OPINION OF ADVOCATE GENERAL
SZPUNAR
delivered on 3 February 2015 (1)
Case C‑5/14
Kernkraftwerke Lippe-Ems GmbH
v
Hauptzollamt Osnabrück
(Request for a preliminary ruling from the Finanzgericht Hamburg (Germany))
(Reference for a preliminary ruling — Legislation of a Member State imposing a duty on nuclear fuel — Compatibility with the national constitution and EU law — Directive 2003/96/EC — Articles 2 and 14 — Directive 2008/118/EC — Article 1 — Article 107 TFEU — Articles 93 EA, 191 EA and 192 EA)
Introduction
1. Does EU law preclude a Member State from introducing duty on the use of fissile material, to be borne by operators of nuclear power stations? This is, in essence, the question which the Finanzgericht Hamburg (Finance Court, Hamburg) has referred to the Court.
2. There are several aspects to this question. It concerns the provisions of the TFEU, those of the EAEC Treaty, and the relationship between those treaties. It will also be necessary to consider the harmonised system of excise duty on energy products and electricity.
3. Finally, or, to be precise, before proceeding any further, it will be necessary to examine the interface between the preliminary reference procedure and procedures for reviewing constitutionality within the Member States.
The legal framework
EU law
4. Articles 107 TFEU and 267 TFEU and Articles 93 EA, 191 EA and 192 EA are the provisions of primary law which make up the legal framework of this matter. They are sufficiently well-known for it to be unnecessary for me to quote them.
5. The harmonised system of excise duty on energy products and electricity is based on Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for excise duty and repealing Directive 92/12/EEC, (2) and Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity. (3) The first directive lays down the general rules of the excise duty system, while the second contains more specific provisions governing the taxation of energy products and electricity.
6. Articles 1 and 2 of Directive 2003/96 provide:
‘Article 1
Member States shall impose taxation on energy products and electricity in accordance with this Directive.
Article 2
1. For the purposes of this Directive, the term “energy products” shall apply to products:
(a) falling within CN codes 1507 to 1518, if these are intended for use as heating fuel or motor fuel;
(b) falling within CN codes 2701, 2702 and 2704 to 2715;
(c) falling within CN codes 2901 and 2902;
(d) falling within CN code 2905 11 00, which are not of synthetic origin, if these are intended for use as heating fuel or motor fuel;
(e) falling within CN code 3403;
(f) falling within CN code 3811;
(g) falling within CN code 3817;
(h) falling within CN code 3824 90 99 if these are intended for use as heating fuel or motor fuel.
2. This Directive shall also apply to:
Electricity falling within CN code 2716.
3. When intended for use, offered for sale or used as motor fuel or heating fuel, energy products other than those for which a level of taxation is specified in this Directive shall be taxed according to use, at the rate for the equivalent heating fuel or motor fuel.
In addition to the taxable products listed in paragraph 1, any product intended for use, offered for sale or used as motor fuel, or as an additive or extender in motor fuels, shall be taxed at the rate for the equivalent motor fuel.
In addition to thepeb taxable products listed in paragraph 1, any other hydrocarbon, except for peat, intended for use, offered for sale or used for heating purposes shall be taxed at the rate for the equivalent energy product.
...’
7. Under Article 14(1)(a) of Directive 2003/96:
‘In addition to the general provisions set out in Directive 92/12/EEC on exempt uses of taxable products, and without prejudice to other Community provisions, Member States shall exempt the following from taxation under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of such exemptions and of preventing any evasion, avoidance or abuse:
(a) energy products and electricity used to produce electricity and electricity used to maintain the ability to produce electricity. However, Member States may, for reasons of environmental policy, subject these products to taxation without having to respect the minimum levels of taxation laid down in this Directive ...’
8. Article 1 of Directive 2008/118 provides:
‘1. This Directive lays down general arrangements in relation to excise duty which is levied directly or indirectly on the consumption of the following goods (hereinafter “excise goods”):
(a) energy products and electricity covered by Directive 2003/96/EC;
...
2. Member States may levy other indirect taxes on excise goods for specific purposes, provided that those taxes comply with the Community tax rules applicable for excise duty or value added tax as far as determination of the tax base, calculation of the tax, chargeability and monitoring of the tax are concerned, but not including the provisions on exemptions.
3. Member States may levy taxes on:
(a) products other than excise goods;
...
However, the levying of such taxes may not, in trade between Member States, give rise to formalities connected with the crossing of frontiers.’
German law
9. The duty at issue in the main proceedings was introduced by the law of 8 December 2010 on excise duty on nuclear fuel (Kernbrennstoffsteuergesetz ‘KernbrStG’). (4) Under that law, nuclear fuel used for the commercial production of electricity is subject to the duty on nuclear fuel. Nuclear fuel is to be understood as referring to plutonium 239 and 241 and uranium 233 and 235. The rate of taxation is fixed per gram of fuel, at EUR 145. The duty falls due when the fuel is used for the first time in a nuclear reactor and a chain reaction is triggered. It is payable by the operator of the plant for producing electricity by nuclear fission (nuclear power station).
