On Dec 3, 2020, the ECJ issues its decision in the case C-62/19 (Star Taxi App SRL). Whilst this is not a VAT case, you may wonder the impact the classification of a Taxi app has for VAT purposes.
A service consisting of directly putting taxi users in contact with taxi drivers by means of an electronic application constitutes an information society service within the meaning of the Directive on electronic commerce. This service is not an integral part of a package of services, the main element of which is a transport service, so that the service in question cannot be classified as a transport service. Any licensing regimes should be applied to an information society service only under limited conditions. That is the answer of the EU Court to questions from a Romanian judge.
Article in the EU VAT Directive
Not a VAT case
Facts
Star Taxi App is a company based in Bucharest (Romania) that operates a smartphone app of the same name that connects users of taxi services directly with taxi drivers. This app can perform a search for taxi rides and present users with a list of taxi drivers available for a ride. The customer / user is then free to choose a driver from that list. Star Taxi App does not pass on the orders to the taxi drivers and does not determine the fare. Purchased rides are paid directly by the customer / user to the driver at the end.
On December 19, 2017, the Bucharest City Council adopted a decision (hereinafter: the decision) extending the requirement to obtain a prior authorization for so-called dispatching activities to administrators of software applications such as Star Taxi App. A dispatching activity is the activity associated with taxi transport in which taxi orders from customers are accepted by telephone or other channels and transmitted to the taxi driver via a radio transmitter receiver. Star Taxi has failed to apply for such a permit and is subsequently fined for violation of this permit requirement.
Star Taxi App argued that its activity is an “information society service”, which under the Directive 2000/31 / EC on certain legal aspects of information society services, in particular electronic commerce apply the principle that service may be made dependent on prior authorization. She therefore applied for annulment of the decision in the court of first instance in Bucharest, Romania.
The Romanian court asks the EU Court whether a service consisting of directly putting taxi users in contact with taxi drivers by means of an electronic application is an ‘information society service’ and, if so, whether a (licensing) scheme such as the Romanian decision affecting such services is in accordance with Union law.
Questions
Are the provisions of Directive 98/34/EC 1 (Article 1(2)), as amended by Directive 98/48/EC, 2 and of Directive 2000/31/EC 3 (Article 2(a)), which state that an Information Society service is a ‘service … provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services’, to be interpreted as meaning that an activity such as that carried on by Star Taxi App SRL (namely a service consisting in putting taxi passengers directly in touch, via an electronic application, with taxi drivers) must be regarded specifically as an Information Society and collaborative economy service (bearing in mind that Star Taxi App SRL does not fulfil the criteria for being a transport undertaking considered by the Court of Justice of the European Union in paragraph 39 of its judgment in Case C-434/15 with reference to Uber)?
In the event that [the application operated by] Star Taxi App SRL is to be regarded as an Information Society service, do the provisions of Article 4 of Directive 2000/31/EC, of Articles 9, 10 and 16 of Directive 2006/123/EC 4 and of Article 56 TFEU entail the application of the principle of the freedom to provide services to the activity carried on by Star Taxi App SRL? If the answer to that question is in the affirmative, do those provisions preclude rules such as those set out in Articles I, II, III, IV and V of Hotărârea Consiliului General al Municipiului București nr. 626/19.12.2017 (Decision No 626 of the General Council of the Municipality of Bucharest of 19 December 2017) (‘CGMB Decision No 626/2017’) amending and supplementing CGMB Decision No 178/2008 approving the framework regulation for the organisation and operation of local public taxi services, the regulations governing that service and the concession agreement for the delegated management of that service?
In the event that Directive 2000/31/EC applies to the service provided by Star Taxi App SRL, are restrictions imposed by a Member State on the freedom to provide Information Society services which make the provision of such services conditional on the possession of an authorisation or licence valid measures derogating from Article 3(2) of Directive 2000/31/EC in accordance with Article 3(4) of that directive?
Do the provisions of Article 5 of Directive (EU) 2015/1535 5 preclude the adoption, without first notifying the European Commission, of regulations such as those set out in Articles I, II, III, IV and V of CGMB Decision No 626/2017 amending and supplementing CGMB Decision No 178/2008 approving the framework regulation for the organisation and operation of local public taxi services, the regulations governing that service and the concession agreement for the delegated management of that service?
AG Opinion
(1) Article 2(a) of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’), read in conjunction with Article 1(1)(b) of Directive (EU) 2015/1535 of the European Parliament and of the Council of 9 September 2015 laying down a procedure for the provision of information in the field of technical regulations and of rules on Information Society services, must be interpreted as meaning that a service consisting in putting taxi passengers directly in touch, via an electronic application, with taxi drivers constitutes an Information Society service where that service is not inherently linked to the taxi transport service so that it does not form an integral part of the taxi transport service.
(2) Article 4 of Directive 2000/31 must be interpreted as not precluding the application to an Information Society service provider of an authorisation scheme applicable to providers of economically equivalent services that are not Information Society services.
Articles 9 and 10 of Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market must be interpreted as precluding the application of such an authorisation scheme unless it complies with the criteria laid down in those articles, which is a matter for the national court to determine. An authorisation scheme does not comply with the criteria laid down in Article 10 of Directive 2006/123 when the grant of authorisation is subject to requirements that are technologically unsuited to the applicant’s intended service.
Article 3 of Directive 2000/31, Article 16 of Directive 2006/123 and Article 56 TFEU are not applicable in the situation of a provider wishing to provide Information Society services in the Member State in which he or she is established.
