C-83/99 Commission v Spain

JUDGMENT OF THE COURT (Fifth Chamber)

18 January 2001 *

In Case C-83/99,

Commission of the European Communities, represented by M. Diaz-Llanos La Roche and C. Gómez de la Cruz, acting as Agents, with an address for service in Luxembourg,

applicant,

v

Kingdom of Spain, represented by S. Ortiz Vaamonde, acting as Agent, with an address for service in Luxembourg,

defendant,

APPLICATION for a declaration that, by applying a reduced rate of value added tax to the supply of services consisting in making road infrastructure available to users, the Kingdom of Spain has failed to fulfil its obligations under Article 12 of

* Language of the case: Spanish.

I - 4 59 the 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 1977 L 145, p. 1), as amended by Council Directive 96/95/EC of 20 December 1996 (OJ 1996 L 338, p. 89),

THE COURT (Fifth Chamber),

composed of: A. La Pergola (Rapporteur), President of the Chamber, M. Wathelet, D.A.O. Edward, P. Jann and L. Sevón, Judges,

Advocate General: S. Alber, Registrar: R. Grass,

having regard to the report of the Judge-Rapporteur,

after hearing the Opinion of the Advocate General at the sitting on 28 September 2000,

I - 4 60 gives the following

Judgment

Legal context and the dispute

1By application lodged at the Court Registry on 8 March 1999, the Commission of the European Communities brought an action under Article 169 of the EC Treaty (now Article 226 EC) for a declaration that, by applying a reduced rate of value added tax (VAT) to the supply of services consisting in making road infrastructure available to users, the Kingdom of Spain had failed to fulfil its obligations under Article 12 of the 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 1977 L 145, p. 1), as amended by Council Directive 96/95/EC of 20 December 1996 (OJ 1996 L 338, p. 89) ('the Sixth Directive').

Legal background

Community legislation

2Under Article 2(1) of the Sixth Directive, VAT is chargeable on the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such.

3Article 12(3)(a) of the Sixth Directive provides:

'The standard rate of value added tax shall be fixed by each Member State as a percentage of the taxable amount and shall be the same for the supply of goods and for the supply of services. From 1 January 1997 to 31 December 1998, this percentage may not be less than 15.

Member States may also apply either one or two reduced rates. These rates shall be fixed as a percentage of the taxable amount which may not be less than 5% and shall only apply to supplies of the categories of goods and services specified in Annex H.'

4Annex H to the Sixth Directive, entitled 'List of supplies of goods and services which may be subject to reduced rates of VAT', mentions as category 5 'Transport of passengers and their accompanying luggage'.

National legislation

5Royal Decree No 14/1997 of 29 August 1997 and Law No 9/1998 of 21 April 1998 amending Law No 37/1992 of 28 December 1992 on value added tax provided for a reduced rate of VAT of 7% to apply to motorway tolls, which were previously subject to the standard rate of 16%.

Pre-litigation procedure

6By letter of 22 December 1997, the Commission informed the Spanish Government that it considered that, by applying a reduced rate of VAT to the supply of services consisting in making road infrastructure available to users, the Kingdom of Spain was in breach of Article 12 of the Sixth Directive. Pursuant to Article 169 of the Treaty, it gave formal notice to the Spanish Government to submit its observations on the point within two months.

7In its reply of 24 April 1998, the Spanish Government submitted that the making available of motorways in return for payment of a toll receives very different tax treatment in the various Member States, some of which do not subject that activity to VAT, and that, in order to compensate for the resulting distortion, the Spanish authorities had decided to apply a reduced rate of VAT of 7% to that activity. The Spanish Government also stated that the application of the reduced rate was consistent with the provisions of category 5 in Annex H to the Sixth Directive.

8Since it did not regard the explanations given by the Spanish authorities as satisfactory, the Commission by letter of 10 August 1998 sent the Kingdom of Spain a reasoned opinion, restating the complaint set out in its letter of formal notice and requesting Spain to take the necessary measures to comply with the reasoned opinion within two months.

9In their reply of 21 October 1998, the Spanish authorities denied the alleged failure to fulfil obligations, on the same grounds as those previously stated.