The facts of the main proceedings, the questions referred and the proceedings before the Court of Justice
10. Kernkraftwerke Lippe-Ems GmbH, a company governed by German law, is the operator of a nuclear power station in Lingen (Germany). In a tax return dated 13 July 2011, it declared the sum of EUR 154 117 745 in respect of duty on nuclear fuel, relating to the fuel used in its reactors in June of that year. At the same time, it brought an action before the referring court against the competent tax authority, Hauptzollamt Osnabrück, challenging the legality of the duty in question under EU law.
11. In parallel proceedings involving another nuclear power station operator, the referring court sought a decision from the Bundesverfassungsgericht (the German Federal Constitutional Court) concerning the constitutionality of the KernbrStG. The available information indicates that these proceedings are still ongoing.
12. In those circumstances, the Finanzgericht Hamburg stayed the proceedings and referred the following questions to the Court for a preliminary ruling:
‘(1) Does the second sentence, in conjunction with the first sentence, [b], of Article 267 TFEU justify a court of a Member State in referring to the Court of Justice of the European Union questions on the interpretation of EU law which have been put to the national court in connection with the legality of a national law, even if the national court not only has doubts concerning the legality of the national law under EU law, but is also certain that the national law is inconsistent with the national Constitution and therefore, in a parallel case, the national court has already sought a decision from the Constitutional Court which, under national law, alone has jurisdiction to decide on the constitutionality of laws, but the Constitutional Court has not yet given a decision?
If question 1 is answered in the affirmative:
(2) Do Directives 2008/118 and 2003/96, which were adopted for the harmonisation of excise duty and for energy products and electricity in the Union, preclude the introduction of a national duty which is levied on nuclear fuels used for the commercial production of electricity? Does this depend on whether the national duty can be expected to be passed on to consumers by means of the electricity price and, if appropriate, what is meant by “passed on”?
(3) Can an undertaking resist a duty which a Member State imposes in order to raise revenue on the use of nuclear fuels for the commercial production of electricity, by objecting that the levying of the duty constitutes aid contrary to EU law under article 107 TFEU?
If the answer to the previous question is in the affirmative:
Does the KernbrStG, under which a tax for raising revenue is imposed only on undertakings which produce electricity commercially by using nuclear fuels, constitute State aid within the meaning of Article 107 TFEU? What circumstances are to be taken into account in considering whether other undertakings which are not taxed in the same way are in a similar factual and legal situation?
(4) Is the levying of the German nuclear fuel duty inconsistent with the provisions of the EAEC Treaty?’
13. The request for a preliminary ruling was received by the Court on 7 January 2014. Written observations were submitted by the parties in the main proceedings, the German and Finnish Governments and the European Commission. The same parties were represented at the hearing, which took place on 4 November 2014.
Analysis
14. The first question concerns the admissibility of the reference for a preliminary ruling. I will therefore consider it first, before addressing the substantive questions in the order in which they have been submitted.
The first question
15. By its first question, the referring court asks in essence whether it may make a reference for a preliminary ruling under Article 267 TFEU, notwithstanding the fact that there are ongoing national proceedings for review of the constitutionality of the provisions of national law which form the legal basis of the individual measure at issue in the main proceedings (as it happens, those proceedings were instituted by the same referring court, but that is of little importance). According to the explanation provided by the referring court, if the Bundesverfassungsgericht were to declare the KernbrStG unconstitutional, without limiting its decision so that it took effect only for the future, the tax return at issue in the main proceedings would be annulled automatically, which would put an end to the main proceedings and deprive the questions referred of any purpose.
16. It should be observed at the outset that, having regard to the established case-law of the Court, there would not appear to be any room for doubt as to the admissibility of the reference for a preliminary ruling in this matter.
17. It could certainly be objected that, in the circumstances of the present case, the questions referred are hypothetical, as the issue as to their relevance depends on the outcome of the national proceedings reviewing the constitutionality of the provisions in question: if those provisions are found to be invalid with retrospective effect, the issue of interpretation of EU law will fall away. However, that is not the approach the Court takes to the interaction between the preliminary ruling procedure and procedures for the review of constitutionality.
18. First, it is apparent from the case-law of the Court that, while it might be convenient for questions of purely national law to be settled at the time the reference is made to the Court, national courts have the widest discretion in referring matters to the Court if they consider that a case pending before them raises questions involving interpretation of provisions of EU law, or consideration of their validity, necessitating a decision on their part. (5)
19. Thus, a national court which, in a case concerning EU law, considers that a provision of national law is not only contrary to EU law, but also unconstitutional, does not lose the right or escape the obligation, under Article 267 TFEU, to refer questions to the Court on the interpretation or validity of EU law, by reason of the fact that a declaration that a rule of national law is unconstitutional requires a reference to the constitutional court. The effectiveness of EU law would be in jeopardy if the existence of an obligation to refer a matter to a constitutional court could prevent a national court, in a case governed by EU law, from exercising the right conferred on it by Article 267 TFEU to refer questions to the Court concerning the interpretation or validity of EU law, in order to enable it to decide whether or not a provision of national law was compatible with that EU law. (6)
20. Secondly, according to settled case-law, in proceedings under Article 267 TFEU, it is solely for the national court before which the dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine, in the light of the particular circumstances of each case, both the need for a preliminary ruling to enable it to give judgment, and the relevance of the questions which it submits to the Court. The Court may refuse to rule on a question referred for a preliminary ruling by a national court only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it. (7)
21. In this matter, as I see it, that is not the case. To my mind, there can be no doubt that the questions referred relate to the actual facts of the main proceedings, or that the information provided by the referring court is sufficient.
