ADDITIONAL EXCISE TAX ON ELECTRICITY: ACCORDING TO THE CJEU, ITALIAN LEGISLATION INFRINGES THE PRINCIPLE OF EFFECTIVENESS BY NOT ALLOWING FINAL CONSUMERS TO DIRECTLY ASK TO THE STATE THE REIMBURSEMENT OF THE SUMS UNDULY PAID 

 

Court of Justice of the European Union, Fifth Chamber, judgment of April 11, 2024, no. 316/22

 

In this preliminary ruling concening the correct interpretation of the third paragraph of Article 288 TFEU and of the principle of effectiveness, the Court of Justice of the European Union - Fifth Chamber– with judgment no. 316/22 of April 11, 2024, was referred to in order to assess whether or not an Italian Court is required to disapply, in a dispute between private parties, a provision of national law that is contrary to a clear, precise, and unconditional provision of a EU directive incorrectly transposed by the Italian Republic. 

 

As it is widely know, in the period between the deadline allowed for Member States to comply with Directive 2008/118 and the point when the Italian Legislator ordered that the additional tax on electricity excise duties would cease to apply, energy companies continued to unduly collect from their final consumers the additional excise tax provided for by the Legislative Decree of November 28th of 1988. 

 

This resulted in a high number of lawsuits filed for the recovery - under Article 2033 of the Civil Code - of the sums unduly paid by final consumers to their respective suppliers in respect of that tax for the period between 2010 and 2011. 

 

Regarding these disputes, the Italian lower courts have taken two different approaches, concerning, specifically, the direct horizontal and vertical effectiveness of directives not transposed or incorrectly transposed by the Member States. 

 

According to one line of case-law, such claims shall be rejected on the assumption that their acceptance would imply that, in a dispute between private parties, a directive not yet transposed by the Legislator is capable of producing a «horizontal direct effect», which is consistently plecluded by the CJEU.

 

As a matter of fact, «the disapplication of national provisions would have the effect of creating a new obligation on private parties: that of refunding to the final user sums collected as illegal taxes» given the principle that «an untransposed directive cannot create obligations for an individual and cannot therefore be invoked against one».

 

On the other hand, according to the second line of case-law, such claims shall be upheld as the obligation to interpret domestic law in light of the wording and purpose of that directive would allow to consider that the principle of direct effect only vertically of the directives does not prevent the determination of the undue nature of a payment in a horizontal “passing on” relationship.

 

In the instant matter, the Court of first instance (District Court, Como), recognizing that two disputes before it raised similar legal issues those of other disputes concerning the fate of the aforementioned refund claims, decided to stay the proceedings and to refer to the Court of Justice two main questions for a preliminary ruling, specifically:

 

 

Regarding the first question, notwithstanding the principle of the exclusion of the horizontal direct effect of EU directives, the CJEU clarified that a national court shall disapply incompatible national disposition, thus allowing a private individual to assert the illegitimacy of a tax collected by the supplier in order to obtain reimbursement of the additional economic burden unduly borne, if national law allows for such a possibility.

 

In this regard, the Court of Justice also recalled the principle already established by its case law, according to which the unconditional and sufficiently precise provisions of a directive can be invoked by individuals directly against “private law entities” subject to the authority or control of the State or which have powers exceeding those provided for by the rules applicable to relationships between private parties.

 

Regarding the second question, the Court of Justice, in light of the characteristics of national legislation, final consumers are legally prevented from asserting against electricity suppliers the illegitimacy of the additional excise tax and, consequently, from obtaining reimbursement of the additional economic burden resulting from the application of a tax contrary to the clear, precise, and unconditional provisions of an EU directive.

 

As a matter of fact, upon the undue nature of these payments, domestic law allows final consumers to act exclusively against their respective suppliers, by bringing a civil action for the recovery of the undue amounts. 

 

On the other hand, the illegitimacy of the tax collected cannot be validly invoked due to the principle of exclusion of the horizontal effect of EU directives, which prevents consumers from basing the existence of an individual right on the directive and from asserting it against other private parties.

 

In this sense, according to the CJEU, Italian legislation infringes the principle of effectiveness by not allowing final consumers to directly act against the Member State for the reimbursement of the undue economic burden they have borne due to the collection, made by a supplier, of a tax based on a provision of national law incompatible with EU law.

 

In conclusion, in the instant matter, the Court of Justice have provided clarifications that concerned the interpretation of Article 288, third paragraph, TFEU and the principle of effectiveness. The decision of the CJEU will have relevant practical implications in light of the longstanding contrast in Italian case law regarding the admissibility of refund claims concerning amounts unduly paid as additional excise tax.

 

On one hand, Article 288 TFEU must be interpreted as precluding the disapplication by a national court, in a dispute between private parties, of a provision of national law establishing an indirect tax contrary to a clear, precise and unconditional provision of a directive that has not been transposed or has been incorrectly transposed, unless national law provides otherwise or unless the entity against which that inconsistency of the aforementioned tax is relied upon is subject to the authority or control of the State or possesses special powers beyond those which result from the normal rules applicable to relations between private parties.

 

On the other hand, the principle of effectiveness must be interpreted as precluding national legislation that does not allow a final consumer to seek from directly from the Member State reimbursement for the undue economic burden unduly borne as a consequence of the application of the additional tax that is contrary to a clear, precise, and unconditional provision of a directive not transposed or incorrectly transposed.

 

Author: Avv. Daniela di Palma and Dott.ssa Francesca Rosa