10As the Kingdom of Spain had not complied with the reasoned opinion, the Commission brought the present action.

Grounds

Substance

11The Court has held, first, that making road infrastructure available on payment of a toll constitutes a supply of services for consideration within the meaning of Article 2(1) of the Sixth Directive, and, second, that Article 4(5) of the Sixth Directive, under which the activities of bodies governed by public law in which they engage as public authorities are exempt from VAT, does not apply to the activities of operators governed by private law (see Case C-276/97 Commission v France [2000] ECR I-6251, paragraphs 36 and 46, Case C-358/97 Commission v Ireland [2000] ECR I-6301, paragraphs 34 and 44, Case C-359/97 Commission v United Kingdom [2000] ECR I-6355, paragraphs 46 and 56, Case C-408/97 Commission v Netherlands [2000] ECR I-6417, paragraphs 30 and 40, and Case C-260/98 Commission v Greece [2000] ECR I-6537, paragraphs 31 and 40).

12It is common ground that in Spain the activity of making road infrastructure available to users on payment of a toll is carried out not by a body governed by public law but by operators governed by private law.

13Consequently, as is moreover not contested by the Kingdom of Spain, the activity in question relates to supplies of services subject to VAT and is carried on in Spain by economic operators who are taxable persons for VAT purposes in respect of that activity.

14The sole issue in the present action is therefore whether, by applying a reduced rate of VAT to those supplies of services instead of the standard rate, the Kingdom of Spain has failed to fulfil its obligations under Article 12(3)(a) of the Sixth Directive.

15The Commission's argument is that, since the option of applying reduced rates provided for in the Sixth Directive constitutes an exception, it can only apply strictly to the categories of goods and services listed in Annex H. In the present case, to treat the making available of a motorway as a supply of services relating to the transport of passengers and their accompanying luggage is contrary to the directive.

16The Spanish Government submits, on the contrary, that the making available of road infrastructure by private operators may be regarded as the activity of the transport of passengers and their accompanying luggage, and may therefore enjoy a reduced rate of VAT. It argues that this interpretation of the Sixth Directive is justified by the need to compensate for the distortions of competition which affect companies operating motorways in Spain because other Member States do not charge VAT on motorway tolls.

17On this point, it must be observed that, in the absence of a definition in the Sixth Directive of the activity of 'transport of passengers and their accompanying luggage' referred to in category 5 in Annex H, that provision should be interpreted in the light of its context within the Sixth Directive and not by reference to considerations such as those relied on by the Spanish Government relating to differences in the way the directive is applied in the Member States.

18It follows from Article 12(3)(a) of the Sixth Directive that the application of one or two reduced rates is an option accorded to the Member States as an exception to the principle that the standard rate applies. Moreover, according to that provision, the reduced rates of VAT may be applied only to the supplies of goods and services specified in Annex H.

19It is settled case-law that provisions which are in the nature of exceptions to a principle must be interpreted strictly (see, inter alia, Case C-399/93 Oude Luttikhuis and Others v Coberco [1995] ECR I-4515, paragraph 23, Case C-92/96 Commission v Spain [1998] ECR I-505, paragraph 31, and Case C-216/97 Gregg v Customs and Excise [1999] ECR I-4947, paragraph 12).

20Consequently, the expression 'transport of passengers and their accompanying luggage' must be interpreted in accordance with the usual meaning of those words.

21The making available of road infrastructure to users on payment of a toll does not consist in the provision of a means of transport but in permitting users who have a vehicle to make a journey in better conditions. That activity cannot therefore be treated as an activity of transport of passengers and their accompanying luggage within the meaning of category 5 in Annex H to the Sixth Directive.

22The Spanish Government submits, as justification for its failure to fulfil its obligations under the Sixth Directive, that the length of the procedures initiated by the Commission against the Member States not charging VAT on the activity of making road infrastructure available gave rise to a legitimate expectation on the part of the Kingdom of Spain that the Sixth Directive did not necessarily require the standard rate of VAT to be applied to that activity.