22. As to whether the issue raised is hypothetical, given the uncertainty as to the outcome of the parallel proceedings before the constitutional court — both in terms of the decision of the constitutional court itself and its temporal effects — it is clear that the questions referred cannot be characterised as hypothetical simply on the basis that those proceedings are ongoing. Clearly, there are a number of circumstances in which the main proceedings may come to an end before the Court has ruled on the questions referred, perhaps the most obvious being the withdrawal of the application. Among those possible circumstances is a declaration by the constitutional court that the provisions of national law on which the subject matter at issue in the main proceedings are based are invalid. In such a case, it is for the referring court to give due effect to such a decision and, in particular, to determine whether it is appropriate to pursue the request for a preliminary ruling, to amend it, or to withdraw it. (8) However, in no case may the possibility of such an outcome — the likelihood of which will be even greater where a procedure for review of constitutionality has been set in motion — be enough to render the questions referred hypothetical.
23. In this regard it is also appropriate to draw the referring court’s attention to the rules in Article 100 of the Rules of Procedure of the Court of Justice, which entered into force on 1 November 2012, as to the circumstances in which the Court remains seised of a request for a preliminary ruling. Under that provision, the withdrawal of a request for a preliminary ruling may be taken into account until notice of the date of delivery of the judgment has been served on the interested persons referred to in Article 23 of the Statute of the Court of Justice of the European Union.
24. Third, and lastly, the Court has also had occasion to observe that the preliminary ruling procedure and national procedures for review of constitutionality have different purposes and legal effects. A ruling by the constitutional court that a provision of national law is unconstitutional normally leads to the removal of that provision from the legal system. Depending on the national system in question, such removal may take effect ex nunc or ex tunc, or even from a time determined by the constitutional court itself. Where the matter has come before the constitutional court in the context of an actual dispute which is the subject of proceedings before a national court, it may be that the provision in question, although found to be invalid, is applicable to the party which initiated the constitutional review. The situation is entirely different in the case of the preliminary ruling procedure. As the Court has put it, a conflict between a provision of national law and a directly applicable provision of the Treaty (found to exist by the referring court, following the Court’s decision on the order for reference) is to be resolved by the national court applying EU law, if necessary by refusing to apply the conflicting national provision, and not by a declaration that the national provision is invalid, the powers of authorities, courts and tribunals in that regard being a matter to be determined by each Member State. (9)
25. I should add, although it does not affect the answer to the question referred, that in the present case, according to the information provided by the referring court, the matter before the constitutional court concerns an alleged breach of domestic jurisdictional rules, and thus an issue which differs from that of the possible incompatibility between the KernbrStG and the provisions of EU law referred to above.
26. I therefore propose that the Court should answer the first question to the effect that a national court may make a reference for a preliminary ruling under Article 267 TFEU, notwithstanding the fact that there are ongoing national proceedings for review of the constitutionality of the provisions of national law which form the legal basis of the individual measure at issue in the main proceedings.
The second question
27. By its second question, the referring court asks, in essence, whether Directives 2003/96 and 2008/118 preclude the levying of the duty at issue in the main proceedings. It also wishes to ascertain whether the answer to this question depends on whether the duty in question can be passed on to consumers of electricity.
28. The referring court does not specify, in the wording of the question referred, the provisions of Directives 2003/96 and 2008/118 which could, potentially, preclude the duty. However, it is clear from the order for reference that the issues are, in particular, first, whether nuclear fuel falls within the exemption provided for in Article 14(1)(a) of Directive 2003/96, and second, whether the duty can be considered to be an indirect tax on electricity, which would make it potentially incompatible with Article 1(2) of Directive 2008/118. The effect of the fact that it is possible to pass on the duty in question falls to be considered as part of this second issue.
29. The second question referred is thus divided into two parts, which I will consider separately.
Directive 2003/96
– Preliminary observations on the applicability of Directive 2003/96 to nuclear fuel
30. Nuclear fuel is covered by the EAEC Treaty. (10) It is therefore appropriate to consider whether the taxation of such a product may be governed by provisions of secondary legislation adopted on the basis of the EC Treaty. (11) If this is answered in the negative, will no purpose be served in analysing the first part of the second question.
