C-295/17 Meo - Serviços de Comunicações e Multimédia

JUDGMENT OF THE COURT (Fifth Chamber)

22 November 2018 ( *1 )

(Reference for a preliminary ruling — Common system of value added tax (VAT) — Directive 2006/112/EC — Scope — Taxable transactions — Supply for consideration — Distinction between non-taxable damages and interest and the taxable supply of services provided in return for ‘compensation’)

In Case C‑295/17,

REQUEST for a preliminary ruling under Article 267 TFEU from the Tribunal Arbitral Tributário (Centro de Arbitragem Administrativa) (Tax Arbitration Tribunal (Centre for Administrative Arbitration), Portugal), made by decision of 8 January 2017, received at the Court on 22 May 2017, in the proceedings

Applicant: MEO — Serviços de Comunicações e Multimédia SA

v

Autoridade Tributária e Aduaneira,

THE COURT (Fifth Chamber),

composed of K. Lenaerts, President of the Court, acting as President of the Fifth Chamber, E. Levits (Rapporteur) and M. Berger, Judges,

Advocate General: J. Kokott,

Registrar: R. Șereș, Administrator,

having regard to the written procedure and further to the hearing on 26 April 2018,

after considering the observations submitted on behalf of

MEO — Serviços de Comunicações e Multimédia SA, by V. Codeço, M. Machado de Almeida and R.M. Fernandes Ferreira, advogados,

the Portuguese Government, by L. Inez Fernandes, M. Figueiredo and R. Campos Laires, acting as Agents,

the Irish Government, by M. Browne, J. Quaney and by A. Joyce, acting as Agents, and by N.J. Travers, Senior Counsel, and A. Keirse, Barrister-at-Law,

the European Commission, by L. Lozano Palacios and A. Caeiros, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 7 June 2018,

gives the following

Judgment

Legal context and the dispute

1This request for a preliminary ruling concerns the interpretation of Article 2(1)(c), Article 64(1), Article 66(1)(a) and Article 73 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1, ‘the VAT Directive’).

2The request has been made in proceedings between MEO — Serviços de Comunicações e Multimédia SA (‘MEO’) and the Autoridade Tributária e Aduaneira (Tax and Customs Authority, Portugal) concerning payment of value added tax (VAT) and compensatory interest thereon.

Legal context

European Union law

3Under Article 2(1)(c) of the VAT Directive, ‘the supply of services for consideration within the territory of a Member State by a taxable person acting as such’ is subject to VAT.

4Article 64(1) of the VAT Directive provides:

‘Where it gives rise to successive statements of account or payments, the supply of goods, … or the supply of services shall be regarded as being completed on expiry of the periods to which such statements of account or payments relate’.

5The first paragraph of Article 66(1) of the VAT Directive provides:

‘By way of derogation from Articles 63, 64 and 65, Member States may provide that VAT is to become chargeable, in respect of certain transactions or certain categories of taxable person at one of the following times:

no later than the time the invoice is issued;

…’

6Article 73 of the VAT Directive is worded as follows:

‘In respect of the supply of goods or services, other than as referred to in Articles 74 to 77, the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price of the supply.’

7Article 90 of the VAT Directive provides:

‘1. In the case of cancellation, refusal or total or partial non-payment, or where the price is reduced after the supply takes place, the taxable amount shall be reduced accordingly under conditions which shall be determined by the Member States.

2. In the case of total or partial non-payment, Member States may derogate from paragraph 1.’

Portuguese law

8According to Article 1(1)(a) of the Código do Imposto sobre o Valor Acrescentado (Value Added Tax Code):

‘The following shall be subject to value added tax:

the supply of goods and the supply of services for consideration within the national territory by a taxable person acting as such.’

9Article 16(1) of the Value Added Tax Code is worded as follows:

‘Without prejudice to paragraphs 2 and 10, the taxable amount in respect of the taxable supply of goods or services shall be equivalent to the value of the consideration received or to be received from the purchaser, the customer or a third party.’

The dispute in the main proceedings and the questions referred for a preliminary ruling

10MEO, a company established in Lisbon, has as its main activity the provision, on Portuguese territory, of telecommunications services. It thereby carries out an economic activity within the meaning of the second subparagraph of Article 9(1) of the VAT Directive and is thus liable to VAT.

11As part of its activity, MEO concludes contracts with its customers for the supply of services in the fields of telecommunications, internet access, television and multimedia, some of which provide for minimum commitment periods, while offering its customers favourable terms, particularly in the form of lower monthly subscription fees.

12These contracts also stipulate that, in the case of deactivation of the goods and services referred to therein before the expiry of the agreed minimum commitment period at the request of customers or for a reason which is attributable to them, MEO is entitled to compensation corresponding to the amount of the agreed monthly subscription fee multiplied by the difference between the duration of the minimum commitment period provided for in the contract and the number of months during which the service was provided.

13According to the referring court, the amount payable by the customer to MEO in case of early termination of the services contract is therefore made up of the amount of the subscription fee that corresponds to the full amount of the minimum commitment period, even if the service is not supplied to the customer up to the end of that period.

14It is also apparent from the order for reference that the customer is liable to pay that amount where services are deactivated before the end of the minimum commitment period, in particular if the customer fails to pay the agreed monthly subscription fee.

15During an inspection carried out at MEO between 1 April and 20 November 2014, the tax and customs authority found that, for the tax year 2012, MEO had not paid VAT on the amount which had been invoiced to customers as a result of the early termination of services contracts, and accordingly issued notices requiring payment of VAT.

16According to the order for reference, following the early termination by the customer of a services contract, MEO deactivates the services provided for under that contract and sends an invoice to the customer which includes the predetermined contractual damages owed to MEO and the words ‘not subject to VAT’.

17Taking the view that amounts due under the early termination of the services contracts constitutes compensation that is not subject to VAT, because it is not intended to pay for any services supplied, MEO brought an administrative appeal against those notices requiring payment of VAT; that appeal was rejected.

18On 23 December 2015, MEO brought a further appeal against the decision to reject its administrative appeal, on which a ruling has not been given by the legal deadline.

19On 20 May 2016, MEO brought proceedings before the referring court, the Tribunal Arbitral Tributário (Centro de Arbitragem Administrativa) (Tax Arbitration Tribunal (Centre for Administrative Arbitration), Portugal), an action seeking to establish the unlawfulness of the acts requiring the payment of VAT.

20The referring court considers that the amounts payable by customers to MEO for non-compliance with the minimum contractual commitment period represent, for VAT purposes, consideration for a supply of services and thus constitute remuneration.