23In response to that submission, the Court must reiterate that the procedure for a declaration of a failure on the part of a Member State to fulfil an obligation affords a means of determining the exact nature of the obligations of the Member States in case of differences of interpretation (Case 7/71 Commission v France [1971] ECR 1003, paragraph 49) and is based on the objective finding that a Member State has failed to fulfil its obligations under the Treaty or secondary legislation (see, inter alia, Case C-71/97 Commission v Spain [1998] ECR I-5991, paragraph 14).

24Moreover, the principle of the protection of legitimate expectations, which is the corollary of the principle of legal certainty, is generally relied upon by individuals (economic operators) in a situation where they have legitimate expectations created by the public authorities, and cannot be relied on by a Government in order to avoid the consequences of a decision of the Court declaring a Community provision invalid (Joined Cases C-177/99 and C-181/99 Ampafrance and Sanofi [2000] ECR I-7013, paragraph 67).

25In view of the foregoing, it must be emphasised that the principle of protection of legitimate expectations cannot, in a case such as the present, be relied on by a Member State to preclude an objective finding of a failure on its part to fulfil its obligations under the Treaty or secondary legislation, since to admit that justification would run counter to the aim pursued by the procedure under Article 169 of the Treaty (see, to that effect, Case 288/83 Commission v Ireland [1985] ECR 1761, paragraph 22, and Case C-35/97 Commission v France [1998] ECR I-5325, paragraph 45).

26The reliance by the Kingdom of Spain on the principle of the protection of legitimate expectations is therefore not in any event capable of precluding a finding in the present case that the Member State has failed to fulfil its obligations.

27In those circumstances, it must be held that, by applying a reduced rate of VAT to the supply of services consisting in making road infrastructure available to users on payment of a toll, the Kingdom of Spain has failed to fulfil its obligations under Article 12(3)(a) of the Sixth Directive.

Costs

28Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the Kingdom of Spain has been unsuccessful and the Commission has applied for costs, the Kingdom of Spain must be ordered to pay the costs.

Operative part

On those grounds,

THE COURT (Fifth Chamber),

hereby:

1. Declares that, by applying a reduced rate of value added tax to the supply of services consisting in making road infrastructure available to users on payment of a toll, the Kingdom of Spain has failed to fulfil its obligations under Article 12(3)(a) of the 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, as amended by Council Directive 96/95/EC of 20 December 1996;

2. Orders the Kingdom of Spain to pay the costs.

La Pergola Wathelet Edward

Jann Sevón

Delivered in open court in Luxembourg on 18 January 2001.

R. Grass A. La Pergola

Registrar President of the Fifth Chamber

I - 4 69

OPINION OF ADVOCATE GENERAL ALBER delivered on 28 September 2000 1

I — Introduction

1In these proceedings for failure to fulfil Treaty obligations the Commission claims that the Kingdom of Spain has subjected motorway tolls not to the standard rate of VAT but to a reduced rate thereof.

2Spain justifies its action on the ground that the provision of road infrastructure by concessionaires constitutes a service which may be equated with the transport of passengers and their accompanying luggage, in respect of which a reduced rate of tax is possible. The tax reduction is also necessary in order to offset distortions of competition caused by the failure of other Member States to subject tolls to VAT.

II — Relevant provisions

A — Community law

3The rates applicable as a result of the harmonisation of turnover taxes are listed in Title IX of the 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 2 — hereinafter 'the Sixth Directive'.

4In that respect the first subparagraph of Article 12(3)(a) 3 provides as follows:

'The standard rate of value added tax shall be fixed by each Member State as a percentage of the taxable amount and shall be the same for the supply of goods and for the supply of services. From 1 January 1997 to 31 December 1998, this percentage may not be less than 15.'

5Under the third subparagraph of Article 12(3)(a), the Member States 'may also apply either one or two reduced rates. These rates shall be fixed as a percentage of the taxable amount which may not be less than 5% and shall apply only to supplies of the categories of goods and services specified in Annex H'.

6Annex H 4 contains the 'List of supplies of goods and services which may be subject to reduced rates of VAT'.