31. When Directive 2003/96 was adopted, the relationship between the EC and EAEC Treaties were governed by Article 305(2) of the EC Treaty, which provided that ‘[t]he provisions of [the EC Treaty] shall not derogate from those of the [EAEC Treaty]’. (12) However, this rule, which gives the EAEC Treaty the same legal status as the EC Treaty, does not seem to me to resolve the question of the applicability of provisions of secondary legislation adopted pursuant to the EC Treaty within the field covered by the EAEC Treaty. There are two possible approaches to this issue. (13)
32. The first consists in treating the two communities as completely separate and autonomous in their respective fields. On that approach, acts adopted on the basis of the EC Treaty would not be applicable within the area covered by the EAEC Treaty, and vice versa. Taken in conjunction with the principle of conferral of powers, this would mean that all legislative action falling within the area covered by one of the treaties would require a legal basis within that same treaty. However, the EAEC Treaty does not cover nearly as much ground as the EC Treaty. As a sectoral treaty, it was limited from the outset to those legal instruments which, at the time of its adoption, seemed necessary for the development of the European nuclear industry (for example, it does not provide for any general power to harmonise national legislation). Furthermore, unlike the EC Treaty, its scope has not been substantially expanded by successive amending treaties.
33. The adoption of such a strictly ‘dualist’ approach would thus give rise to serious problems, at a time when EU law covers areas as varied as competition, tax and the environment, and there is no justification for excluding goods or activities covered by the EAEC Treaty from intervention by the European legislature.
34. I prefer the second approach, according to which the scope of the EC Treaty, which is intended to be of general application, covers all goods, services and activities, whereas the EAEC Treaty lays down specific rules only if the characteristics of the nuclear industry so require. On this approach, secondary legislation adopted on the basis of the EC Treaty may be applied to goods and activities covered by the EAEC Treaty, unless that treaty provides otherwise. I am aware of the legal problems that this approach would also entail, but it seems to me that these are easily surmountable, and in any event they have no impact on the present case.
35. Furthermore, this approach appears to be supported by case-law. In opinion 1/94, the Court held that ‘[s]ince the [EAEC] Treaty contains no provisions relating to external trade, there is nothing to prevent agreements concluded pursuant to Article 113 of the EC Treaty from extending to international trade in [EAEC] products’. (14) In relation to the ECSC Treaty, the Court has held that the EEC Treaty ‘can apply to products covered by the ECSC Treaty in so far as the matters arising are not the subject of provisions in the ECSC Treaty’. (15) It seems to me that that can perfectly well be applied to the EAEC Treaty. It is true that the Court has recently linked the applicability of a provision of the EC Treaty in an area covered by the EAEC Treaty on the basis that the provision constitutes a general rule of EU law. (16) Nevertheless, it seems to me that the situation under consideration in that case was different from that at issue in the case before the referring court. First, it concerned the direct application of a provision of the EC Treaty within the area covered by the EAEC Treaty, and not whether secondary legislation adopted on the basis of the EC Treaty may be applied to goods covered by the EAEC Treaty. Secondly, the fact that the court held that such a fundamental principle of the European legal order as that prohibiting discrimination on grounds of nationality was applicable in the area covered by the EAEC Treaty does not necessarily mean, in my view, that only general principles laid down in the EC Treaty may be applied in situations governed by the EAEC Treaty.
36. Finally, the approach that I advocate seems to have been followed in the practice adopted by the institutions for a considerable time. Indeed, acts adopted solely on the basis of the EC Treaty, such as Directive 85/337/EEC, (17) Directive 98/34/EC (18) or, in the area of tax, Directive 2006/112/EC, (19) apply without distinction to goods and activities covered by the EC Treaty (now the TFEU) and the EAEC Treaty. Accordingly I do not see any formal obstacle to the proposition that the provisions of Directive 2003/96 may also, in theory, be applicable to nuclear fuel.
– Direct application of Directive 2003/96 to nuclear fuel
37. Article 1 of Directive 2003/96 requires Member States to impose excise duty on energy products and electricity. Energy products are defined in Article 2(1) of the directive, by reference to combined nomenclature codes (20) relating to a certain number of products, essentially coal, natural gas and mineral oils, as well as certain derived products. Article 1(2) adds electricity to this list. Nuclear fuel as referred to in the KernStG thus does not figure among the listed products.
38. Under the second and third subparagraphs of Article 2(3) of Directive 2003/96, all products used as motor fuel, and all other hydrocarbons used as heating fuel, except for peat, are also subject to the duty. (21)
39. Thus, in stating the products which are subject to excise duty, Article 2 of Directive 2003/96 also defines the scope of the directive. (22)
40. Article 14(1)(a) of Directive 2003/96 exempts ‘energy products and electricity used to produce electricity’ from the duty. In this case, therefore, it is necessary to determine whether this exemption covers nuclear fuel. For the reasons set out below, I do not think that this is the case.
41. First, Article 14(1)(a) of Directive 2003/96 refers expressly to ‘energy products’. This term is given a precise definition in Article 2(1) of the directive in an exhaustive list of products which are clearly designated by their combined nomenclature codes. That being the case, the term cannot have a different meaning in Article 14 from that given to it in Article 2. It would be an affront to legal logic to contend that the legislature had used the same term, in the same text, with two different meanings.
42. It is of course true that, in addition to the products listed in Article 2(1) of Directive 2003/96, excise duty applies to other products used as motor fuel and other hydrocarbons used as heating fuel. Logically, the exemptions provided for in Article 14 of that directive must therefore also apply to those two categories of products, namely hydrocarbons used as heating fuel to produce electricity. However, the nuclear fuel at issue in this case is not a hydrocarbon but consists of specific isotopes of plutonium and uranium. (23)
43. Secondly, as I have already observed in point 32 of this opinion, the scope of Directive 2003/96 is defined by Article 2. It follows that Article 14 cannot apply, beyond that scope, to products not falling within it, exempting them from a duty to which they were never subject.
