The Interpretation of Article 30 TFEU and Article 110 TFEU by the Court of Justice - Essay Example

The Court of Justice has adopted an appropriately nuanced approach to both Article 30 TFEU and Article 110 TFEU which strikes the right balance between ensuring the free movement of goods and respecting the autonomy of Member States.’ Critically discuss this statement with reference to decided cases and academic opinion. I. Introduction The success of EU as an economic and social entity has been highly related to its principles. Reference is made to the core rights on which EU is based, as for example the free movement of goods. The Court of Justice has managed to secure the respect of these principles in all Member States. In this paper emphasis is given to two articles related to the free development of commerce across EU: the article 30 TFEU and the article 110 TFEU. These articles, as analyzed below, help the authorities of Member States to check their power in imposing taxes, or not, in regard to goods of different characteristics/ quality. The application of these articles in practice by the Court of Justice can be characterized as effective, at the level that the CJ addresses the need for protecting the EU”s freedoms but without limiting the autonomy of Member States. The above practice of the Court of Justice is explored in this paper by referring to relevant legislation. It is proved that the promotion of EU’s rights is a challenging task, even by a powerful body such as the CJ, since opposing interests can be quite strong. In such environment, the role of CJ can be characterized as critical for the survival of EU principles. II. Article 30 TFEU and Article 110 TFEU – overview Article 30 TFEU addresses an issue similar to that regulated through the Article 110 TFEU: both articles refer to the potential of a Member State to impose tax on goods. More specifically, article 30 TFEU introduces a clear and absolute prohibition for member states as of the power of the latter to impose charges on goods transferred through their borders, either as imports or exports (Woods et al. 2011, p.101). The reasoning behind the particular provision is the need for ensuring that the movement of goods in EU will be free, a fact that would help the Member states to become more competitive in the EU market. It should be made clear though that the article 30 TFEU refers just to custom duties and not to other types of restrictions that a Member state imposes on the goods imported or exported (Suibhne 2013, p.21). For example, the restrictions referring to limitations on imports in regard to goods of specific characteristics a Member state could be controlled by the CJ using the article 36, and not the article 30 TFEU (Suibhne 2013, p.21). On the other hand, when no clear legal rules exist in regard to a critical issue related to EU law, then the article 30 TFEU can be used, as an alternative, for helping to secure the free movement of goods without causing conflicts with national law (Horspool and Humphreys 2012, p.300). Such phenomenon appeared in the case 7/68 where the issue under discussion, i.e. the taxes on products that are part of national history or culture, was resolved using the article 30 TFEU (Horspool and Humphreys 2012, p.300). In the above case the CJ had explained the criteria that ‘goods’, as a term included in the article 30 TFEU, have to meet: they have to be ‘products of specific value so that they can become part of a transaction’ (Foster 2012, p.267). In addition, such products can be goods even when they are not to be consumed but they are going to be used as means for ‘providing services’ (Foster 2012, p.267), as noted in the case 45/87. Through a similar point of view, the article 110 TFEU prohibits taxes on foreign goods, meaning the goods introduced from another Member state, if these taxes establish discrimination for these goods, as compared with domestic products (Berry et al. 2013, p.351). The article 110 TFEU is divided into two sub-sections: in the first section reference is made to taxes that are higher from ‘the taxes imposed on similar domestic products’ (Berry et al. 2013, p.351) while the second section refers to taxes that meet the term of protectionism for domestic products (Berry et al. 2013, p.351); this means that a tax imposed on a foreign good can be considered as unfair, according to article 110 TFEU, even if it is not higher from the tax imposed on domestic goods of similar characteristics. According to Weiss and Kaupa (2014) goods can be characterized as similar not only if they have similarities as of their characteristics but even if they can ‘compete with each other’ (Weiss and Kaupa 2014, p.91). In any case, the two articles are based on a different approach: for article 30 TFEU a Member State does not have power to impose charges of specific characteristics, i.e. custom duties (Barnard 2013) while for article 110 a Member State is allowed to impose taxes but only under the following two criteria: ‘that these taxes are neither discriminatory nor protectionist’ (Barnard 2013, p.37). Another important difference of the two articles is their geographical relevance: article 30 can be used only for goods which are ‘at the border of a country’ (Barnard 2013, p.37). In opposition, article 110 involves in goods which have already entered the country or which are going to exit the country, in the context of an export agreement (Barnard 2013). In other words, article 110 is applied within the borders of a country. At the same time, Cremona et al. (2013) noted that in its case law the CJ has revealed an intention to make clear the distinction between the article 30 TFEU and the article 110 TFEU; the interpretation by the above Court of the particular articles has been rather narrow, a practice that has changed through the years (Cremona et al. 2013). For example, when asking to apply the article 34 TFEU the CJ preferred a ‘quite broad interpretation’ (Cremona et al. 2013, p.4). The above trend should be taken into consideration when evaluating the decisions of the CJ in regard to the field of disputes covered by the articles 30 and 110 TFEU. Weatherill (2012) explains that the article 30 TFEU is not able, if used alone, to secure the free movement of goods in EU. In this context, the use of the article 110 TFEU as a supplement has been considered as necessary (Weatherill 2012). Indeed, article 30 TFEU is applied at a first level, i.e. when goods are at the borders of a Member State and are going to be imported/ exported while the article 110 TFEU is used when the foreign products, meaning the products of another Member state, have already entered the territory of a Member state (Weatherill 2012). III. The interpretation of Article 30 TFEU and Article 110 TFEU by the Court of Justice The Court of Justice (CJ) has clearly set the criteria under which the articles 30 and 110 TFEU are applied. For example, in the case C-266/91 the CJ has ruled that the legality of non-common charges, such as the para-fiscal ones, can be judged based not on the article 30 TFEU but either on article 12 or article 95 TFEU (Kaczorowska 2013, p.516). This means that not all charges imposed on a country’s goods, meaning the goods that are already within the market, can be considered as tax, in the common sense of the above term (Kaczorowska 2013, p.516). This clarification is quite important in order to understand the level at which fiscal policies of a Member state can be controlled using the articles 30 and 110 TFEU. Moreover, the identification of the cases in which one of the above two articles should be preferred can be a challenging task. The decisions of CJ in regard to such cases reflect the dilemmas that the above Court has faced when having to choose one of these articles for resolving the relevant dispute. An indicative example is the case C-387/01. In the above case the plaintiffs have expressed their doubts as of the validity of the tax imposed on the plaintiffs’ vehicle. The Court decided that the relevant charge was imposed by the Member state legally and that this charge should be considered as part of the state’s fiscal policy (Kaczorowska 2013, p.516). It should be noted that the vehicle was brought abroad, a fact that gave the chance to the plaintiffs to use the violation of the free movement of goods, as a legal reasoning for opposing the payment of the particular charge. In the context of the Court’s decision that the specific charge should be considered as ‘an internal tax and non a custom duty’ (Kaczorowska 2013, p.516) the use of article 30 TFEU was proved as non-applicable; rather the article 110 TFEU was preferred as mostly related to the particular case. Using this article the plaintiff could still have the chance to oppose the charge imposed on their vehicle but on a different legal basis: for being released from paying this charge the plaintiffs should provide sufficient explanations that the specific charge (tax) violates the terms of the article 110 TFEU by causing discrimination for foreign products, i.e. the plaintiffs’ vehicle, in favour of local goods, i.e. the vehicles produced domestically. The above decision reflects the willingness of the CJ to support the autonomy of Member states: the terms of the use of the article 30 TFEU are made clear so that the power of Member states to develop their own, independent, fiscal policy, to be secured. However, the protection of Member states’ autonomy could not exceed the protection of EU’s fundamental principles. In the case 7/68 the CJ has characterized the taxes of Italy as non - aligned with the EU law; the decision was based on article 30 TFEU which, according to CJ, can lead to the prohibition of a tax as ‘fully unlawful’ (Craig and de Burca 2011, p.613). In the above case Italy tried to justify the validity of the tax under examination by referring to the article 36 TFEU; however, the CJ replied that the above article is applicable only in regard to taxes that ‘meet the criteria of article 34 and not of the article 30 TFEU’ (Craig and de Burca 2011, p.613). It should be noted that the introduction of the above charge in Italy was not related to specific goods; instead the particular charge was imposed on all ‘imports and exports’ (Turner 2013, p.34) of Italy. The local government has justified this decision by referring to the need for financing a project related to the gathering/ process of trade statistics (Turner 2013). The CJ did not accept this justification and ruled that this practice could be rather characterized as an effort to set ‘barriers to trade’ (Turner 2013, p.34). Through the 7/68 decision the CJ made clear that Member states cannot ignore the prohibitions set by the article 30 and that the power of a Member state to secure its autonomy cannot higher than the power of EU to protect its rights. In