7Category 5 of the total of 17 categories refers to 'Transport of passengers and their accompanying luggage.' 5

B — National law

8Royal Decree No 14-1997 of 29 August 1997 and Law No 9/1998 of 21 April 1998, which amended Law No 37/1992 of 28 December 1992 concerning VAT, provide that a reduced rate of 7% is to be applied to motorway tolls instead of the standard rate of 16%. In order to bring this about, the provision of road infrastructure by concessionaires was equated with the transport of passengers and their accompanying luggage specified in category 5 of Annex H of the Sixth Directive.

III — Pre-litigation procedure and forms of order sought

9By letter of formal notice of 22 December 1997 the Commission informed the Spanish Government of its view that the provisions of the Sixth Directive precluded the application of the reduced rate to the collection of motorway tolls.

10The Spanish Government put forward its view in a letter of 24 April 1998 to which certain observations of the Minister for Economic and Financial Affairs of

13 April 1998 were attached. Essentially, the following arguments for the application of the reduced rate were set out therein.

11First, there is between the Member States, some of which collect no VAT, unequal treatment of taxable persons, that is to say the concessionaires as operators of the road infrastructure, as a result of the differential tax treatment of the relevant tolls paid for the use of roads. Spain therefore decided to reduce the rate of tax in order to reduce this imbalance. Furthermore, this action has no effect on the Community's own resources and was thus not at variance with the Sixth Directive.

12Second, category 5 of Annex H of the Sixth Directive is applicable in the present case. Although it is possible that a strict interpretation of the term 'transport of passengers and their accompanying luggage' does not cover the provision of road infrastructure on payment of a toll, in the present case a logical or teleological interpretation, which is not guided by the wording of the provision alone, must be taken as a basis. Since it is necessary to find a solution which enables the Member States to apply a comparable rate, a broad interpretation must be placed on the term in question. This serves to safeguard the principles of neutrality and non-discrimi nation in respect of taxation.

13However, since the Commission still considered that the Sixth Directive had been infringed, it delivered a reasoned opinion pursuant to Article 169 of the EC Treaty (now Article 226 EC) by letter of 10 August 1998. In that opinion it again pointed out to the Spanish Government that the application of a reduced rate constituted a failure to fulfil the obligations under Article 12 of the Sixth Directive and invited it to take appropriate measures within two months of service in order to comply with that opinion.

14The response from the General Secretary of the Ministry of Economic and Financial Affairs responsible for technical matters of 28 September 1998 essentially reiterated the arguments which had already been put forward.

15In the light of these submissions by the Spanish authorities, the Commission brought the present proceedings — received by the Registry of the Court of Justice on 8 March 1999 — since in its view the Kingdom of Spain had failed to comply with the reasoned opinion.

16It claims that the Court should

(1) declare that, by applying a reduced rate of tax to the supply of services consisting in making road infrastructure available to users, the Kingdom of Spain has failed to fulfil its obligations under Article 12 of the Sixth Council Directive 77/388/EEC of 17 May 1977;

(2) order the Kingdom of Spain to pay the costs.

17The Kingdom of Spain contends that the Court should

(1) dismiss the action brought by the Commission;

(2) order the Commission to pay the costs.

IV — Arguments of the parties

18The Commission contends that the reduced rate of VAT is applicable only to the services listed in Annex H of the Sixth Directive. It is unable to concur with the broad interpretation which Spain places on the Directive and cannot accept the equation of the provision of infrastructure by concessionaires with the transport of passengers and their accompanying luggage which is allegedly necessary in order to avoid discrimination. Furthermore, the Commission disputes Spain's contention that there is distortion of competition as a result of the differential tax treatment of tolls paid for the use of roads in the individual Member States. Tolls for the use of roads are charged in a total of nine of the 15 Member States. Only four Member States (France, Italy and Portugal in addition to Spain) have a comparable toll road infrastructure in terms of size. In the other Member States tolls are collected only in respect of certain stretches of road or specific bridges or tunnels. Five of these countries — including France — have not subjected tolls to VAT and therefore proceedings for failure to fulfil Treaty obligations have been instituted against them. The alleged distortion of competition is not as great as Spain claims in order to justify its action.

19Furthermore, a Member State cannot rely on unlawful acts of other Member States in order to justify its failure to fulfil Treaty obligations.