44. It is thus clear in my opinion that Directive 2003/96, and in particular Article 14(1)(a), is not applicable to nuclear fuel.
– Application by analogy
45. The referring court also raises the issue of whether Directive 2003/96, or at least Article 14(1)(a) of that directive, may be applied to nuclear fuel by analogy. I must admit that I find it difficult to see how this could be the case. The provision referred to creates an exemption from excise duty and thus cannot be applied, even by analogy, to products which are not subject to the duty. It would first be necessary to bring nuclear fuel within the scope of Directive 2003/96. In my view, however, it is utterly inconceivable for a product to be subjected, by analogy, to a tax which is not applicable to that product. Moreover, there is no valid analogy to be drawn in this respect between nuclear fuel and the products subject to excise duty. The object of Directive 2003/96 is not to tax products used to produce electricity, but to tax energy products, as defined in the directive, regardless of how they are used. Accordingly, the fact that nuclear fuel was not included within those rules does not represent a lacuna which must be filled by having recourse to analogy.
46. At the very most, it could be suggested that the line of case-law established in Braathens (24) could be applied by analogy to the present case. The reasoning would be as follows: In that judgment, the Court was required to interpret a provision of the directive which preceded Directive 2003/96, (25) concerning the exemption of fuel supplied for the purpose of air navigation (now Article 14(1)(b) of Directive 2003/96). The Court held that such an exemption freed the exempt products not only from excise duty, but also from other national taxes which might normally be imposed on excise goods. (26) The Court stated that such national taxes would render the exemption laid down by Directive 92/81 entirely ineffective. (27) That same exemption from national taxes should apply to energy products used to produce electricity, which are exempt from excise duty under Article 14(1)(a) of Directive 2003/96. If energy products used to produce electricity cannot be subject to national taxes, the same must apply, by analogy, to other products which, although not energy products within the meaning of Directive 2003/96, are also used to produce electricity, such as nuclear fuel.
47. It seems to me that this reasoning is flawed, however. Article 14(1)(a) of Directive 2003/96 does not lay down any general principle exempting products used to produce electricity. The directive establishes a harmonised system of taxation for energy products and electricity, and the exemption of energy products used to produce electricity has to be viewed in that strict context. (28)Braathens concerned a product falling within the area covered by Directive 92/81, which was expressly exempted. Its purpose was simply to ensure the effectiveness of that exemption, not to broaden its scope. A wider interpretation would encroach on the scope of Directive 2003/96, interfere with its objective of harmonisation and infringe the power of Member States to impose indirect taxes outside the harmonised area, a power which is reaffirmed in Article 1(3)(a) of Directive 2008/118.
48. In conclusion, I am of the opinion that a duty on the use of nuclear fuel by nuclear power stations does not fall within the scope of Directive 2003/96, and consequently that directive does not preclude the imposition of such a duty.
Directive 2008/118
49. By the second part of its second question, the referring court asks whether the duty at issue may be regarded as an indirect tax on electricity. I should say at the outset that, if that were the case, the duty would be contrary to Directive 2008/118, read in conjunction with Directive 2003/96. However, I do not think that the duty can be characterised as an indirect tax on electricity.
– Whether it is possible to introduce supplementary national taxes on excise goods
50. Article 1(2) of Directive 2008/118 permits Member States to levy other indirect taxes on excise goods (including electricity) for specific purposes, provided that those taxes comply with the EU tax rules applicable to excise duty or value added tax. Those rules concern, amongst other things, determination of the tax base, calculation of the tax, chargeability and monitoring.
51. According to the referring court, the duty at issue in the main proceedings is not levied for specific purposes, as the associated revenue is allocated to the federal budget. In any event, assessing the purpose of a duty is a matter for the national authorities and courts, although they must take into account the criteria laid down in the case-law of the Court, which are extremely strict. (29) If the national court finds that the duty in question does not meet those criteria, it cannot be said to comply with Article 1(2) of Directive 2008/118.
52. As to compliance with applicable EU tax rules, it seems to me that the duty at issue in the main proceedings does not satisfy this requirement either. In the main proceedings, of course, the only relevant rules are those relating to excise duty, as the duty at issue is not comparable to value added tax in any respect.
53. It is undoubtedly true that, according to the case-law of the Court, Article 1(2) of Directive 2008/118 requires compliance only with the general scheme of taxation under EU law. (30) Nevertheless, even in terms of its general scheme, the duty at issue does not seem to me to comply with the rules applicable to excise duty on electricity.
54. First, it clearly departs from those rules in so far as concerns the tax base. The tax base for excise duty is the product subject to excise duty itself — in other words, a certain amount of electricity — whereas the tax base for the duty at issue is nuclear fuel — in other words a factor in the production process — and it might be possible to establish the relationship between that factor and a given amount of electricity only by means of a further calculation.
