Lady & Kid A/S and Others v Skatteministeriet.

• Jurisdiction: European Union
• ECLI: ECLI:EU:C:2011:540
• Date: 06 September 2011
• Celex Number: 62009CJ0398
• Court: Court of Justice (European Union)
• Procedure Type: Reference for a preliminary ruling
• Docket Number: C-398/09

Case C-398/09

Lady & Kid A/S and Others

v

Skatteministeriet

(Reference for a preliminary ruling from the Østre Landsret)

(Refusal to reimburse a tax paid in error – Unjust enrichment arising from the link between the introduction of that tax and the abolition of other taxes)

Summary of the Judgment

Union law – Direct effect – National taxes incompatible with Union law – Repayment – Refusal – Condition – Unjust enrichment – Definition – Passing on directly to the purchaser of amounts wrongly paid by the taxpayer

The rules of Union law on recovery of sums wrongly paid must be interpreted to the effect that recovery of sums wrongly paid can give rise to unjust enrichment only when the amounts wrongly paid by a taxpayer under a tax levied in a Member State in breach of Union law have been passed on direct to the purchaser. Consequently, Union law precludes a Member State from refusing reimbursement of a tax wrongfully levied on the ground that the amounts wrongly paid by the taxpayer have been set off by a saving made as a result of the concomitant abolition of other levies, for such a set-off cannot be regarded, from the point of view of Union law, as unjust enrichment in relation to that tax.

The direct passing on to the purchaser of the tax unduly paid being the sole exception to the right to reimbursement of tax levied in breach of Union law, the national court, applying its domestic law, may not take account of possible means of refusing reimbursement of an unlawful tax other than its setting off.

(see paras 25-26, operative part)

JUDGMENT OF THE COURT (Grand Chamber)

6 September 2011 (*)

(Refusal to reimburse a tax paid in error – Unjust enrichment arising from the link between the introduction of that tax and the abolition of other taxes)

In Case C‑398/09,

REFERENCE for a preliminary ruling under Article 234 EC from the Østre Landsret (Denmark), made by decision of 12 October 2009, received at the Court on 14 October 2009, in the proceedings

Lady & Kid A/S,

Direct Nyt ApS,

A/S Harald Nyborg Isenkram- og Sportsforretning,

KID-Holding A/S

v

Skatteministeriet,

THE COURT (Grand Chamber),

composed of V. Skouris, President, A. Tizzano, J.N. Cunha Rodrigues, K. Lenaerts, J.-C. Bonichot, K. Schiemann and D. Šváby, Presidents of Chambers, A. Rosas, R. Silva de Lapuerta, E. Juhász, M. Safjan (Rapporteur), M. Berger and A. Prechal, Judges,

Advocate General: P. Cruz Villalón,

Registrar: R. Şereş, Administrator,

having regard to the written procedure and further to the hearing on 28 September 2010,

after considering the observations submitted on behalf of:

– Lady & Kid A/S and Others, by H. Peytz, advokat,

– the Danish Government, by T. Winkler, acting as Agent, assisted by S. Fugleholm, advokat,

– the European Commission, by R. Lyal and N. Fenger, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 7 December 2010,

gives the following

Judgment

1 This reference for a preliminary ruling relates to the interpretation of Community law on recovery of amounts wrongly paid.

2 The reference has been made in the course of proceedings between Lady & Kid A/S (‘Lady & Kid’), Direct Nyt ApS (‘Direct Nyt’), A/S Harald Nyborg Isenkram- og Sportsforretning (‘Harald Nyborg’) and KID-Holding A/S (‘KID-Holding’) and Skatteministeriet (the Danish Ministry of Fiscal Affairs) concerning the repayment of a tax levied in breach of Community law (‘the unlawful tax’).

Legal context

3 By Law No 840 of 18 December 1987, the Kingdom of Denmark introduced, with effect from 1 January 1988, a business tax known as the employment market contribution (arbejdsmarkedsbidrag; ‘the Ambi’). The Ambi, the rate of which was fixed at 2.5%, was, in principle, calculated on the same basis as value added tax (‘VAT’). However, it was not payable upon import of goods into Danish territory, but was charged on the imported goods’ full sale price upon first sale in Denmark.

4 In return for the introduction of the Ambi, a number of social charges of employers, which had to be paid by Danish undertakings in the sum of around DKK 10 300 per full-time employee, had been abolished.

5 The purpose of the fiscal reform was to eliminate the link between the contributions to be paid and the number of employees, in order to stimulate growth and develop employment, while retaining neutrality as regards public finances.

6 The Ambi was levied on Danish undertakings between 1 January 1988 and 31 December 1991 inclusive, Law No 840 of 18 December 1987 having been repealed by a law of 21 December 1991 having effect from 1 January 1992.

7 During 1989, the lawfulness of the Ambi was contested by importing undertakings before the Østre Landsret (Eastern Regional Court) (Denmark), which considered it necessary to refer to the Court of Justice the question of the compatibility of the Ambi with Community law. In reply, by the judgment in Case C‑200/90 Dansk Denkavit and Poulsen Trading [1992] ECR I‑2217, the Court held that Article 33 of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (OJ 1988 L 145, p. 1) precludes a tax such as the Ambi, since such a tax:

– is paid both on activities subject to VAT and on other industrial or commercial activities which consist in the supply of services for consideration;

– is charged, in the case of undertakings which were taxable persons for VAT purposes, on the same basis of...