20It should also be borne in mind that the claiming of VAT allows users of the infrastructure to avail themselves of a possible tax deduction, and that this system therefore safeguards the neutrality of the tax.

21The Commission further contends that category 5 of Annex H is not applicable in the present case. As regards the 'transport of passengers and their accompanying luggage', the taxable persons undertake to transport passengers and goods from one location to another. In the present case, however, the concessionaires are making road infrastructure, that is to say motor ways, available to users so that they may move more quickly. Even if a broad interpretation is placed on the term, the two cases are not comparable.

22The real reason for the application of a reduced rate lies in the concessionaires' demand for tolls to be reduced or any increase to be avoided.

23As in the pre-litigation procedure, the Spanish Government claimed that there were distortions of competition resulting from the differential tax treatment of motorway tolls in the Member States and referred to category 5 of Annex H of the Sixth Directive to justify its action.

24Even if the service concerned — the provision of road infrastructure — varies in extent in the individual Member States, this does not justify distortions of competition which place traders at a disadvantage.

25Unequal treatment to the detriment of Spanish motorway operators in the event that the standard rate of VAT were applied is demonstrated by the fact that a large number of users would be unable to claim a deduction of input tax. This would result in the service supplied becoming more expensive, which would have a unfavourable effect on demand, and consequently the differential tax treatment would lead to an imbalance since operators in the other countries would be able to expand their trading volumes.

26Furthermore, the Spanish Government relies on the principle of the protection of legitimate expectations. In 1989 the Commission instituted several sets of proceedings for failure to fulfil Treaty obligations against other Member States who had not subjected such services to the standard rate of VAT. However, up until the end of 1997 these proceedings were not pursued further. Consequently, when the Royal Decree of August 1997 was adopted Spain had no reason to expect that the Commission would nevertheless take further action against the Member States. The staying of the relevant proceedings for failure to fulfil Treaty obligations gave rise to legitimate expectations to the benefit of Spain.

27By its action, that is to say by applying tax at a reduced rate, Spain intended to attain three objectives. First, the action was designed to limit the consequences of the distortion of competition and the unequal treatment of users. Second, it was a provisional measure intended to remain in force until a definitive solution was found at Community level. This was also notified to the Commission as such. Thirdly, a course of action had been chosen which caused no damage to the Community — a reduced rate was applied to avoid any impact on the system of the Communities' own resources.

28As regards the applicability of category 5 of Annex H of the Sixth Directive, the Spanish Government contends that it did not interpret this provision too broadly, but merely in the light of the Treaty. The Treaty lays down the principle of the protection of free competition. In view of the situation prior to the introduction of the reduced rate, Spain was not only permitted to reduce the effects distorting competition but was actually required to do so.

V — Opinion

29The provision of road infrastructure by concessionaires is a service effected for consideration subject to VAT as provided for in Article 2(1) of the Sixth Directive. The requirement that there must be a direct link between the service and the consideration, that is to say the toll, is fulfilled.

30An economic activity within the meaning of Article 4(2) of the Sixth Directive also exists in particular since, according to the case-law of the Court, the scope of the term must be assumed to be very broad without regard to its purpose or results and the service does not have to be primarily or exclusively orientated towards the market or economic life. It is sufficient that it is actually connected with economic life in some way or other, regard being had to the actual economic situation. In the present case road infrastructure is being made available on payment of a toll in accordance with a system of concessions.

31Since the concessionaires carry out this economic activity independently, they are

I - 4 53 taxable persons within the meaning of Article 4(1) of the Sixth Directive. They carry out this activity in their own name and not as representative for or on behalf of the State. Therefore, the question whether the activity of providing road infrastructure is an activity carried out in the exercise of public authority, in respect of which the State as the person carrying out the activity is not considered a taxable person pursuant to Article 4(5) of the Sixth Directive, may be left undecided.

32It follows from all the foregoing that the relevant activity constitutes a service subject to VAT. For a reduced rate to apply, the relevant activity would have to be a service within the meaning of Annex H.

33However, I am unable to accept the comparison made between the service consisting in making a road infrastructure generally available and the 'transport of passengers and their accompanying luggage' specified in category 5 of Annex H of the Sixth Directive.