55. Secondly, excise duty on electricity is not chargeable until the electricity is supplied to consumers, (31) whereas the duty at issue becomes chargeable the moment the nuclear fuel is used in the reactor, that is, even before the electricity is produced. This is not merely a difference of timing, as the identity of the person liable for payment is also different. In the case of excise duty, the person liable for payment is the distributor or redistributor of the electricity, whereas in the case of the duty at issue, it is the producer. This also means that, if the electricity is exported to another Member State, the duty at issue is collected in the State of production (Germany), whereas excise duty on the electricity is collected in the State of consumption. (32)
56. Third, and lastly, supervision of payment of the duty at issue requires the person liable to complete a tax return at the time of the chargeable event. However, it may be inferred from the case-law cited above (33) that Article 1(2) of Directive 2008/118 does not allow taxes to be introduced which require operators to attend to formalities other than those laid down by EU rules relating to excise duty or value added tax.
57. I am therefore of the opinion that if the duty at issue in the main proceedings were to be regarded as an indirect tax on electricity, it would not meet the requirements set out in Article 1(2) of Directive 2008/118. However, I do not believe it can be regarded as such.
– Whether the duty at issue may be characterised as an indirect tax on electricity
58. The referring court raises the issue of whether the duty in question may be regarded as an indirect tax on electricity, on the basis that it is proportionate to the quantity of electricity produced using a given quantity of nuclear fuel. However, I do not think that proportionality of that kind is sufficient in that regard.
59. In order for a tax to be regarded as a tax on a specific product, it must be imposed on consumption of that product. This may occur either directly (34) or indirectly, by incorporation of the tax in the product price. Taxes levied at the production stage, as the duty at issue might be if it were regarded as a tax on electricity, can fall only into the second category, as they apply at a time when the taxed product does not yet exist.
60. The duty at issue in the main proceedings clearly constitutes an expense forming part of the production costs of nuclear power stations. Those costs form part of the price which those power stations charge for electricity. However, this does not seem to me to be sufficient for the duty at issue to be treated as a tax on electricity. As the Commission rightly pointed out, such reasoning would lead to all taxes and duties borne by producers of electricity being treated as indirect taxes on electricity, such as corporation tax, the basis for the assessment of which (namely taxable profit) is also proportionate, to some extent, to the amount of electricity produced. (35)
61. In order for a tax levied in advance (at the production stage) to be regarded as being imposed on the consumption of a product, the exact amount of the tax must be included in the price of each amount of the product released for consumption, so that the tax is neutral for the producer or distributor who, as the taxable person, serves only as a conduit between the consumer, who bears the economic burden of the tax, and the tax authority.
62. This does not seem to be possible, however, in the case of a tax which is levied only on some electricity producers. Electricity is a particular kind of product, which exists only in the form of voltage in the grid. Once it has been produced and has entered the grid, it is no longer possible to distinguish the electricity generated by a particular producer from that generated by another. While the prices charged by individual producers for supplying electricity to the grid may therefore differ to a certain extent, the price of its subsequent supply to consumers cannot reflect this difference. Consumers pay a single price for electricity generated by all producers. It would therefore be impossible to identify the amount of the duty at issue paid by consumers in respect of a given amount of electricity. The duty cannot therefore be characterised as a tax on electricity.
63. Finally, as regards the last issue raised in the referring court’s second question, the decisive factor is not whether it is possible in abstracto to pass the duty on to consumers (and thus characterise it as an indirect tax), but the fact that it is impossible to pass it on in the specific case of the electricity market.
64. Accordingly, the duty at issue in the main proceedings is not an indirect tax on electricity, and it is not therefore covered by Article 1(2) of Directive 2008/118. Rather, it is a tax on a product other than excise goods within the meaning of Article 1(3)(a). That provision simply requires that the levying of such a tax must not give rise to any formalities connected with the crossing of frontiers. In so far as the duty at issue does not involve any such formalities, it is not precluded by Directive 2008/118.
Answer to the second question
65. In my opinion, having regard to the considerations set out above, the second question should be answered to the effect that Directives 2003/96 and 2008/118 do not preclude a duty which is levied on nuclear fuel and which is imposed on the use of that fuel for the production of electricity.
The third question
66. By its third question, the referring court asks first, in essence, whether a person liable for payment of the levy at issue in the main proceedings could challenge its application on the ground that it constitutes State aid which is incompatible with the internal market within the meaning of Article 107(1) TFEU. It then asks whether the duty may in fact be characterised as State aid. Notwithstanding the order in which the referring court has presented its questions, I think it is appropriate to begin with this second point.
67. According to settled case-law of the Court, a tax measure may constitute State aid within the meaning of Article 107(1) TFEU. (36) This will be the case where the beneficiaries of the tax measure are granted favourable tax treatment as a result of the mitigation of burdens normally borne by the budget of an undertaking. Furthermore, the measure must be of such a kind as to favour ‘certain undertakings or the production of certain goods’ over others, which, in the light of the objective pursued by the regime in question, are in a comparable legal and factual situation. (37) Hence, in assessing such measures, among the four cumulative criteria set out in the FEU Treaty provision in question, it is that of selective advantage which is crucial.