(3) The Hotărârea Consiliului General al Municipiului București nr. 626/2017 pentru modificarea și completarea Hotărârii Consiliului General al Municipiului București nr. 178/2008 privind aprobarea Regulamentului-cadru, a Caietului de sarcini și a contractului de atribuire în gestiune delegată pentru organizarea și executarea serviciului public de transport local în regim de taxi (Decision No 626/2017 of 19 December 2017 of Bucharest Municipal Council amending and supplementing Decision No 178/2008 of 21 April 2008 approving the framework regulation, contract documents and concession agreement for the delegated management of the organisation and provision of local public taxi services) does not constitute a technical regulation within the meaning of Article 1(1)(f) of Directive 2015/1535.
Decision
1) Article 2 (a) of Directive 2000/31 / EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, and in particular of commerce electronics, in the internal market ( “the e-commerce Directive”), which refers to Article 1 st, paragraph 1 (b), of Directive (EU) 2015/1535 of the European Parliament and of the Council of 9 September 2015 providing for an information procedure in the field of technical regulations and rules relating to company services information, must be interpreted as an “information society service”, within the meaning of these provisions, an intermediation service consisting, by means of an application for a smartphone, of in relation, for remuneration, to people who wish to make an urban trip and to authorized taxi drivers, for whom the provider of the said service has entered into contracts for the provision of services with these drivers for this purpose in return for the payment of a monthly subscription , but do not pass the commands on to them,does not set the price of the trip or ensure its collection from these people, who pay it directly to the taxi driver, and does not exercise more control over the quality of the vehicles and their drivers as well as on the behavior of the latter.
2) Article 1 st , paragraph 1, f) of the 2015/1535 Directive must be interpreted as meaning that not a “technical regulation” within the meaning of that provision, regulation of a local authority , which subordinates the provision of an intermediation service, the purpose of which, by means of an application for a smartphone, is to put in contact, for remuneration, people who wish to make an urban trip and authorized taxi drivers, and subject to the qualification of “the service of society information” within the meaning of Article 1 st(1) (b) of Directive 2015/1535, to obtaining a prior authorization to which other providers of taxi reservation services are already subject.
3) Article 56 TFEU, Article 3 (2) and (4) of Directive 2000/31 and Article 16 of Directive 2006/123 / EC of the European Parliament and of the Council of 12 December 2006, relating to services in the internal market, must be interpreted as meaning that they do not apply to a dispute in which all the relevant elements are confined within a single Member State.
Article 4 of Directive 2000/31 must be interpreted as meaning that it does not apply to a regulation of a Member State which makes the provision of an intermediation service subject to, through of an application for smart phone, to put in contact, against remuneration, people who wish to make an urban trip and authorized taxi drivers, and falling under the qualification of “service of the information society”, within the meaning Article 2 a) of Directive 2000/31, which refers to Article 1 st , paragraph 1 b) of Directive 2015/1535, to obtain prior authorization for which are already subject to other taxi reservation service providers.
Articles 9 and 10 of Directive 2006/123 must be interpreted in the sense that they preclude a regulation of a Member State which makes the provision of an intermediation service subject to, by means of ” an application for smart phone, to put in contact, against remuneration, people who wish to make an urban trip and authorized taxi drivers, to obtain an authorization prior to the exercise of their activity, when the conditions to obtain that authorization do not meet the requirements provided for in those articles, in particular in that they impose technical requirements that are inappropriate for the service concerned, which is for the referring court to verify.
First of all, the Court notes that the service offered by Star Taxi App falls within the concept of ‘information society service’ as referred to in the e-commerce Directive. Because this service is provided for remuneration, remotely, electronically and at the individual request of a customer of services. In this context, it is irrelevant that such a service is provided free of charge to the person wishing to travel or take a city route.
However, according to previous case law of the EU Court , a service which has the characteristics of an ‘information society service’ may not be regarded as such. This is particularly the case when it concerns a mediation service which is an integral part of a package of services, the main element of which is a service falling under another legal classification.
In this regard, the EU Court notes that the service provided by Star Taxi App is complementary to an already existing and organized taxi transport service. In addition, the service provider does not select the taxi drivers, fix or collect the fare, nor does it monitor the quality of the vehicles and their drivers or the behavior of those drivers. The EU Court therefore concludes that the present Star Taxi App service cannot be considered to be an integral part of a service package, the main element of which is a transport service. This service is thus an Information Society service, covered by the Directive on electronic commerce.
The EU Court then assesses whether a (licensing) scheme such as the present Romanian municipal council decision to extend the licensing obligation to dispatch activities is in accordance with EU law. In this regard, the Court notes, first, that the decision is not a ‘technical regulation’ within the meaning of Directive (EU) 2015/1535concerning an information procedure in the field of technical regulations and rules on information society services as it does not specifically relate to information society services and applies without distinction to all types of dispatching services, whether they are provided by telephone or by means of a software application conducted. The Member State concerned is therefore under no obligation to notify the Commission of its decision under the Directive.
Subsequently, the EU Court ruled that Directive 2000/31 / EC on electronic commercedoes not oppose the application of a licensing regime to a provider of an information society service that already applies to providers of economically equivalent services that do not constitute information society services.
Third, the EU Court notes that Directive 2006/123 / EC on services in the internal market only precludes the application of such a licensing system if that system does not meet the requirements of that directive, which the referring court should consider to go.
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