21According to that court, those amounts can be assimilated to remuneration because they make it possible for MEO to maintain the same level of income which it would have had if the services had not been discontinued. It held that MEO did not suffer any losses since those amounts were contractually agreed.

22In those circumstances, the Tribunal Arbitral Tributário (Centro de Arbitragem Administrativa) (Tax Arbitration Tribunal (Centre for Administrative Arbitration)) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

Must Articles 2(1)(c), 64(1), 66(a) and 73 of Directive 2006/112/EC be interpreted as meaning that a telecommunications operator (television, internet, mobile network and fixed network) is liable for value added tax as a result of charging its customers –– in a case of termination, for reasons attributable to the customer, of a contract containing an obligation to be bound by the contract for a defined term (tie-in period) before the end of that period –– a pre-determined amount, corresponding to the basic monthly amount payable by the customer under the contract, multiplied by the number of monthly payments that are still to be made before the end of the tie-in period, the operator having, at the time when that amount is invoiced and independently of its actual payment, already ceased to provide the services, where:

the contractual purpose of the amount invoiced is to deter the customer from disregarding the tie-in period which he has undertaken to observe and to make good the damage sustained by the operator as a result of the failure to complete the tie-in period –– in particular, on account of loss of the profit the operator would have obtained if the contract had continued until the end of the period, as well as on account of the agreement to charge lower tariffs, the supply of equipment or other offers, free of charge or at discounted prices, and the costs of advertising and of acquiring customers;

contracts negotiated with a tie-in period entail higher remuneration for the commercial intermediaries who obtained them than contracts obtained by them without a tie-in period and that remuneration is calculated, in each case (that is, as regards contracts with or without a tie-in), on the basis of the amount set for monthly payments in the contracts obtained;

the amount invoiced may be classified, under national law, as a penalty clause.

Is the answer to the first question liable to change in the event that one or more of the situations described in points (a), (b) and (c) of that question does not apply?’

The request to have the oral procedure reopened

23Following the delivery of the Advocate General’s Opinion, MEO, by a document lodged at the Court Registry on 25 June 2018, applied for the oral part of the procedure to be reopened, pursuant to Article 83 of the Rules of Procedure of the Court of Justice.

24In support of its request, MEO argued, in essence, that the Advocate General’s Opinion, in particular points 41, 44, 46 and 47 thereof, was based on incorrect facts, having regard, in particular, to the amount charged by MEO to its customers in the case of early termination of the services contract.

25In that regard, it should be noted that, under the second paragraph of Article 252 TFEU, it is the duty of the Advocate General, acting with complete impartiality and independence, to make, in open court, reasoned submissions on cases which, in accordance with the Statute of the Court of Justice, require his involvement. The Court is not bound either by the Advocate General’s Opinion or by the reasoning on which it is based (judgment of 22 June 2017, Federatie Nederlandse Vakvereniging and Others, C‑126/16, EU:C:2017:489, paragraph 31 and the case‑law cited).

26It should also be recalled that neither the Statute of the Court of Justice of the European Union nor the Rules of Procedure make provision for the interested parties to submit observations in response to an Advocate General’s Opinion (judgment of 25 October 2017, Polbud — Wykonawstwo, C‑106/16, EU:C:2017:804, paragraph 23 and the case-law cited). As a consequence, the fact that a party disagrees with the Advocate General’s Opinion, irrespective of the questions examined in the Opinion, cannot in itself constitute grounds justifying the reopening of the oral procedure (judgments of 25 October 2017, Polbud — Wykonawstwo, C‑106/16, EU:C:2017:804, paragraph 24, and of 29 November 2017, King, C‑214/16, EU:C:2017:914, paragraph 27 and the case-law cited).

27By its arguments concerning the elements characterising the amount invoiced in the case of early termination of the services contract by the customer, MEO seeks to respond to the Opinion of the Advocate General by questioning the description of that amount, as emerges from the order for reference, in the file before the Court and in the information provided at the hearing.

28It is true that, pursuant to Article 83 of its Rules of Procedure, the Court may, at any time, after hearing the Advocate General, order the reopening of the oral part of the procedure, in particular if it considers that it lacks sufficient information or where a party has, after the close of that part of the procedure, submitted a new fact which is of such a nature as to be a decisive factor for the decision of the Court, or where the case must be decided on the basis of an argument which has not been debated between the parties or the interested persons referred to in Article 23 of the Statute of the Court of Justice of the European Union.

29However, the calculation of the amount invoiced by MEO for premature termination of the contract for the supply of services was described by the referring court, as is apparent from paragraph 12 above, a fact that MEO has not disputed either in its written observations or at the hearing. In addition, it should be pointed out that the finding of the facts falls within the exclusive jurisdiction of the national court. As to the classification of that amount by MEO, it is not binding on the Court in its reply to the request for a preliminary ruling.

30In the present case, the Court, having heard the Advocate General, considers that it has all the information necessary to answer the questions referred by the national court and that, for the purposes of deciding the case in the main proceedings, all the arguments, in particular those relating to the classification of that amount, have been argued before the Court.

31Accordingly, there is no need to order that the oral part of the procedure be reopened.

Consideration of the questions referred

Admissibility

32The Portuguese Republic raises the inadmissibility of the request for a preliminary ruling, alleging the speculative and uncertain nature of the questions raised by the referring court, which, it claims, has failed to establish the facts at the origin of the main proceedings and has not determined the relevant legal framework.

33As to those submissions, it should be recalled that, according to settled case-law, in the context of the cooperation between the Court and national courts provided for in Article 267 TFEU, it is solely for the national court before which the dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine, in the light of the particular circumstances of the case, both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions submitted concern the interpretation of EU law, the Court is in principle bound to give a ruling (judgment of 6 March 2018, SEGRO and Horváth, C‑52/16 and C‑113/16, EU:C:2018:157, paragraph 42 and the case-law cited).

34A reference from a national court may be refused only if it is quite obvious that the interpretation of EU law sought bears no relation to the actual facts of the main action or to its purpose, or where the problem is hypothetical or the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (judgment of 6 March 2018, SEGRO and Horváth, C‑52/16 and C‑113/16, EU:C:2018:157, paragraph 43 and the case-law cited).

35In the present case, it is apparent from the order for reference that the referring court has doubts as to the interpretation and application of Article 2(1)(c) and Article 73 of the VAT Directive as regards the characterisation of the amounts collected by MEO following the termination by its customers of services contracts before the end of the agreed minimum commitment period. It should also be noted that the referring court has adequately and precisely set out the facts at the origin of the dispute in the main proceedings and the legal background of the main proceedings, from which it is apparent that the questions referred are not hypothetical.

