Portugal, Constitutional Court, 711/2020, 9th December 2020

Member State
Portugal
Topic
Fundamental Rights
Sector
Use of the Preliminary Reference Procedure
Deciding Court Original Language
Tribunal Constitucional
Deciding Court English translation
Constitutional Court
Registration N
711/2020
Date Decision
9th November 2020
ECLI (if available)
N/A
National Follow Up Of (when relevant)
N/A
EU legal sources and CJEU jurisprudence

Article 110 of the Treaty on the Functioning of the European Union.

Judgment of the ECJ of 9 March 1995 in Case C-345/93, Nunes Tadeu, EU:C:2001:109; Judgement of 22 February 2001, in Case C-393/98, Gomes Valente, EU:C:2001:109.

ECtHR Jurisprudence
N/A
Subject Matter
Fundamental Rights and the Use of the Preliminary Reference Procedure
Legal issue(s)
Whether an article of Portugal's Vehicle Tax Code, when interpreted in a certain way, violates Article 110 of the Treaty on the Functioning of the European Union (TFEU).
Request for expedited/PPU procedures
NO
Interim Relief
N/A
National Law Sources
Portuguese Constitution; Law No. 22-/2007, of 29 June («Portuguese Vehicle Tax Code»)
Facts of the case
A limited liability company wanted the Portuguese Tax Authority (AT) to apply a reduction in vehicle tax provided for in Article 11 of the Portuguese Vehicle Tax Code.

Failing to do so, it requested the constitution of an arbitral tribunal within the scope of the Administrative Arbitration Centre (CAAD). This court ruled in its favour, disapplying the norm in Article 11 of the Code on the grounds that it violated the Treaty on the Functioning of the European Union (TFEU). However, the Tax Authority (AT) appealed this decision to the Constitutional Court.

Since the system for reviewing constitutionality in Portugal is normative in nature, the AT argued that the norm that had been disapplied by the CAAD, with the meaning it gave it, was unconstitutional. That meaning was as follows: Article 11 of the Code, by not providing for a reduction in the environmental component of vehicle tax when calculating the tax levied on used vehicles acquired in other Member States that takes account of their depreciation, allowing the amount of tax in question to be higher than the amount of vehicle tax calculated on equivalent national used vehicles, was unconstitutional. 

For the applicant, this interpretation is incorrect: for the applicant, the aim of the scheme is to burden taxpayers according to the costs caused to the environment, based on the polluter pays principle, leading them to opt for vehicles with lower carbon dioxide emissions. If this is not the case, it is not only the fundamental right to protect the environment, provided for in Article 66(2) of the Portuguese Constitution, that is being violated, but also Articles 110 and 191 of the TFEU, which, according to the applicant, must be interpreted together.
Reasoning (role of the Charter or other EU, ECHR related legal basis)
In view of the above, the Constitutional Court has decided to refer a question to the Court of Justice for a preliminary ruling under Article 267 TFEU to the following effect: ‘[w]hether Article 110 TFEU, alone or in conjunction with Article 191 TFEU, in particular Article 191(2) thereof, may be interpreted as not precluding a rule of national law which omits the environmental component in the application of reductions linked to the average commercial depreciation of vehicles on the national market to the tax levied on used vehicles bearing a national market. Is Article 110 TFEU, alone or in conjunction with Article 191 TFEU, and in particular Article 191(2) thereof, to be interpreted as not precluding a rule of national law which omits the environmental component in the application of reductions linked to the average commercial depreciation of vehicles on the national market to the tax levied on used vehicles bearing definitive Community licence plates granted by other Member States of the European Union, allowing the value thus calculated to be higher than that for equivalent national used vehicles?’