another case the potential of the article 110 to set limits in the power of a country to levy taxes has been highlighted: this was the case 170/78. In the particular case the practice of UK to impose higher taxes on wine compared to the beer was checked by the CJ (Hargreaves and Homewood 2013, p.97). In the Court’s decision the similarity between wine and beer, as goods, is used as the basis for the final decision: UK has been found to have violated the article 110 TFEU since the higher taxes on wine led to the increase of the wines’ prices, compared to beer (Hargreaves and Homewood 2013, p.97). In the above case, the UK had not imposed custom duties on wines but it has introduced a discriminatory tax policy in the context of which taxes on wines were higher than the taxes imposed on beer (Hargreaves and Homewood 2013, p.97). Even if UK had not violated its obligations in regard to custom duties (as regulated through the article 30 TFEU) it had managed to create a protectionist environment for beer by making wines more expensive. The above case shows that the article 110 TFEU can be used for securing free trade within the EU but only under a particular term: that the goods under examination are subject of discrimination compared to domestic products. If no such term is met, then the national charges cannot be prohibited by the CJ as they do not violate the rules of the article 110 TFEU. Thus, through the above case the CJ aimed to make clear that the limitation of the power of Member states is not a target when examining the claims for violation by a Member state of the free movement of goods. Rather, the CJ uses the article 110 TFEU for imposing obligations that limit the autonomy of Member states at the lower possible level. Of course, in any case that the CJ identifies violations of the EU law through the use of discriminatory taxation in favour of the domestic products, then the use of the article 110 is inevitable (Moens and Trone 2010, p.230, C 383/ 01 and C 290/05). However, in the case C-221/06 the CJ held that a Member state is free to introduce an autonomous tax policy but the rules of this policy should be ‘compatible with the EU law’ (Chalmers et al. 2010, p.681). Furthermore, in the case 244/80 the CJ rejected the request of the parties to check the potential violation of the article 110 TFEU since, after reviewing the case, the Court came to the conclusion that the procedure has been developed not for checking the existence in the specific case of tax discrimination but rather for exploring the ‘French tax system’ (Turner and Storey 2014, p.110). The willingness of the CJ to keep a balance between free movement of goods and the autonomy of Member states is also made clear in the case 132/78. In the above case the Court held that a tax imposed on a product should be set under the restrictions of article 110 TFEU only if inequalities could be identified between this tax and the tax imposed on other products; however, if these inequalities are result of different status of the products compared, then the article 110 TFEU (Foster 2013, p.151). For example, in the case 132/78 it was noted by the Court that the article 110 could not be applied since in regard to foreign products the taxes imposed at distribution level while in regard to domestic products the taxes imposed at the production level; thus, the difference in taxes would be expected and no issue of discrimination in favor of domestic products could exist (Foster 2013, p.151). At this point emphasis should be given to the following fact: even if the CJ is trying to keep a balance between the free movement of goods and the Member states’ autonomy still the Court is obliged to ensure that any violation of the articles 30 and 110 is appropriately addressed. For example, in regard specifically to article 30 the CJ has accepted that the failure of a Member state to meet its obligations, as derived from the article 30 TFEU, result to the country’s obligation to return ‘any charged that has been unlawfully levied’ (Davies 2012, p.119, C-199/82 and C-192/95). IV. Conclusion The promotion of the free movement of goods from the CJ seems to be quite effective. In fact, as proved through the case law presented above, the CJ has, fully, protected the EU law in regard to the free movement of goods but without setting in risk the right of Member state to define their tax policy. Moreover, the CJ has set the basis for the understanding of the EU law: the legal framework of EU should not be regarded as a tool for imposing limitations or restrictions on national strategies but it should be rather used for improving these strategies so that the performance of Member states in regard to trade and commerce is kept at high levels. The case law released by the CJ in relation to the articles 30 and 110 TFEU has revealed an important fact: Member states may be willing to align their tax policy with the rules of the EU law but such practice may not be feasibly, at least not fully, in practice due to the status of national economy. In such case, i.e. when discrimination against foreign products is partially inevitable, then the combination of the above articles should be a solution for ensuring that major violations of the EU law are avoided. Bibliography Barnard, C. (2013) The Substantive Law of the EU: The Four Freedoms. Oxford: Oxford University Press. 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