68. According to the Court, the determination of the reference framework has a particular importance in the case of tax measures, since the very existence of an advantage may be established only when compared with ‘normal’ taxation. (38) It is therefore appropriate to investigate whether a normal system of taxation exists, under which other producers of electricity are treated favourably by comparison with nuclear power stations.
69. It is common ground that no general system under which tax is payable prior to the production of electricity exists under German law. However, in certain circumstances, the imposition of a new tax on only some of the undertakings whose situation is comparable can have the same effect as an exemption from an existing tax. (39) Is it, then, possible to conceive of a general system of taxation under which all producers of electricity are taxed in the same way on the electricity they produce? (40)
70. Electricity has the particular characteristic that it can be produced using several very different techniques: combustion of fossil fuels (coal, natural gas or oil) or their derived products, nuclear reaction, or the use of various renewable sources of energy — water, wind, solar energy, geothermal energy etc.
71. It therefore seems to me to be impossible to create a system of advance taxation which would take account of all those production processes equally. (41) In other words, the undertakings producing electricity using these different technologies are not in a comparable factual situation as regards the potential for advance payment of tax. All they have in common is their final product — electricity. As I have stated in point 64 of this Opinion, the duty at issue is not a tax, even an indirect tax, on electricity. The imposition of such a tax on electricity at the production stage would also be contrary to the combined provisions of Directives 2003/96 and 2008/118. (42)
72. The fact that there is no advance tax on the production of electricity by means other than nuclear power does not, therefore, constitute an advantage with respect to a general system of taxation, as no such system can exist. The duty at issue in the main proceedings is thus a tax of a specific kind, which may only be applied to the nuclear sector.
73. Given that such a general system under which producers of electricity are taxed in advance is not a conceivable reference framework, the fact that no such system is imposed on producers cannot be regarded as mitigating a burden normally borne by the budget of an undertaking.
74. Producers of electricity which use a source of energy other than nuclear fuel thus do not benefit, in relation to a general system, from special tax treatment which could be characterised as State aid. Consequently, it is not necessary — nor is it relevant — to consider whether the undertakings in question are in a factual and legal situation which, in the light of the objectives pursued by a system of taxation used as a reference framework, is comparable.
75. It should also be added that the various methods of producing electricity also differ in terms of their environmental costs, their effect on the labour market, the extent to which they are detrimental to human health, public security, etc. Thus, even though undertakings using these different methods are in competition with each other to a certain extent, as their product — electricity — is the same, (43) they are not in the same factual situation. Public authorities may therefore take measures which they consider appropriate in relation to one of those electricity production sectors, and this will not automatically constitute selective State aid benefiting the other sectors. (44)
76. Accordingly the third question should be answered to the effect that the fact that the duty at issue in the main proceedings is applicable only to undertakings producing electricity commercially using nuclear fuel does not constitute State aid within the meaning of Article 107(1) TFEU. It is therefore unnecessary to examine whether an undertaking could challenge such aid with a view to claiming exemption from the tax.
The fourth question
77. By its fourth question, the referring court asks whether the provisions of the EAEC Treaty preclude the duty in question, without specifying, in the wording of the question, which particular provisions are at issue. However, it is apparent from the grounds of the order for reference that the question relates specifically to Articles 93 EA, 191 EA and 192 EA.
78. On reading those grounds, it seems to me that the referring court’s doubts as to whether the duty at issue complies with those EAEC provisions are based on the fact that, under national law, the duty is regarded and classified as a tax on a product — namely nuclear fuel. However, in reality that duty, which is calculated on the basis of the quantity of nuclear fuel, is of a hybrid nature. It is levied at the time the fuel is used to produce electricity, this being the only taxed use. (45) The operator of the nuclear power station is the person liable for payment, and also bears the economic burden of the tax. At the same time, the taxed nuclear fuel is essential to the operation of nuclear power plants, as there is no alternative product. In other words the operator of a power station has the choice of either using the taxed product, or of ceasing its activity. From that point of view, the duty at issue is more akin in its effect to a tax on the economic activity of operators of nuclear power stations, than to a true tax on a product. When seen in that light, in my opinion there is less doubt as to whether the duty complies with the provisions of the EAEC Treaty cited above.
79. First, Article 93 EA prohibits all customs duties, charges having equivalent effect and quantitative restrictions on imports and exports between Member States in respect of the products listed in Annex IV to the EAEC Treaty, which include various nuclear fuels. This article is thus, broadly speaking, the equivalent of what are now Articles 30 TFEU and 34 TFEU. According to the observations of the applicant in the main proceedings, as all nuclear fuel used in Germany is imported, the duty at issue applies only to imported products, increasing the cost of using those products. It is thus a charge which is equivalent in effect to a customs duty.
80. I do not think, however, that it is useful to assess the duty at issue in the light of Article 93 EA. As I observed in point 78 above, it should be regarded as a tax on the production of electricity, and it is, at most, the cost of that activity which is increased by the duty. (46) The purpose of Article 93 EA, however, is to protect free trade in goods, not to protect the activities undertaken using those goods.
81. Furthermore, I very much doubt that it is possible to speak of genuine trade or movement in this context. Among the products governed by the EAEC Treaty, nuclear fuel (‘special fissile materials’) has a special status. Under Articles 57 EA to 59 EA, the agency created by the EAEC Treaty has a monopoly on the acquisition of such materials within the Community, and, under Article 86 EA, they remain the property of the Community. Article 87 EA provides that Member States, persons and undertakings have only a right of use and consumption.