This is a very important decision, as this is the first time that the Portuguese Constitutional Court has referred a question to the Court of Justice of the European Union for a preliminary ruling.
Relation of the case to the EU Charter
N/A
Relation between the EU Charter and ECHR
N/A
Use of Judicial Interaction technique(s)
This is, of course, a vertical judicial interaction, in that the Constitutional Court, wanting to know whether a certain Portuguese rule complies with European Union law, asks this question to the exclusive holder of this jurisdiction: the Court of Justice of the European Union.
Horizontal Judicial Interaction patterns (Internal – with other national courts, and external – with foreign courts)
N/A
Vertical Judicial Interaction patterns (Internal – with other superior national courts, and external – with European supranational courts)
N/A
Strategic use of judicial interaction technique (purpose aimed by the national court)
The Constitutional Court sought to interpret national legislation in accordance with the European Union Law.
Impact on Legislation / Policy
Portuguese legislation was amended accordingly from the moment it was declared incompatible with European Union law.

However, and curiously, this incompatibility was not declared in response to the preliminary question raised, but by virtue of an infringement procedure brought against Portugal. 

In its judgement on that case - Judgement of 02/09/2021, in case C-169/20 - the Court stated the following:

«45 On the other hand, the Court of Justice has also held that the objective of protecting the environment could be achieved in a more complete and coherent manner by levying an annual tax on any vehicle entering into circulation in a Member State, which would not benefit the national market for used vehicles to the detriment of the putting into circulation of used vehicles imported from other Member States and would, moreover, be in accordance with the polluter pays principle (see, to that effect, judgment of 7 April 2011, Tatu, C-402/09, EU:C:2011:219, paragraph 60).

46 On the other hand, a tax calculated according to the pollution potential of a used vehicle, which, like the tax in question, is only levied in full when a used vehicle from another Member State is imported and put into circulation, while the purchaser of such a vehicle already on the market in the Member State concerned only has to bear the amount of the residual tax incorporated into the commercial value of the vehicle he acquires, is contrary to Article 110 TFEU.»
Notes on the national implementation of the preliminary ruling by the referring court
Following a communication received from the Court of Justice of the European Union concerning the judgement on the infringement procedure, the President of the Constitutional Court, referring to the question referred for a preliminary ruling, addressed the following communication to the CJEU:

‘[...]

[In the light of the decision of the Court of Justice in its judgement of 02/09/2021 in Case C-169/20, and in particular of paragraphs 42/46 thereof, the question raised is considered to have been clarified. Accordingly, the referral determined by Judgement 711/2020 has lost its usefulness and is therefore no longer maintained.]

Finally, and also following the judgement handed down in the infringement proceeding, the Constitutional Court, in Judgement No. 418/2023 - therefore, three years after the judgement raising the preliminary question and two years after the ECJ judgement - came down in favour of CAAD, confirming the decision that had been appealed.
Did the national court quote case law of the CJEU/ECtHR (in particular cases not already referred to by the CJEU in its decision) or the Explanations?

Yes. The Constitutional Court quoted case law from the CJEU that was not mentioned in Judgement of 02/09/2021 (case C-169/20), namely: Judgment of the ECJ of 9 March 1995 in Case C-345/93, Nunes Tadeu, EU:C:2001:109; and Judgement of 22 February 2001, in Case C-393/98, Gomes Valente, EU:C:2001:109.

Did the national court quote soft law instruments, such as GRECO Reports, Venice Commission, CEPEJ Reports, or CCEJ Reports?
N/A
Did the national court take into account national case law on fundamental rights?

On the relationship between European Union law and Portuguese law, namely by reference to the Portuguese Constitution, the Constitutional Court quoted previous case law on the matter, namely Judgement No. 422/2020 of the same Constitutional Court.

If the court that issued the preliminary reference is not a last instance court, and the “follow up” was appealed before a higher court, include the information

N/A

Was there a consensus among national courts on how to implement the CJEU's preliminary ruling; and were there divergences between the judiciary and other state powers regarding the implementation of the preliminary ruling?

N/A

Impact on national case law from the same Member State or other Member States
N/A
Connected national caselaw / templates
N/A
Other
N/A
Author
Afonso Brás, Lisbon Public Law Research Centre
 
Project implemented with financial support of the Fundamental Rights & Citizenship Programme of the European Union
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