36It follows, first, that the interpretation of EU law which is sought in the present instance bears a definite relation to the purpose of the main proceedings and, second, that the questions submitted are not hypothetical.

37It follows from the foregoing that the request for a preliminary ruling is admissible.

Substance

The first question

38By the first question, the referring court asks, in essence, whether the predetermined amount received by an economic operator where a contract for the supply of services with a minimum commitment period is terminated early by its customer or for a reason attributable to the customer, which corresponds to the amount that the operator would have received for the remainder of that period, should be regarded as payment for a supply of services for consideration within the meaning of Article 2(1)(c) of the VAT Directive, and, as such, be subject to VAT.

39In that respect, a supply of services is carried out ‘for consideration’, within the meaning of that provision, only if there is a legal relationship between the provider of the service and the recipient pursuant to which there is reciprocal performance, the remuneration received by the provider of the service constituting the actual consideration for the service supplied to the recipient (see, to that effect, judgments of 18 July 2007, Société thermale d’Eugénie-les-Bains, C‑277/05, EU:C:2007:440, paragraph 19 and the case-law cited, and of 23 December 2015, Air France-KLMand Hop!Brit-Air, C‑250/14 et C‑289/14, EU:C:2015:841, paragraph 22). This is the case if there is a direct link between the service supplied and the consideration received (see, to that effect, judgment of 23 December 2015, Air France-KLM, and Hop! Brit-Air, C‑250/14 and C‑289/14, EU:C:2015:841, paragraph 23 and the case-law cited).

40As regards the direct link between the service supplied to the recipient and the consideration actually received, the Court has already held, as regards the sale of air tickets that passengers have not used and for which they could not obtain repayment, that the consideration for the price paid at the time of the signing of a contract for the supply of a service is formed by the right derived by the customer to benefit from the fulfilment of the obligations arising from the contract, irrespective of whether the customer uses this right. Thus, that supply is made by the supplier of services when it places the customer in a position to benefit from the supply, so that the existence of the abovementioned direct link is not affected by the fact that the customer does not avail himself of that right (see, to that effect, judgment of 23 December 2015, Air France-KLM, and Hop! Brit-Air, C‑250/14 and C‑289/14, EU:C:2015:841, paragraph 28).

41Moreover, as regards the condition relating to the direct link between the consideration received and the service supplied, it must be established whether the amount due for failure to comply with the minimum commitment period, in accordance with the terms of the contracts at issue in the main proceedings, corresponds to the payment for a service, in the light of the case-law cited in paragraphs 39 and 40 of this judgment.

42In the present case, it should be recalled that, according to the calculation method described by the referring court and referred to in paragraph 12 of this judgment, the amount payable, under those contracts, for non-compliance with the minimum commitment period consists of the subscription fee multiplied by the difference between the duration of the minimum commitment period and the number of months during which the service was supplied. Thus, the payment of the amount due for non-compliance with the minimum commitment period affords MEO, in principle, income equal to that which it would have received if the customer had not terminated the contract prematurely.

43As regards the importance of contractual terms in categorising a transaction as a taxable transaction, it is necessary to bear in mind the case-law of the Court according to which consideration of economic and commercial realities is a fundamental criterion for the application of the common system of VAT (see, to that effect, judgment of 20 June 2013, Newey, C‑653/11, EU:C:2013:409, paragraph 42 and the case-law cited).

44Inasmuch as MEO has a right under the agreements at issue in the main proceedings, in the event of failure to observe the minimum commitment period, to payment of the same amount as it would have received as payment for services which it undertook to supply in the event that the customer had not terminated his contract, a matter which it is for the referring court to ascertain if necessary, the early termination of the contract by the customer, or its termination for a reason attributable to that customer, does not alter the economic reality of the relationship between MEO and its customer.

45In those circumstances, it must be held that the consideration for the amount paid by the customer to MEO is constituted by the customer’s right to benefit from the fulfilment, by MEO, of the obligations under the services contract, even if the customer does not wish to avail himself or cannot avail himself of that right for a reason attributable to him. In the present case, MEO enables the customer to benefit from the service within the meaning of the case-law cited in paragraph 40 of this judgment and the cessation of that service is not imputable to it.

46It should be added, in that regard, that if that amount were characterised as damages to make good the loss suffered by MEO, the nature of the consideration paid by the customer would be changed, depending on whether or not the customer decides to use the service in question during the period provided for in the contract.

47Thus, a customer who benefited from services for the entire commitment period stipulated in the contract and a customer who terminated the contract before the end of that period would be treated differently for the purposes of VAT.

48Consequently, it must be held that the amount payable for non-compliance with the minimum commitment period is payment for the services provided by MEO, regardless of whether the customer exercises the right to benefit from those services until the end of the minimum commitment period.

49As to the requirement that the sums paid constitute actual consideration for an identifiable service, it should be noted that the service to be provided and the amount invoiced to the customer in the event of termination of the contract during the minimum commitment period are already identified at the time of conclusion of the contract.

50Thus, the amount due for non-compliance with the minimum commitment period must be considered an integral part of the total price paid for the services, divided into monthly instalments, which amount becomes payable immediately in case of failure to pay.

51As regards the latter condition, it is apparent from the order for reference that, in accordance with the relevant provisions of national law, the tax on that amount is payable at the time of issuance of the invoice, the situation envisaged by Article 66(1)(a) of the VAT Directive, by way of derogation, in particular, from Article 64(1) of that directive, to which the referring court expressly refers in its first question. Having regard to the considerations set out above, in particular the fact that the early termination of the contract does not change the economic reality of the relationship between MEO and its customer, it must be held that neither the early chargeability of VAT in the case of termination of the contract, nor the abovementioned provisions, have an impact on the interpretation of Article 2(1)(c) of the VAT Directive which must be adopted in the present case.

52Consequently, the amount payable for non-compliance with the minimum commitment period constitutes consideration for a determinable supply of services.

53It is clear from the wording of the first question, which also refers to Article 73 of the VAT Directive, that the national court has doubts as to the possible effect on the chargeability of VAT of the absence of actual recovery of the amount payable in the case of early termination of the contract.

54According to that article, the taxable amount is to include everything which constitutes consideration obtained or to be obtained by the supplier from the customer.

55Furthermore, given that VAT is intended to tax only the final consumer, the taxable amount of VAT to be collected by the tax authorities cannot exceed the consideration actually paid by the final consumer which is the basis for calculating the VAT ultimately borne by him (see, to that effect, judgment of 24 October 1996, Elida Gibbs, C‑317/94, EU:C:1996:400, paragraph 19).

