On February 25 , 2021, the ECJ issued its decsion in the case C-712/19 Novo Banco S.A. v Junta de Andalucía, on the question whether Spanish IDECA tax is compatible with the VAT directive
Article in the EU VAT Directive
135(1)(d) and 401 of the EU VAT Directive 2006/112/EU
Without prejudice to other provisions of Community law, this Directive shall not prevent a Member State from maintaining or introducing taxes on insurance contracts, taxes on betting and gambling, excise duties, stamp duties or, more generally, any taxes, duties or charges which cannot be characterised as turnover taxes, provided that the collecting of those taxes, duties or charges does not give rise, in trade between Member States, to formalities connected with the crossing of frontiers.
1. Member States shall exempt the following transactions:
(d) transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection;
- The present case is a dispute between Novo Banco SA (claimant) and the Junta de Andalucía (defendant).
- Plaintiff is of the opinion that the defendant’s IDECA tax is not compatible with EU law. This tax provides tax benefits to banks if their head office is located in the autonomous region of Andalusia, or depending on the number of bank branches that the banks have established in that autonomous region or on the loans and investments that these banks make for projects in this autonomous region.
- By the first question, the referring court asks whether the IDECA tax is compatible with the freedom of establishment, the freedom to provide services and the free movement of capital. He has doubts about this, because the IDECA tax seems to amount to de facto taxing banks that do not have their headquarters in the autonomous region of Andalusia.
- By the second question, the referring court asks the Court a question concerning the nature of the IDECA tax. In particular, he wishes to know whether this tax should be classified as an indirect tax. And if so, whether this is compatible with the VAT Directive, taking into account the provisions of Articles 401 and 135 (1) (d) of that Directive.
Must Articles 49, 56 and 63 TFEU, which guarantee the freedom of establishment, the freedom to provide services and the free movement of capital, respectively, be interpreted as precluding, inter alia, a system of deductions like that laid down for the IDECA in points 2 and 3 of Article 6(7) of Andalusian Law 11/2010 of 3 December on fiscal measures for the reduction of the government deficit and for sustainability?
Must the tax on customer deposits in credit institutions in Andalusia (IDECA) be categorised as an indirect tax despite the fact that Article 6(2) of Andalusian Law 11/2010 classifies it as a direct tax, and, in that case, are its existence and chargeability compatible with VAT, in the light of the provisions of Articles 401 and 135(1)(d) of the VAT Directive.
1) The freedom of establishment enshrined in Article 49 TFEU must be interpreted as meaning that, in the case of deductions applied to the gross amount of a tax on deposits made by customers of credit institutions having their head office or agencies located in the territory of a region of a Member State,
– it opposes a deduction of 200,000 euros applied to the gross amount of this tax in favor of credit institutions whose head office is located in the territory of this region;
– it does not oppose deductions applied to the gross amount of said tax, of 5,000 euros per agency established in the territory of the said region, the latter amount being increased to 7,500 euros for any agency located in a municipality less than of 2 000 inhabitants, unless those deductions do in fact lead to discrimination based on the location of the head office of the credit institutions concerned which is not justified, which is for the referring court to verify.
Article 63 (1) TFEU must be interpreted as meaning that, in the case of a tax on deposits made by customers of credit institutions having their head office or branches located in the territory of a region of a Member State, it is opposed to deductions from the gross amount of that tax equal to credits, loans and investments intended for projects carried out in that region, provided that these deductions pursue an objective of a purely economic nature.
2) Article 401 of Council Directive 2006/112 / EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that it does not preclude legislation national instituting a tax due by credit institutions due to the holding of customer deposits, the tax base of which corresponds to the arithmetic average of the quarterly balance of these deposits and which cannot be passed on by the taxpayer to third parties.