On September 8, 2016 on the website of the Court of Justice of the European Union (CJEU) the opinion of Advocate General Szpunar in Case C‑344/15 National Roads Authority versus the Revenue Commissioners (ECLI:EU:C:2016:661) was published.
If a body governed by public law carries on an activity such as providing access to a road on payment of a toll and if in the Member State there are private bodies who collect tolls on different toll roads pursuant to an agreement with the public body concerned under national statutory provisions, is the second indent of Article 13[1] of Council Directive 2006/112/EC to be interpreted as meaning that the public body concerned must be deemed to be in competition with the private operators concerned such that to treat the public body as a non-taxable person is deemed to lead to a significant distortion of competition notwithstanding the facts that (a) there is not and cannot be any actual competition between the public body and the private operators concerned and (b) there is no evidence that there is any realistic possibility that any private operator could enter the market to build and operate a toll road which would compete with the toll road operated by the public body?
Facts, proceedings and questions referred for a preliminary ruling
· The majority of national toll roads in Ireland are managed by private bodies on the basis of agreements concluded with the NRA. However, two of those roads, namely the Westlink Toll Road (part of the Dublin ring road) and the Dublin Tunnel (a tunnel linking Dublin with the port), are managed by the NRA and it is the NRA that collects the relevant tolls. It is worth noting that until August 2008 the Westlink Toll Road was also managed by a private body under an agreement with the NRA. However, that body was unwilling to bear the cost of changing the toll collection system, as a result of which the NRA terminated the agreement with it and assumed direct management of the road.
· The tolls collected from users on roads managed both by private bodies and by the NRA include VAT. However, the NRA applied to the Revenue Commissioners (the competent tax authority) for repayment of that tax for the July and August 2010 period in respect of tolls on the two national roads it manages directly, arguing that, pursuant to the provisions transposing Article 13(1) of Directive 2006/112, as a body governed by public law it is not a taxable person for VAT purposes. When the Revenue Commissioners refused to repay the tax, the NRA appealed against that decision to the referring tribunal.
· Having doubts as to the correct interpretation of the provisions of Directive 2006/112, that tribunal decided to stay the proceedings and to request a preliminary ruling from the Court on the following questions:
1) If a body governed by public law carries on an activity such as providing access to a road on payment of a toll and if in the Member State there are private bodies who collect tolls on different toll roads pursuant to an agreement with the public body concerned under national statutory provisions, is the second indent of Article 13[1] of Council Directive 2006/112/EC to be interpreted as meaning that the public body concerned must be deemed to be in competition with the private operators concerned such that to treat the public body as a non-taxable person is deemed to lead to a significant distortion of competition notwithstanding the facts that (a) there is not and cannot be any actual competition between the public body and the private operators concerned and (b) there is no evidence that there is any realistic possibility that any private operator could enter the market to build and operate a toll road which would compete with the toll road operated by the public body?
2) If there is no presumption, what exercise should be conducted to determine whether there is significant distortion of competition within the meaning of the second indent of Article 13[1] of Council Directive 2006/112/EC?
· The order for reference was received by the Court on July 6, 2015. Written observations were submitted by the parties to the main proceedings and the European Commission. They and also the German and Polish Governments were represented at the hearing on May 25, 2016.
Conclusion
The Advocate General proposes that the Court reply as follows to the questions referred by the Appeal Commissioners:
The second subparagraph of Article 13(1) of Council Directive 2006/112/EEC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that where, under the national law of a Member State, road tolls may be and actually are collected both by bodies governed by public law and by private bodies, the bodies governed by public law must be treated as taxable persons for VAT purposes, on account of significant distortions of competition, even if there is no real possibility of direct competition between roads on which tolls are collected by a body governed by public law and those on which they are collected by a private body.
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