56Accordingly, it must be added, for the sake of completeness and as the Advocate General observed in point 55 of her Opinion, that, where necessary, it will be for the competent national authorities to carry out, under the conditions determined by national law, an adjustment of the corresponding VAT, as provided for in Article 90 of the VAT Directive, so that the VAT is deducted from the amount actually received by the service provider from his customer.

57In the light of the foregoing, the answer to the first question is that Article 2(1)(c) of the VAT Directive must be interpreted as meaning that the predetermined amount received by an economic operator where a contract for the supply of services with a minimum commitment period is terminated early by its customer, or for a reason attributable to the customer, which corresponds to the amount that the operator would have received during that period in the absence of such termination — a matter which it is for the referring court to determine — must be regarded as the remuneration for a supply of services for consideration and subject, as such, to VAT.

The second question

58By the second question, the referring court asks, in essence, whether the conditions in paragraphs (a), (b) and (c) of the first question, namely the fact that the purpose of the lump sum is to discourage customers from not observing the minimum commitment period and to make good the damage that the operator would suffer in the event of failure to observe that period, the fact that the remuneration received by a commercial agent for the conclusion of contracts stipulating a minimum commitment period is higher than that provided for under a contract which does not stipulate such a period, or the fact that the amount invoiced is classified, under national law, as a penalty, are decisive for the classification of a predetermined amount in the services contract which the customer must pay in the event of early termination of the contract.

59First, the referring court asks whether the objective of the lump sum, which is to discourage customers from not observing the minimum commitment period and to make good the damage sustained by the operator in case of early termination of the contract, affects the classification of that amount as consideration for a supply of services.

60In this respect, it should be noted that the concept of ‘supply of services’ within the meaning of the VAT Directive must be interpreted without regard to the purpose or results of the transactions concerned (see, to that effect, judgment of 20 June 2013, Newey, C‑653/11, EU:C:2013:409, paragraph 41).

61On the other hand, as has been held in paragraph 43 above, it is essential to take into account the economic reality of the transaction at issue, which constitutes a fundamental criterion for the application of the common system of VAT (see, to that effect, the judgment of 20 June 2013, Newey, C‑653/11, EU:C:2013:409, paragraphs 42, 48 and 49 and the case-law cited). As the Advocate General observed in point 46 of her Opinion, in the context of an economic approach, the amount due for non-compliance with the minimum commitment period guarantees MEO a fixed income in the form of a minimum contractual remuneration.

62Consequently, the objective of that amount, namely to discourage customers from not observing the minimum commitment period, is not decisive for the classification of that amount, in so far as, according to the economic reality, the same amount aims to ensure that MEO, in principle, obtains the same income as it would have obtained if the contract had not been terminated before the end of the minimum commitment period for a reason attributable to the customer.

63Secondly, the referring court asks whether the fact that the remuneration received by a commercial agent for the conclusion of contracts stipulating a minimum commitment period higher than that contained in contracts which do not stipulate such a period has an impact on the classification of the amount payable for non-compliance with the minimum commitment period.

64For the purpose of determining whether that amount constitutes consideration for a supply of services subject to VAT, it is necessary to take into account, as is apparent from paragraphs 39 to 51 of this judgment, the file submitted to the Court, from which it is apparent that that amount was calculated by reference to the amount of the basic subscription fee, both for the period preceding the termination of the services contract and for the period from the termination of the contract until the end of the minimum commitment period.

65Since the Court’s answer to the first question does not depend in any way on the fact that the remuneration received by a commercial agent may vary according to the type of contract concluded with the customer, it is sufficient to note that a comparison between contracts laying down a minimum period of commitment and those that do not do so has no bearing on the question whether the amount payable for non-compliance with the minimum commitment period is remuneration for the supply of services at issue in the main proceedings.

66Thirdly, the referring court also asks whether the fact that the amount invoiced for non-compliance with the minimum commitment period is categorised under national law as a penalty may have an influence on the classification of that amount as remuneration for the supply of services.

67The Court of Justice has consistently held that the terms of a provision of EU law which makes no express reference to the law of the Member States must normally be given an autonomous and uniform interpretation (see, to that effect, judgment of 16 November 2017, Kozuba Premium Selection, C‑308/16, EU:C:2017:869, paragraph 38 and the case-law cited).

68Therefore, as the Advocate General observed in point 34 of her Opinion, it is irrelevant for the purposes of interpreting the provisions of the VAT Directive that that amount is to be regarded, under national law, as a right to a remedy in tort or a contractual penalty, or that it is characterised as a remedy, damages or remuneration.

69The assessment of whether payment of a fee is made as consideration for a supply of services is a question of EU law which needs to be determined independently of the assessment made under national law.

70In the light of the foregoing, the answer to the second question is that the fact that the objective of the lump sum is to discourage customers from not observing the minimum commitment period and to make good the damage that the operator suffers in the event of failure to observe that period, the fact that the remuneration received by a commercial agent for the conclusion of contracts stipulating a minimum period of employment is higher than that provided for under contracts which do not stipulate such a period, and the fact that the amount invoiced is classified under national law as a penalty, are not decisive for classifying the amount predetermined in the services contract which the customer is liable to pay in the event of its early termination.

Costs

71Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds, the Court (Fifth Chamber) hereby rules:

Article 2(1)(c) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that the predetermined amount received by an economic operator where a contract for the supply of services with a minimum commitment period is terminated early by its customer or for a reason attributable to the customer, which corresponds to the amount that the operator would have received during that period in the absence of such termination — a matter which it is for the referring court to determine — must be regarded as the remuneration for a supply of services for consideration and subject, as such, to value added tax.

The fact that the objective of the lump sum is to discourage customers from not observing the minimum commitment period and to make good the damage that the operator suffers in the event of failure to observe that period, the fact that the remuneration received by a commercial agent for the conclusion of contracts stipulating a minimum period of commitment is higher than that provided for under contracts which do not stipulate such a period, and the fact that the amount invoiced is classified under national law as a penalty, are not decisive for classifying the amount predetermined in the services contract which the customer is liable to pay in the event of early termination.

Signatures

[Signatures]

( *1 ) Language of the case: Portuguese.

OPINION OF ADVOCATE GENERAL

KOKOTT

delivered on 7 June 2018 ¹

(Request for a preliminary ruling — Common system of value added tax — Scope — Taxable transactions — Supply for consideration — Distinction between non-taxable damages and taxable services against payment of an ‘indemnity’)

I. Introduction

1In these proceedings, the Court is required to distinguish, under VAT law, between a payment for a (taxable and taxed) service and payment for pecuniary damage (which is a non-taxable event).

