catalonia, which ruled ‘on complaints lodged against the decisions of those departments without receiving any instruction from the tax authority’. The Gabalfrisa rationale based on a pure ‘separation of functions’ is reproduced in Nidera Handelscompanie (C-385/09) in relation to the Lithuanian Tax Disputes Commission.
Fortunately, Banco Santander goes back to ‘an organisational link’ analysis and moves away from the outcomes of Gabalfrisa and Nidera in relation to administrative tax tribunals. Such an ‘organisational link’ yardstick allows the Court to conclude that: (i) the irremovability of the members of the TEAC is not well preserved against direct or indirect external pressures (see paragraphs 64-68 in the judgment in relation to the causes of dismissal); (ii) the ‘impartiality’ of the body is not guaranteed because the TEAC is linked to Ministry of the Economy and Finance (namely the composition of the Special Chamber for the Unification of Precedent to challenge the decisions of the TEAC – see paragraphs 73-77 in the judgment).
Why has the Court now struck out its previous precedents to embrace the previous Corbiau’ organisational link analysis? The reason to depart from Gabalfrisa points to the enshrinement of the standard of ‘judicial independence’ within the second subparagraph of Article 19(1) TEU in the landmark Associação Sindical dos Juízes Portugueses (C-64/16). For the purposes of ensuring effective judicial protection in Europe under the second subparagraph of Article 19(1) TEU,
‘maintaining the court or tribunal independence is essential, as confirmed by the second subparagraph of article 47 of the Charter, which refers to the access to an “independent” tribunal as one of the requirements linked to the fundamental right to an effective remedy’(paragraph 41, Associação Sindical dos Juízes Portugueses).
The recent threats to the rule of law in EU Member States such as Poland and Hungary – see for instance Commission v Poland ( C-619/18) – places the independence of the body as a minimum requirement to enter into the dialogue with the CJEU. As Lenaerts recently observes, only independent courts insulated from internal and external pressure can secure citizens from across the EU an effective judicial protection of their rights granted by EU law.
The leap made in Associação Sindical dos Juízes Portugueses and exemplified in Banco Santander links to my second round of comments on the understanding of the preliminary reference procedure. Article 267 TFEU goes beyond a mere procedure to ask for clarifications on how to interpret EU law to directly embrace the core goal of protecting the fundamental rights granted by EU law to European citizens against national interferences. This finding does not come as a surprise. In previous judgements like Unibet (C-432/05) and Impact (C-268/06), the Court attributed the need to preserve the effective judicial protection of individual’s rights under EU law to Article 267 TFEU.
What is revolutionary and derived from the current threats to the rule of law in several Member States is that the national bodies requesting questions for preliminary rulings have to be independent from adverse national interferences to ensure the protection of rights granted by EU law to European citizens. The circle is now closed and completely aligned with the goal allocated to Article 267 TFEU. There is no drama in denying the right of the TEAC to refer a question for preliminary ruling, inasmuch as the TEAC’s decisions can be challenged before a judicial body: the Central Tax Court (Audiencia Nacional). Therefore, the Central Tax Court is always entitled to resort to Article 267 TFEU.
Banco Santander set aside Gabalfrisa, which inherited a ‘naive’ narrative of Article 267 TFEU more in line with giving a useful interpretation of EU law to the referring court. In simple words, at that time, the Court needed more preliminary rulings in taxation to apply EU law to this branch of law, which was an indissoluble part of the national sovereignty of the Member States. Notice that the first direct tax case, an infringement procedure – Avoir Fiscal (C-270/83) – was handed down in 1986.
Times change and mistrust in the EU integration process reflected in the threats to the rule of law in several Member States compelled the CJEU to protect Article 267 TFEU as one of the most suitable procedures to preserve EU fundamental rights. Only independent courts, which are secured from the pressures of the executive power, may challenge national legislation in breach of fundamental rights granted by EU law to EU citizens. That also explains the ‘hardening’ of the preliminary reference procedure against any breaches of the acte clair doctrine in cases like Ferreira da Silva (C-160/14) and Commission v France (C-416/17). It is vital that national courts request preliminary rulings on questions of EU law interpretation. Article 267 TFEU becomes a ‘sort of infringement procedure’ in the hands of the EU citizens to protect their EU fundamental rights in fruitful cooperation with independent judicial bodies.
Ricardo Garcia Antón is Assistant Professor of Tax Economics at Tilburg University (Fiscal Institute Tilburg) and former Associate Researcher at the IBFD. His PhD at the European University Institute examined the preliminary reference procedure and its interplay with case law in direct taxation. On the notion of ‘court’ under Article 267 TFEU, Ricardo published ‘Ceci n’est pas une pipe: the notion of Tax Court under Article 267 of the TFEU’ in European Taxation Vol. 55 (2015), no. 11, pp 515-522.