82. Finally, as the German government stated in its observations, a tax which is manifestly of a fiscal nature and is not levied by reason of the frontiers of the Member State which introduced it being crossed, is part of a general system of internal taxation for the purposes of Article 110 TFEU, and is not a tax equivalent in effect to a customs duty. The fact that such a tax is actually imposed solely on imported products, because there is no domestic production, is not such as to justify its classification as a charge having equivalent effect, rather than a domestic tax, since it is part of a general system of internal taxation applied systematically to products in accordance with objective criteria irrespective of the origin of the products. Article 110 TFEU cannot be invoked against domestic taxes on imported products where there is no similar or competing domestic production. In particular, it does not provide a basis for censuring the excessiveness of the level of taxation which Member States might adopt for particular products, in the absence of any discriminatory or protective effect. (47)
83. The duty at issue in the main proceedings is not linked to the crossing of frontiers and applies equally to all the goods concerned, which are, as the applicant in the main proceedings has stated in its observations, all imported, as there is no domestic production. Accordingly, this duty should be regarded as a domestic duty and not as a charge equivalent in effect to a customs duty. Given its non-discriminatory nature, it cannot be considered to be contrary to Article 110 TFEU, and there is no need to analyse whether this provision is applicable within the field covered by the EAEC Treaty.
84. I am therefore of the opinion that the duty at issue is not covered by Article 93 EA.
85. Secondly, Article 191 EA provides that within the territories of the Member States, the Community enjoys the privileges and immunities set out in the Protocol on the privileges and immunities of the European Union. The referring court questions whether that article, read in conjunction with the first paragraph of Article 3 of that protocol, which exempts the EU and its assets from all direct taxes, precludes the duty at issue by reason of the rules governing the ownership of special fissile materials, mentioned in point 81 of this Opinion.
86. In my opinion, the answer is necessarily in the negative. Once again, the duty at issue applies to the activity of operators of nuclear power stations after they have acquired a right of use in respect of nuclear fuel. It is those operators who are liable for payment of the duty and they bear the economic burden, the Community not being concerned in any way.
87. At the hearing, the applicant in the main proceedings once again asserted that, under German tax law, excise goods serve as security for the payment of the tax imposed on them. Accordingly the Community, as the owner of nuclear fuel, could be called on as a guarantor for payment of the duty owed by the person liable, which would infringe Article 3 of the Protocol (No 7) on the privileges and immunities of the European Union. Even if that were the case — which the Court is not in a position to verify in these proceedings, as no details are provided in that regard either in the order for reference or in the parties’ observations — I do not think that any finding that the system for guaranteeing payment of a national tax is incompatible with EU law could lead automatically to the tax itself being regarded as invalid under EU law. At the very most, it is the guarantee that would be disregarded, where necessary, by the national courts.
88. Accordingly, Article 191 EA does not, in my opinion, preclude the duty at issue.
89. Thirdly, under the second paragraph of Article 192 EA, Member States are required to abstain from any measure which could jeopardize the attainment of the objectives of the EAEC Treaty. Among the objectives of the treaty, it is that of ensuring that all users receive a regular and equitable supply of nuclear fuels, set out in Article 2(d) EA, which the referring court mentions specifically in the order for reference.
90. However, as I have already observed, the duty at issue does not relate to the supply of nuclear fuel, but to its use. Furthermore, as the referring court itself observes, the objective set out in Article 2(d) EA is given more concrete expression in Article 52 EA. Besides establishing an agency whose principal function is precisely to ensure supply, that article prohibits all practices designed to ensure a privileged position for certain users. Plainly, the duty at issue does not have that effect.
91. More generally, Article 1 EA assigns to the Community the general task of creating the conditions necessary for the speedy establishment and growth of nuclear industries. The steps to be taken in carrying out that task are set out in Article 2 EA. Nowhere does the EAEC Treaty require Member States to introduce or develop nuclear energy as such, still less nuclear energy exempt from all taxes.
92. I therefore consider that the provisions of the EAEC Treaty do not preclude a tax on nuclear fuel, imposed on the use of such fuel for the purposes of producing electricity.
Conclusion
93. In the light of the above, I propose that the Court should answer the Finanzgericht Hamburg’s questions as follows:
(1) A national court may make a reference for a preliminary ruling under Article 267 TFEU notwithstanding the fact that there are ongoing national proceedings for review of the constitutionality of the provisions of national law which form the legal basis of the individual measure at issue in the main proceedings.
(2) Neither Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity, nor Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for excise duty and repealing Directive 92/12/EEC, preclude a duty which is levied on nuclear fuel and which is imposed on the use of that fuel for production of electricity.
(3) The fact that such a duty is applicable only to undertakings producing electricity commercially using nuclear fuel does not constitute State aid within the meaning of Article 107(1) TFEU. It is therefore unnecessary to consider whether an undertaking could challenge such aid with a view to claiming exemption from the tax.
(4) The provisions of the EAEC Treaty do not preclude such a duty.