2This situation arises from the fact that, under VAT law, not all payments of money to taxable persons are taxed, but only payments for supplies of goods or services. However, how must a case be treated under VAT law where the contractually agreed payment must be paid although all the services provided hitherto have been discontinued and consequently no further services are provided? To what does the payment relate in such a case? Can it still be referred to as consideration for a supply of goods or services?

3The Court has already discussed a similar question in its case-law on so-called compensation payments in respect of non-use of a service in Société thermale d’Eugénie-les-Bains ² and Air France-KLM and Hop!-Bri-Air. ³ This request for a preliminary ruling provides it with the opportunity to further develop that case-law.

II. Legal framework

A. EU law

4The framework of EU law relevant to the case is provided by Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax ⁴ (‘the VAT Directive’).

5Article 2(1)(c) of the VAT Directive provides:

‘(1) The following transactions shall be subject to VAT: …

the supply of services for consideration within the territory of a Member State by a taxable person acting as such; …’

6Article 73 contains the following wording:

‘In respect of the supply of goods or services, other than as referred to in Articles 74 to 77, the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price of the supply.’

B. Portuguese law

7In Portuguese law, the provisions of the VAT Directive were transposed into the Código do Imposto sobre o Valor Acrescentado (VAT Code) by Article 1(1)(a) and Article 16(1) in the applicable version thereof.

III. Dispute in the main proceedings

8MEO — Serviços de Comunicações e Multimédia SA (‘MEO’) is a limited liability company whose object is the establishment, design, construction, management and operation of telecommunications networks and infrastructures, as well as the provision of telecommunications services and services for transporting and transmitting telecommunications signals.

9The provision of services (telecommunications, internet access, television and multimedia) by MEO requires a complex infrastructure, the setting up and maintenance of which entails a significant investment in terms of human and material resources. On the basis of the level of investment needed for the provision of the services, MEO determines a (minimum) number of contracts that must be concluded to enable its business objective to be achieved.

10As part of its business, MEO enters into contracts with its customers for the provision of those services. Some of the contracts that MEO concludes with its customers contain a term requiring the customer to remain bound by the contract for a minimum period; in those situations certain advantageous conditions are offered, including lower monthly payments.

11These contracts include clauses that place the customer under an obligation to pay an amount corresponding to the monthly payment multiplied by the number of months needed to complete the abovementioned minimum period (exclusive of VAT) (‘the indemnity’), where, on MEO’s initiative, the service is deactivated for reasons attributable to the customer before the end of the contractual tie-in period (in particular, the failure to pay the monthly payments due under the contract).

12In situations where there is a breach of contract by the customer, MEO, as a first step, informs the customer that it is necessary to settle the amounts that are owing and warns him that, in the case of failure to pay, it will deactivate the services contracted for and charge to the customer’s account the indemnity arising as a result of the breach of the term concerning the tie-in period, as provided for in the contract.

13Following that notice, if the customer fails to pay the outstanding amounts, MEO then definitively deactivates the agreed services. MEO then charges to the customer’s account the indemnity that it believes to be owing under the contract, corresponding to the ‘monthly payment amount … multiplied by the number of months still needed to complete the period’.

14Most of MEO’s customers, faced with the risk of having to pay the indemnity, choose to comply with the agreed terms, remaining bound throughout the minimum subscription period. MEO charged VAT on the customer’s monthly payments during the period when the contract was being properly performed and duly paid VAT to the State.

15In the event of deactivation, on the other hand, MEO issues its customers who are in breach of contract with invoices in respect of the indemnity, without including VAT and expressly stating ‘Not subject to VAT’. Only a small proportion of the amounts due for non-performance of the contract is actually paid.

16MEO was inspected by the Unidade dos Grandes Contribuintes (Major Taxpayers Unit). This revealed that MEO had not paid VAT on the indemnities charged to its customers in 2012.

17MEO’s justification for this was that the indemnities in question were not subject to VAT. In that regard, MEO relies in particular on a legal opinion commissioned from Professor Englisch (University of Münster, Germany). It also saw no point to the charge to VAT in view of the various arrangements for recovery of the tax provided for in Article 78 of the VAT Code and it further considered that the tax authority’s assessment of the VAT was improperly quantified given that VAT was already included in the amount charged.

18The tax authority did not accept that argument, stating that the indemnities were due because the recipient of the service was liable to pay remuneration for the service provided and not as compensation for damage caused to the service provider. Those indemnities therefore fell within the concept of lost profit and, as such, were subject to VAT. The tax authority established the amount of tax to be paid and accordingly made an adjustment amounting to EUR 1 812 195.35.

19MEO appealed that decision. The appeal was rejected by an administrative decision. On 23 December 2015 the claimant lodged a further appeal against the decision dismissing that appeal. No decision was taken on that appeal within the period laid down by law. On 20 May 2016, this was challenged by MEO before the Tribunal Arbitral Tributário (Tax Arbitration Tribunal, Portugal).

IV. Request for a preliminary ruling and procedure before the Court

20By decision of 8 January 2017, received on 22 May 2017, the Tribunal Arbitral Tributário (Tax Arbitration Tribunal) referred the following questions to the Court of Justice for a preliminary ruling under Article 267 TFEU:

Must Articles 2(1)(c), 64(1), 66(a) and 73 of Directive 2006/112/EC be interpreted as meaning that a telecommunications operator (television, internet, mobile network and fixed network) is liable for value added tax as a result of charging its customers –– in a case of termination, for reasons attributable to the customer, of a contract containing an obligation to be bound by the contract for a defined term (tie-in period) before the end of that period –– a pre-determined amount, corresponding to the basic monthly amount payable by the customer under the contract, multiplied by the number of monthly payments that are still to be made before the end of the tie-in period, the operator having, at the time when that amount is invoiced and independently of its actual payment, already ceased to provide the services, where:

the contractual purpose of the amount invoiced is to deter the customer from disregarding the tie-in period which he has undertaken to observe and to make good the damage sustained by the operator as a result of the failure to complete the tie-in period –– in particular, on account of loss of the profit the operator would have obtained if the contract had continued until the end of the period, as well as on account of the agreement to charge lower tariffs, the supply of equipment or other offers, free of charge or at discounted prices, and the costs of advertising and of acquiring customers;

contracts negotiated with a tie-in period entail higher remuneration for the commercial intermediaries who obtained them than contracts obtained by them without a tie-in period and that remuneration is calculated, in each case (that is, as regards contracts with or without a tie-in), on the basis of the amount set for monthly payments in the contracts obtained;

the amount invoiced may be classified, under national law, as a penalty clause?

