On November 15, 2011, the ECJ issued its decision in the case C-539/09 (Commission v Germany).
Context: Failure of a Member State to fulfil obligations – Court of Auditors’ declared intention to carry out audits in a Member State – Member State’s objection – Powers of the Court of Auditors – Article 248 EC – Audit of the cooperation of the national administrative authorities in the field of value added tax – Regulation (EC) No 1798/2003 – Community revenue – Own resources accruing from value added tax
Facts & Questions
- By letter of 26 June 2006, the Court of Auditors informed the German Federal Court of Auditors of its intention to come to Germany for the period from 10 to 13 October 2006 in order to carry out, pursuant to Article 248 EC, an audit relating to the own resources accruing from VAT (‘VAT resources’) and concerning the cooperation between the administrative authorities of the Member States in the field of VAT in accordance with Regulation No 1798/2003. The stated purpose was to check whether the Federal Republic of Germany had established the administrative and organisational structures necessary for such administrative cooperation and, moreover, to examine how that cooperation was put into practice in cases of requests for information under Article 5 of that regulation.
- That audit was to be carried out primarily at the central liaison office and, if appropriate, at the other national departments involved in administrative cooperation. In the same letter, the Court of Auditors asked the German Federal Court of Auditors to indicate whether it intended to take part in that audit in accordance with Article 248(3) EC.
- By letter of 7 September 2006, the Court of Auditors sent the German Federal Court of Auditors a document containing further details of the proposed audit mission schedule and requested certain information to be sent in advance. The German Federal Court of Auditors was requested to forward that schedule and the request for prior information to the central liaison office.
- According to that schedule, the audit mission was to cover the organisation, equipment and working methods of the central liaison office, the submission or receipt of requests for information and their processing, the exchange of information without prior request and the storage and exchange of information on intra-Community transactions by means of the electronic VAT Information Exchange System database (‘VIES’), referred to in Chapter V of Regulation No 1798/2003. The schedule also provided for examination of the legal obstacles hampering administrative cooperation and of the legal measures adopted to overcome them, as well as of any other measures adopted to improve such cooperation and to prevent fraud, such as coordination with anti-fraud authorities, bilateral agreements on exchange of information, cancellation of VAT numbers, the presence of officials of the requesting authority during audits carried out by the requested authority and the simultaneous audits in different Member States provided for by Articles 11 and 12 of Regulation No 1798/2003, or recourse to the possibilities available under the Fiscalis programme (see Decision No 2235/2002/EC of the European Parliament and of the Council of 3 December 2002 adopting a Community programme to improve the operation of taxation systems in the internal market (Fiscalis programme 2003-2007) (OJ 2002 L 341, p. 1)).
- By letter of 18 September 2006, the German Federal Court of Auditors stated that it would take part in that audit.
- In view of the failure of the central liaison office to send the documents requested for the purposes of the audit to the Court of Auditors and to confirm the proposed date, the Court of Auditors informed the German Federal Court of Auditors, by letter of 5 October 2006, that the mission would be postponed to the period from 14 to 17 November 2006.
- The central liaison office having again failed to confirm the new dates, the Court of Auditors proposed, by letter of 9 November 2006 to the German Federal Ministry of Finance, that the planned audit be carried out in the period from 4 to 7 December 2006. The Court of Auditors stated in its letter that such audits had already taken place in seven other Member States and emphasised that the purpose was not to check taxable transactions, including the VAT assessment, but to ensure that requests for information sent and/or received in the context of VIES were being processed efficiently and correctly.
- By letter of 4 December 2006, the Federal Ministry of Finance objected to the conduct of the audit in Germany, stating that it had no valid legal basis.
- Having been informed by the Court of Auditors of that refusal, and taking the view that the latter was entitled to carry out the proposed audit and that the Federal Republic of Germany had failed to comply with its obligations by objecting to the conduct of the audit in Germany, the Commission sent a letter of formal notice to the Federal Republic of Germany on 23 September 2008 inviting it, in accordance with Article 226 EC, to submit its observations. The Federal Republic of Germany replied to that request by letter of 23 December 2008.
- On 23 March 2009, the Commission issued a reasoned opinion requesting that the Federal Republic of Germany take the measures necessary to comply with its obligations within two months of its receipt.
- As it was not satisfied with the response which the Federal Republic of Germany sent on 22 May 2009, the Commission decided to bring the present action.
AG Opinion
(1) declare that, by refusing to permit the Court of Auditors to carry out audits in Germany concerning the administrative cooperation in the field of value added tax which is provided for under Council Regulation (EC) No 1798/2003 of 7 October 2003 on administrative cooperation in the field of value added tax and repealing Regulation (EEC) No 218/92 and to assist it in this regard, the Federal Republic of Germany has failed to fulfil its obligations under Article 10 EC in conjunction with Article 248(1) and (2) EC, Article 248(3) EC, and Article 140(2) of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities;
(2) dismiss the action as to the remainder;
(3) order the Federal Republic of Germany to pay the costs;
(4) order the European Parliament and the European Court of Auditors to bear their own costs.
Decision
1. Declares that, by objecting to the conduct by the Court of Auditors of the European Union of audits in Germany concerning administrative cooperation under Council Regulation (EC) No 1798/2003 of 7 October 2003 on administrative cooperation in the field of value added tax and the provisions for its implementation, the Federal Republic of Germany has failed to fulfil its obligations under Article 248(1) to (3) EC;
2. Dismisses the action as to the remainder;
Summary
By opposing the Court of Auditors of the European Union in Germany to carry out audits concerning administrative cooperation pursuant to Council Regulation (EC) No 1798/2003 of 7 October 2003 on administrative cooperation in the field of VAT and of its implementing rules, the Federal Republic of Germany has failed to fulfill its obligations under Article 248(1) to (3) EC.
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