34No Community law definition of this term is to be found in the relevant provisions. Therefore, in order to determine its meaning more precisely it is necessary to examine its context, regard being had to the system of the Sixth Directive.

35It is clear from the spirit and purpose of the directive, and the wording of Article 2 in particular, that the basic principle of the directive must be construed as being that any supply of goods or services is, if effected for consideration by a taxable person, subject to VAT in full unless it is expressly exempted or a reduced rate is possible. The provisions relating to reduction and exemption must therefore be interpreted strictly, since they constitute an exception to the basic principle of the directive.

36This means therefore that in the present case the term 'transport of passengers and their accompanying luggage' has to be viewed in light of its usual meaning. Thus not every contract which displays elements of transport in the widest sense can automatically be subsumed to this term. This would result in a broad interpretation of the reduction, which is precisely the opposite of what is intended. Consequently, it is a condition that elements of a contract of carriage are predominant in a contractual agreement between the concessionaires, as the operators of the infrastructure, and the users thereof.

37However, the provision of road infrastructure on payment of a toll does not satisfy this condition. Although the stretch of road to be travelled on is made available to the user for a specific period (travelling time) for consideration, elements of a contract of carriage are not predominant in this respect, since the user is merely interested in covering a specific stretch of road as quickly and safely as possible. However, the concessionaires are precisely not contractually bound to effect any 'transport'. That remains a matter for the relevant users, who use the toll motorways merely to move from one point to another and to reach their destination more quickly and conveniently.

38The need for a strict interpretation is also apparent from a comparison of the other 16 categories specified in Annex H (see footnote 4 above), which concern predominantly supplies and services of a social or cultural nature or relate to public services.

39Equating the provision of transport infrastructure for quicker and safer movement and general mobility with the transport of passengers and luggage would extend the scope of Annex H and therefore constitute a derogation from the basic rule of full taxation contrary to the spirit and purpose of the directive.

40Consequently, there is no real need to examine further the other arguments for a reduction and grounds of justification put forward by Spain. Moreover, they do stand up to scrutiny either.

41The Spanish Government justifies the application of the reduced rate on the ground that distortions of competition allegedly exist as a result of the differential tax treatment of tolls in the other Member States.

42First, it must be noted that there is no competition between the Spanish motor way operators and those of other Member States in which tolls are, wrongly, not subjected to VAT. On account of the geographic situation no Spanish driver would switch to a possibly cheaper French motorway. The fact that the profit situation of the Spanish concessionaires is possibly less favourable is a separate issue.

43A distortion of competition in this specific case would arise only if, for example, non-taxable State bodies were competing for the supply of the same services with a taxable private person and were therefore able to offer their services at a lower price because of the tax exemption. However, the Spanish Government has put forward no factual evidence to show that any such competitive situation exists.

44Furthermore, the other arguments advanced by the Kingdom of Spain in respect of distortions of competition do not stand up to scrutiny. First, the scope of the Directive — as is clear from a number of provisions — is limited to transactions within the country. There is at any rate no breach visible of the duty to treat other nationals equally in the present case. Second, the cases of distortion mentioned — no right to deduct input tax on the one hand and reduced costs on the other — are not the result of waiving tax in other countries or charging tax in Spain as the case may be, but of the misapplication of the law by other Member States. Following clarification by the Court, the Member States in which there is a toll road infrastructure will certainly levy VAT in a uniform manner.

45Even where differences regarding the application of VAT to motorway tolls undoubtedly exist between the Member States, since in certain Member States the standard rate is applied and in others no VAT is levied, it is not for the Member States to even out such differences by means of unilateral measures.

46The purpose of the Sixth Directive is to harmonise the laws of the Member States relating to turnover taxes. The aim in particular is thus to ensure — according to the ninth recital in the preamble — that the application of the Community rate to taxable transactions leads to comparable results in all the Member States. Consequently, it is evident as a whole from the harmonised VAT system that the Member States have a margin of discretion only where the relevant provisions of Community law specifically so provide.

47But if all Member States are obliged to apply the standard rate of VAT to a service such as the provision of road infrastructure by concessionaires, a Member State is barred under the Sixth Directive from following the unlawful example of others in order to eliminate differences regarding taxation. The other Member States precisely are required, for their part, to apply the rate laid down by the Sixth Directive.