Is the answer to the first question liable to change in the event that one or more of the situations described in points (a), (b) and (c) of that question does not apply?’

21In the proceedings before the Court, MEO, the Portuguese Republic, Ireland and the European Commission submitted written observations and (with the exception of Ireland) participated at the hearing on 26 April 2018.

V. Assessment

A. Admissibility and interpretation of the questions referred

22As the Court has already held, the Tribunal Arbitral Tributário (Tax Arbitration Tribunal) must be regarded as a court or tribunal of a Member State within the meaning of Article 267 TFEU and is entitled to refer questions to the Court of Justice for a preliminary ruling. ⁵

23The Republic of Portugal’s argument that the request for a preliminary ruling is inadmissible because the referring court’s statements are speculative cannot be accepted. According to the settled case-law of the Court, questions on the interpretation of EU law referred by a national court in the factual and legislative context that that court is responsible for defining, and the accuracy of which is not a matter for the Court to determine, enjoy a presumption of relevance. The Court may refuse to rule on a question referred by a national court only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it. ⁶

24None of this is remotely the situation in the present case. On the contrary, the question raised by the referring court is precisely the interpretation and application of Article 2(1)(c) of the VAT Directive in the case of a contractual indemnity. That question is undoubtedly admissible.

25However, it would seem appropriate to summarise, to some degree, the very long question referred. Essentially, the referring court seeks to ascertain whether the payment of an amount of compensation to MEO by a (now former) customer must be regarded as consideration for a service within the meaning of Article 2(1)(c) of the VAT Directive.

26This is open to doubt because the services supplied under contract were deactivated and, therefore, are no longer supplied. On the other hand, the indemnity to be paid is the same as the net consideration originally agreed for the supply of the services, in order to deter the customer from disregarding the agreed term of the contract.

27It must therefore be determined whether the indemnity paid by the customer relates ‘only’ to compensation for pecuniary damage sustained by MEO or actually to a taxable and taxed service supplied by MEO to the customer.

B. Legal assessment

1. Payment of consideration for a supply or service

28According to Article 2(1) of the VAT Directive, only certain, exhaustively listed events are subject to VAT. The two main chargeable events in that regard are stated in Article 2(1)(a) and (c) of the VAT Directive. Under that article, supplies of goods and services by a taxable person, acting as such, are subject to VAT where they are supplied for consideration. The aim of VAT as a general tax on the consumption of goods is to impose a tax on consumer capacity, which is demonstrated by consumers’ expenditure of assets to procure a consumable benefit (supply of goods or services). ⁷

29It already follows a contrario from the wording of Article 2(1)(a) and (c) of the VAT Directive that payment of money alone (that is, the payment of consideration) does not make the recipient liable to tax, even where the recipient is a taxable person. He must have made a supply of goods or provided a service in return for the monetary payment received. ⁸

30It follows from the case-law of the Court that this can be so only if there is a direct link between the service supplied and the consideration received, the sums paid constituting genuine consideration for an identifiable service supplied in the context of a legal relationship in which performance is reciprocal. ⁹

31Payments outside such a legal relationship (which, however, must be understood broadly, as VAT is a general tax on consumption) do not lead to a taxable transaction. Therefore, a service is not supplied for consideration where, although the undertaking receives a payment, that money is paid by the payer not for a consumable benefit (that is to say, not for a supply of goods or services), but for other reasons (such as out of sympathy ¹⁰).

32The same applies where the payment merely compensates the undertaking for financial damage sustained, as, for example, in the case of interest on account of late payment (pecuniary damage in the form of refinancing damage because of late payment ¹¹) or compensation for profit lost because of cancellation of a contract. ¹² In all these cases, a payment is made not for a supply of goods or services received from the undertaking but as compensation for the financial consequences of the undertaking’s failure to supply goods or services.

33Ultimately, money is paid in these cases by way of settlement for financial damage (pecuniary damage). The expenditure of money for money is the archetype of payment for non-performance ¹³ (‘we cannot eat money’ ¹⁴). Compensation for pecuniary damage (such as compensation for lost profit or damage caused by delay) amounts to the same thing since, in that case, too, no consumable benefit is obtained, only adequate compensation for prevention of the possibility of earning money.

34It is of no importance, on the other hand, how the national law regards the indemnity. It is irrelevant from the point of view of VAT law (as the Commission and Portugal emphasised at the hearing) whether it is to be regarded as compensation for a claim in tort or a contractual penalty, or as damages, compensation or consideration. Assessing whether payment of consideration for a supply has been made is a question of EU law which must be decided independently of any assessment made on the basis of national law. ¹⁵

2. The Court’s case-law on similar ‘indemnities’

35In the case of so-called indemnities, compensation payments or damages, it must therefore always be determined why and for what purpose the money is paid in order to be able to assess whether a supply is effected for consideration within the meaning of Article 2(1)(a) and (c) of the VAT Directive.

36In Société thermale d’Eugénie-les-Bains, the Court ruled on a fixed cancellation charge paid as compensation for the loss suffered by the hotelier as a result of customer default (‘a deposit’). Such compensation does not constitute the fee for a service and forms no part of the taxable amount for VAT purposes. ¹⁶ Since, on the one hand, the deposit paid does not constitute the fee collected by a hotelier by way of genuine consideration for the supply of an independent and identifiable service to his client and, on the other hand, the retention of that deposit, following the client’s cancellation, is intended to offset the consequences of the non-performance of the contract, it must be held that neither the payment of the deposit, nor the retention of that deposit, is covered by Article 2(1)(c) of the VAT Directive. ¹⁷

37In Air France-KLM and Hop!Brit-Air, on the other hand, the Court held that an airline company cannot claim that the price paid by a ‘no-show’ passenger and retained by the company constitutes a contractual indemnity that, since it seeks to compensate only for a harm suffered by the company, is not subject to VAT (by this the Court meant non-taxable). ¹⁸

38The Court’s reasoning in that regard was essentially that, first, the price paid by a ‘no-show’ passenger corresponded to the full price to be paid. Secondly, where the passenger has paid the price of the ticket and the company confirms that a seat is reserved for him, the sale is final and definitive. Moreover, it should be noted that airline companies reserve the right to resell the unused service to another passenger, without being required to reimburse the price to the first passenger. It follows therefrom that the grant of compensation, in the absence of harm, would be unjustified. ¹⁹ It must therefore be held that the sum retained by the airline companies is not intended to compensate for possible harm suffered by them as a result of a passenger’s ‘no-show’, but constitutes remuneration, even where the passenger did not benefit from the transport. ²⁰

39The situation in the present case falls between the situations in those two cases. On the one hand, it is common ground that services were no longer supplied to the customer in breach of contract after its connection was deactivated by MEO. MEO, in particular, emphasises this. On the other hand, the amount of money to be paid is just as high as the net remuneration for the services originally agreed in the contract. This is emphasised in particular by the Commission, Ireland and Portugal.

