Key facts of the case:
Request for a preliminary ruling from the Fővárosi Közigazgatási és Munkaügyi bíróság (Administrative and Labour Court, Budapest, Hungary)
- While the present request for a preliminary ruling is another case in which the Court is asked to answer questions concerning the interpretation of the concept of abuse of rights in tax matters (in this instance, value added tax (VAT)), it also raises interesting questions concerning the interface between the powers of taxation exercised by the Member States and the Charter of Fundamental Rights of the European Union ('the Charter'), in particular the right to respect for private and family life enshrined in Article 7 of the Charter and the right to the protection of personal data enshrined in Article 8 of the Charter.
Results (sanctions) and key consequences of the case:
142. I therefore propose that the Court’s answers to the questions referred for a preliminary ruling by the Fővárosi Közigazgatási és Munkaügyi bíróság (Administrative and Labour Court, Budapest) should be as follows:
- The conclusion of a licensing agreement such as that at issue in the main proceedings may be regarded as an abuse in the light of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax only if its essential aim is to obtain a tax advantage the grant of which would be contrary to the purpose of the provisions of that directive, an issue which it is for the referring court to determine.
- The risk of double taxation does not prevent the tax authorities of a Member State from reclassifying the place of supply of a service as being in its territory.
- Council Regulation (EU) No 904/2010 of 7 October 2010 on administrative cooperation and combating fraud in the field of value added tax (recast) must be interpreted as not imposing on the tax authorities of a Member State which discover the existence of a value added tax debt an obligation to send a request to the tax authorities of the Member State in which the taxable person forming the subject of the tax inspection has already fulfilled his obligation to pay value added tax. It is for the referring court to determine whether the evidence forming the basis of the Hungarian tax authorities’ decision finding the existence of abuse is sufficient to support the existence of the tax debt.
- The gathering of evidence, in the course of a criminal procedure running parallel to the procedure for the adjustment of value added tax, by intercepting telephone conversations and seizing and storing emails is compatible with Articles 7 and 8 of the Charter of Fundamental Rights of the European Union only if it is provided for by law, pursues a legitimate purpose and is proportionate, an issue which it is for the referring court to assess.
107. Since the Court held in paragraphs 27 and 28 of its judgment in Åkerberg Fransson (C‑617/10, EU:C:2013:105) that tax penalties and criminal prosecutions for VAT evasion constitute implementation of the VAT Directive, in particular Article 273 thereof, and therefore of EU law for the purposes of Article 51(1) of the Charter, it must be concluded, as the Commission suggests, that the Charter is applicable here.
108. Given that the present case concerns the interception of WebMindLicenses’ telephone calls, the seizure and storage of its emails and their use as evidence against it, the present case must first of all be examined from the point of view of Articles 7 and 8 of the Charter, which guarantee respect for private and family life and protection of personal data. Indeed, as the Court held in paragraph 47 of its judgment in Volker und Markus Schecke and Eifert (C‑92/09 and C‑93/09, EU:C:2010:662), ‘[Article 8 of the Charter] is closely connected with the right to respect of private life expressed in Article 7 of the Charter’.
109. In this connection, I would recall that ‘the right to respect for private life with regard to the processing of personal data, recognised by Articles 7 and 8 of the Charter, concerns any information relating to an identified or identifiable individual (see, in particular, European Court of Human Rights, Amann v. Switzerland [GC], no. 27798/95, § 65, ECHR 2000-II, and Rotaru v. Romania [GC], no. 28341/95, § 43, ECHR 2000-V) and the limitations which may lawfully be imposed on the right to the protection of personal data correspond to those tolerated in relation to Article 8 of the [ECHR]’.
110. As Articles 7 and 8 of the Charter correspond to Article 8 of the ECHR, the case-law of the European Court of Human Rights on this subject could be useful in the case at issue, given that, ‘in so far as [the] Charter contains rights which correspond to rights guaranteed by the [ECHR], the meaning and scope of those rights shall be the same as those laid down by the [ECHR]’ and that this ‘shall not prevent Union law providing more extensive protection’.
111. As regards, first of all, the scope ratione personae of Articles 7 and 8 of the Charter, it should be noted from the outset that, according to the case-law of both the Court and the European Court of Human Rights, the concept of private life must be interpreted as including the professional or business activities of legal persons.
112. Consequently, Articles 7 and 8 of the Charter and Article 8 of the ECHR concern both natural persons and legal persons.
113. So far as concerns the level of protection conferred by Articles 7 and 8 of the Charter and Article 8 of the ECHR, reference should be made to the case-law of the European Court of Human Rights.
134. If the referring court concludes that there has been an infringement of Articles 7 and 8 of the Charter, it will have to disregard the evidence unlawfully obtained or unlawfully used.
135. It will then have to verify whether the admissible evidence is sufficient to support the tax adjustment notice and, if necessary, annul that notice and order the reimbursement, with interest, of the VAT collected.
136. Finally, as regards the arguments put forward by WebMindLicenses on the basis of Article 41 of the Charter, headed ‘Right to good administration’, it should be noted that a divergence is apparent between the judgment in N. (C‑604/12, EU:C:2014:302, paragraphs 49 and 50), on the one hand, and the judgments in Cicala (C‑482/10, EU:C:2011:868, paragraph 28), YS and Others (C‑141/12 and C‑372/12, EU:C:2014:2081, paragraph 67) and Mukarubega (C‑166/13, EU:C:2014:2336, paragraphs 43 and 44), on the other.
137. While, in paragraphs 49 and 50 of its judgment in N. (C‑604/12, EU:C:2014:302), the Fourth Chamber of the Court seems to accept that Article 41 of the Charter also applies to Member States where they implement EU law, the Third and Fifth Chambers rejected that idea in the other three judgments cited in point 136 of this Opinion.
138. Nevertheless, as the Court held in paragraph 68 of its judgment in YS and Others (C‑141/12 and C‑372/12, EU:C:2014:2081), ‘the right to good administration, enshrined in [Article 41 of the Charter], reflects a general principle of EU law (judgment in [N.], C‑604/12, EU:C:2014:302, paragraph 49). However, by their questions in [these] cases, the referring courts are not seeking an interpretation of that general principle, but ask whether Article 41 of the Charter may, in itself, apply to the Member States of the European Union’. None the less, this does not prevent the Court from providing the referring court with clarification as to the interpretation and assessment of the general principle in question.
139. In any event, there does not appear to be any possibility of a finding that Article 41 of the Charter or the general principle has been infringed in the present case.