48According to the constant case-law of the Court, a Member State cannot successfully rely on the fact that other Member States have likewise failed to fulfil their obligations.

49In that respect the Spanish Government may likewise not rely on an infringement of tax neutrality to justify its conduct, particularly since no infringement has taken place, or rely on the principle of the protection of legitimate expectations. First, the Commission conducted the proceedings for failure to fulfil Treaty obligations brought against Spain swiftly in under 15 months (see paragraphs 9 to 15 above), and second, the unlawful conduct of other Member States cannot create effective legitimate expectations which would justify one's own failures. The admittedly inex plicably long period of many years between the initiation of proceedings for failure to fulfil Treaty obligations and the bringing of the actions in the five cases referred to above (see paragraph 26 and footnote 5 in respect of paragraph 17 above) could have effects at most if additional retrospective payments were requested, which, however, is not so in the present case.

50The other argument advanced by the Spanish Government that the relevant Spanish provisions were merely interim measures which, moreover, had no (unfavourable) impact on the system of the Communities' own resources, is also immaterial, since the standard rate should have been applied to the service in question.

51Consequently, the argument put forward by the Spanish Government regarding the elimination of distortions of competition must be rejected in its entirety.

52To sum up, the Court should declare that, by applying a reduced rate to the provision of services consisting in making road infrastructure available, the Kingdom of Spain has failed to fulfil its obligations under the Sixth Directive.

VI — Costs

53Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the Commission has asked for the Kingdom of Spain to be ordered to pay the costs and the latter has been unsuccessful in its pleadings, it must be ordered to pay the costs.

VII — Conclusion

54For the foregoing reasons I therefore propose that the Court should rule as follows:

(1) By applying a reduced rate to the provision of services consisting in making road infrastructure available to users by concessionaires, the Kingdom of Spain has failed to fulfil its obligations under Article 12 of the 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.

(2) The Kingdom of Spain shall bear the costs of the proceedings.

Notes

(1) Original language: German.

(2) OJ 1977 L 145, p. 1.

(3) Amended by Council Directive 96/95/EC of 20 December

(199) 6 (OJ 1996 L 338, p. 89).

(4) Inserted by Council Directive 92/77/EEC of 19 October

(199) 2 supplementing the common system of value added tax and amending Directive 77/388/EEC (approximation of VAT rates) (OJ 1992 L 316, p. 1).

(5) The other 16 categories concern, for example, foodstuffs, water supplies, pharmaceutical products, medical equipment, supply of books, admissions to shows, services supplied by or royalties due to writers, supply of housing, supply of goods and services by organisations recognised as charities and engaged in welfare, and services supplied in connection with street cleaning and waste treatment.

(6) See in this connection Case C-276/97 Commission v France [2000] ECR I-6251, Case C-358/97 Commission v Ireland [2000] ECR I-6301, Case C-359/97 Commission v United Kingdom [2000] ECR I-6355, Case C-408/97 Commission v Netherlands [2000] ECR I-6417, and Case C-260/98 Commission v Greece [2000] ECR I-6537.

(7) Under Article 2(1) of the Sixth Directive, the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such is subject to value added tax.

(8) See Case 102/86 Apple and Pear Development Council [1988] ECR 1443, paragraph 11.

(9) Case 235/85 Commission v Netherlands [1987] ECR 1471, paragraph 8, Case 348/87 Stichting Uitvoering Financiële Acties [1989] ECR 1737, paragraph 10, and Case C-186/89 Van Tiem [1990] ECR I-4363, paragraph 17.

(10) Opinion of Advocate General Lenz in Case 235/85 Commission v Netherlands [1987] ECR 1478, point 22, and judgment in the same case (cited in footnote 8).

(11) Case C-260/95 DFDS [1997] ECR I-1005, paragraph 23.

(12) Case 52/75 Commission v Italy [1976] ECR 277, Case 232/78 Commission v France [1979] ECR 2729, Case 325/82 Commission v Germany [1984] ECR 777, and Case C-146/89 Commission v United Kingdom [1991] ECR I-3533.