40However, unlike in the two abovementioned cases, services were supplied to the customer for appropriate consideration in the present case whereby termination of the contract gives rise to further costs (provided for in the contract). In that regard, it is however (contrary to the view expressed by MEO) irrelevant that the contract has now been terminated. Even payments made after the termination of the contract can still be connected with previous services to be supplied under contract.

41Moreover, compensation for pecuniary damage equivalent to the profit lost should normally be lower than the agreed net price, as a profit margin equivalent to the agreed (net) consideration is highly unlikely. Generally, the provision of a service gives rise to certain costs which are not incurred where the service is not provided. In that regard, no maintenance and administrative costs, for example, are incurred in respect of customers ‘in breach of contract’. In such a case, it is scarcely possible to speak of consolidation of the compensation into a lump sum (as MEO did at the hearing). From that point of view, it is highly questionable (as the Commission and Portugal submitted at the hearing) how a customer who used the service for 24 months and a customer who could only use it for, for example, 18 months because it was deactivated are to spend the same amount but be treated differently under VAT law.

3. Possibilities for a solution in the specific case

42Against this background, there are, in my opinion, only two conceivable solutions. Either the indemnity relates to the profit lost by MEO and offsets the pecuniary damage suffered by MEO, in which case it must be regarded as a non-taxable event.

43Or the compensation payment must be regarded economically as part of a total price for the supply of specific services by MEO that is merely divided into monthly parts for the purposes of the payment method adopted (as a form of instalment payment) and, in the event of breach of the obligation to pay, becomes payable immediately in the amount still outstanding.

44Like the Commission, Portugal and Ireland, I consider the latter approach to be the correct one. First, the nature of the damage for which compensation is consolidated into a lump sum remains questionable when the supposed damage amounts to the same as the price for supplying the service. Second, when such a contract is concluded, the amount that MEO receives during the minimum contractual period remains fixed, irrespective of the actual duration of the service provision. However, (as the Commission rightly pointed out at the hearing) there is then no damage arising from early termination. MEO receives the same (net) amount as it would have done if the contract had been fulfilled. As the Court has already held, a ‘grant of compensation, in the absence of harm, would be unjustified’. ²¹

45This finding is also supported by an economic consideration of MEO’s contractual arrangement. The Court itself recognises the importance of the economic reality in VAT law. ²²

46Such an economic consideration establishes (as suggested by the Commission, Portugal and Ireland) the existence of a type of fixed price in the form of a contractually agreed minimum remuneration. Under VAT law, it makes no difference in that regard whether a customer pays EUR 100 per month over a minimum period of 24 months for an internet connection and must continue to pay the EUR 100 if he pulls out before the contract period has expired (total amount EUR 2400). The same result would apply if he pays EUR 2400 immediately and is entitled to use the internet connection for up to 24 months, unless he changes premises. In both cases, the contractual amount (EUR 2400) relates to a specific service (internet connection), only the extent of which is uncertain. In fact, the latter would also apply in respect of any other lump-sum price.

47In the present case, only the temporal extent of use is uncertain, not the consideration for the services. As a result, under contracts with a minimum contractual period, MEO always receives at least the same amount, irrespective of the length of time over which the services are actually supplied.

48In that respect, the ‘indemnity’ must be regarded, in economic terms, as merely the last of the previous monthly payments. Like the previous payments, it is payment for the services previously supplied.

49Such an economic consideration is also consistent with the spirit and purpose of the clause, which, according to the referring court, is to deter customers from discontinuing payment of their monthly ‘instalments’. The immediate payment of all outstanding ‘instalments’ of a lump-sum price definitely has that effect. It is therefore a form of contractual penalty that relates not to the amount, but to the due date of the (remaining) price (consideration within the meaning of Article 2(1)(c) of the VAT Directive). Because the customer is ‘in breach of contract’, he must immediately pay the outstanding amount in full instead of in instalments relating to prior use of the services. However, as Portugal has rightly emphasised, the method of payment (immediate or extending over several months) cannot alter the nature of the service.

50The same applies to differences in remuneration for commercial intermediaries. The assessment of the supply relationship between MEO and its customers under VAT law cannot depend on the contractual arrangement of MEO’s relationship to third parties. The higher commission indicates only that contracts with a minimum contractual period probably result in a higher profit for MEO because they guarantee a certain minimum price for the services to be supplied and, in that regard, confirms the abovementioned economic consideration of the situation.

51Therefore, a service was provided for consideration within the meaning of Article 2(1)(c) of the VAT Directive.

4. Calculation and amount of VAT

52As it is clear from the order for reference that, in most cases, the indemnity under consideration here is not paid and that the tax authorities have evidently added VAT to the outstanding indemnity, it seems appropriate to give the referring court some useful guidance on two points.

53First, the VAT due must always be calculated on the basis of the amounts (in this case, the indemnity) agreed or received. This follows from the clear wording of Article 73 und Article 78(a) of the VAT Directive. According to those articles, the taxable amount is the whole amount obtained or to be obtained by the supplier, except for the VAT itself.

54Second, the Court has repeatedly held that taxable undertakings act ‘only’ as tax collectors for the State, ²³ because VAT is an indirect tax on consumption that must be borne by the final consumer. ²⁴ Consequently, the Court has also repeatedly held that ‘the taxable amount serving as a basis for the VAT to be collected by the tax authorities cannot exceed the consideration actually paid by the final consumer which is the basis for calculating the VAT ultimately borne by him’. ²⁵ If the final consumer does not pay the trader, the trader therefore does not substantively owe any VAT.

55Therefore, the trader’s tax liability must necessarily ²⁶ be corrected in accordance with Article 90 of the VAT Directive where it is established with reasonable certainty that no further payment will be made by its contract partner. When such reasonable certainty can be assumed is a question of fact that the national court must assess while respecting, on the one hand, the fundamental rights of the taxable person and the principle of proportionality and, on the other hand, the interest of the State in effective taxation.

VI. Conclusion

Conclusion

56In light of the foregoing, I propose that the Court’s answer to the request for a preliminary ruling from the Tribunal Arbitral Tributário (Centro de Arbitragem Administrativa) (Tax Arbitration Tribunal (Centre for Administrative Arbitration), Portugal) should be as follows:

1Article 2(1)(c) of Directive 2006/112/EC must be interpreted as meaning that the payment of a pre-determined amount in the case of early termination of a contract is liable to value added tax if it is to be regarded as consideration for the services already supplied and is not merely compensation for pecuniary damage sustained.

2For the purposes of that interpretation, it is irrelevant that the commercial intermediary who negotiates such contracts with a tie-in period receives higher remuneration than for contracts without a tie-in period. It is also irrelevant that the amount may be regarded, under national law, as a contractual penalty.

¹ Original language: German.

² Judgment of 18 July 2007 (C‑277/05, EU:C:2007:440).

³ Judgment of 23 December 2015, Air France-KLM and Hop!-Brit Air (C‑250/14 and C‑289/14, EU:C:2015:841).

⁴ OJ 2006 L 347, p. 1.

⁵ Judgment of 12 June 2014, Ascendi Beiras Litoral e Alta, Auto Estradas das Beiras Litoral e Alta (C‑377/13, EU:C:2014:1754, paragraphs 23 to 34).

⁶ Judgments of 17 September 2014, Cruz & Companhia (C‑341/13, EU:C:2014:2230, paragraph 32); of 30 April 2014, Pfleger and Others (C‑390/12, EU:C:2014:281, paragraph 26); of 22 June 2010, Melki and Abdeli (C‑188/10 and C‑189/10, EU:C:2010:363, paragraph 27); and of 22 January 2002, Canal Satélite Digital (C‑390/99, EU:C:2002:34, paragraph 19).

⁷ See, for example, judgments of 18 December 1997, Landboden-Agrardienste (C‑384/95, EU:C:1997:627, paragraphs 20 and 23), and of 11 October 2007, KÖGÁZ and Others (C‑283/06 and C‑312/06, EU:C:2007:598, paragraph 37 – ‘it is proportional to the price charged by the taxable person in return for the goods and services which he has supplied’).

⁸ In the same express terms, see also judgment of 3 March 1994, Tolsma (C‑16/93, EU:C:1994:80, paragraph 18).

⁹ See, to that effect, judgments of 18 July 2007, Société thermale d’Eugénie-les-Bains (C‑277/05, EU:C:2007:440, paragraph 19); of 23 March 2006, FCE Bank (C‑210/04, EU:C:2006:196, paragraph 34); of 21 March 2002, Kennemer Golf (C‑174/00, EU:C:2002:200, paragraph 39); and of 3 March 1994, Tolsma (C‑16/93, EU:C:1994:80, paragraph 14).

¹⁰ Judgment of 3 March 1994, Tolsma (C‑16/93, EU:C:1994:80, paragraph 17 — ‘subjective motives’).

¹¹ Judgment of 1 July 1982, BAZ Bausystem (222/81, EU:C:1982:256, paragraph 8).

¹² Judgment of 18 July 2007, Société thermale d’Eugénie-les-Bains (C‑277/05, EU:C:2007:440, paragraph 35).

¹³ From the point of view of VAT law, money is only the means of procuring a consumable benefit (consumer good), not a consumable benefit as such. The only exception to this is in the case of acquisition of collector coins, where it is no longer the nominal value but the value to the collector which is the primary consideration.

¹⁴ The long version of this is described as a Cree Indian proverb and reads: ‘Only when the last tree has been cut down, the last fish been caught, and the last stream poisoned, will you realise we cannot eat money’.

¹⁵ On the autonomous interpretation of EU concepts, see in particular judgment of 28 July 2011, Nordea Pankki Suomi (C‑350/10, EU:C:2011:532, paragraph 22); of 14 December 2006, VDP Dental Laboratory (C‑401/05, EU:C:2006:792, paragraph 26); and of 4 May 2006, Abbey National (C‑169/04, EU:C:2006:289, paragraph 38).

¹⁶ Judgment of 18 July 2007, Société thermale d’Eugénie-les-Bains (C‑277/05, EU:C:2007:440, paragraph 32); see also, to that effect, in relation to default interest, judgment of 1 July 1982, BAZ Bausystem (222/81, EU:C:1982:256 paragraphs 8 to11).

¹⁷ See expressly judgment of 18 July 2007, Société thermale d’Eugénie-les-Bains (C‑277/05, EU:C:2007:440, paragraph 35).

¹⁸ Judgment of 23 December 2015, Air France-KLM and Hop!-Brit Air (C‑250/14 and C‑289/14, EU:C:2015:841, paragraph 29).

¹⁹ Judgment of 23 December 2015, Air France-KLM and Hop!-Brit Air (C‑250/14 and C‑289/14, EU:C:2015:841, paragraphs 32 and 33).

²⁰ Judgment of 23 December 2015, Air France-KLM and Hop!-Brit Air (C‑250/14 and C‑289/14, EU:C:2015:841, paragraph 34).

²¹ Judgment of 23 December 2015, Air France-KLM and Hop!-Brit Air (C‑250/14 and C‑289/14, EU:C:2015:841, paragraph 34).

²² Judgment of 20 June 2013, Newey (C‑653/11, EU:C:2013:409, paragraphs 48 and 49); see also Opinion of Advocate General Jääskinen in Saudaçor (C‑174/14, EU:C:2015:430, point 55).

²³ Judgments of 20 October 1993, Balocchi (C‑10/92, EU:C:1993:846, paragraph 25), and of 21 February 2008, Netto Supermarkt (C‑271/06, EU:C:2008:105, paragraph 21); see also my Opinion in Di Maura (C‑246/16, EU:C:2017:440, point 21).

²⁴ Judgments of 24 October 1996, Elida Gibbs (C‑317/94, EU:C:1996:400, paragraph 19), and of 7 November 2013, Tulică and Plavoşin (C‑249/12 and C‑250/12, EU:C:2013:722, paragraph 34), and order of 9 December 2011, Connoisseur Belgium (C‑69/11, not published, EU:C:2011:825, paragraph 21).

²⁵ Judgment of 24 October 1996, Elida Gibbs (C-317/94, EU:C:1996:400, paragraph 19); similarly the judgments of 15 October 2002, Commission v Germany (C-427/98, EU:C:2002:581, paragraph 30), and of 16 January 2003, Yorkshire Co-operatives (C-398/99, EU:C:2003:20, paragraph 19); likewise the Opinion of Advocate General Léger in MyTravel (C-291/03, EU:C:2005:283, point 69).

²⁶ Judgment of 23 November 2017, Di Maura (C-246/16, EU:C:2017:887, paragraph 20 et seq.) and my Opinion in Di Maura (C-246/16, EU:C:2017:440, point 27).