The Court of Justice of the European Union (CJEU) has put an end to a years-long dispute: in a trial held this Tuesday, it has overthrown the Spanish system to demand the patrimonial responsibility of the State in case of violation of community laws. The reason? It is too restrictive, to the point that the requirements established to demand compensation make, in practice, “impossible or excessively difficult to obtain compensation”. Something contrary to Union law.
In this way, the CJEU partially upholds the demand of the European Commission, which had denounced Spain in 2017, and is in line with the conclusions of the EU Attorney General, Maciej Spuznar, presented in December. The lawyer had considered that the Spanish law, approved in 2015 to shield the Treasury against claims for the health cent, violates the so-called principle of effectiveness, by greatly complicating the possibility of claiming for damages caused as a result of regulations contrary to community law. .
The State’s patrimonial responsibility system is a tool that allows taxpayers to receive compensation if they have suffered damage or loss as a result of a law contrary to EU law ―or to the Constitution in domestic law―. In order to demand it, the rule violated must “be intended to confer rights to individuals”, its violation must be “sufficiently characterized” and there must be a direct causal relationship between the violation and the damage suffered. From then on, it is the States that are responsible for setting the requirements to recognize compensation. And, in the case of Spain, the rules are so restrictive that it is almost impossible to exercise this right.
Among other things, Spanish law requires that there be a CJEU ruling that declares the national rule incompatible and that the claimant has appealed and obtained a final dismissal ruling, in which he alleges the infringement of community law subsequently declared. All requirements that this Tuesday’s ruling has declared contrary to EU law and that Spain must modify.
“The ruling of the CJEU is a good tribute to its ruling in the matter Francovich, when he was 30 years old, which enshrined the principle of the responsibility of the State for infraction of community law”, comments Isaac Ibáñez, the lawyer who denounced Spain and triggered the process that led the Commission to denounce the State before the courts.
The conflict between Spain and the European Commission comes from afar. In 2014, the CJEU declared illegal the so-called sanitary cent, the tax on retail sales of certain hydrocarbons that collected some 13,000 million euros in nearly a decade. The Ministry of Finance led by Cristóbal Montoro (PP), however, refused to compensate those who had made the payments in the periods already prescribed, through the figure of patrimonial responsibility. A year later, faced with the avalanche of resources, he changed the law and toughened the requirements to demand compensation.
It was then that Ibáñez denounced, the same day the new law was published in the State official newsletter. Previously, the lawyer recalls, it was not necessary to have appealed previously, administratively or judicially. “The Spanish legislator of 2015, instead of adopting a diligent attitude regarding full compliance with European Union Law and adopting preventive measures that effectively contribute to said compliance, what he did was establish legislative measures that made it impossible or excessively difficult the compensation of citizens and companies for the damages suffered by a misapplication of European Union Law”, laments Ibáñez.
The CJEU also considers in its judgment that the limitation period for claiming is contrary to community law. The Spanish norm sets it at one year from the publication in the EU Official Journal of the sentence that declares the national law contrary to the European one. “The Court of Justice declares that the publication of a judgment of this nature in the Official Gazette cannot constitute the only possible starting point for the limitation period of the action whose purpose is to demand the responsibility of the national legislator for the infringements of the Law. of the Union that are attributable to it, ”says a statement from the High Court published this Tuesday.
Likewise, it questions the fact that compensation can only be demanded for the previous five years, recalling that “reparation of damages caused to individuals by infringements of Union Law must be adequate for the damage suffered”. On the other hand, the Court does not believe that the Spanish rule violates the principle of equivalence, as the Commission defended ―it does not consider that the system for claiming State responsibility is more favorable in the case of infringements of national law with respect to community law―.
The sentence of this Tuesday can have several implications. And one of the most obvious is related to those affected by the controversial model 720 of the Treasury. This informative declaration of goods abroad – to which every taxpayer who has goods or rights abroad for a value greater than 50,000 euros is obliged – provided for disproportionate fines, of up to 150% of the undeclared amount. In January, the CJEU overturned this sanctioning regime, and the Treasury quickly lowered the sanctions for not submitting the declaration or doing so after the deadline.
Alejandro del Campo, the lawyer who denounced Spain before the European authorities for the model 720 fines, believes that after Tuesday’s ruling the blow to the Treasury will be “many hundreds of millions of euros.” He explains that there are many taxpayers affected by the 720 who paid without claiming, and that now they can explore the path of patrimonial responsibility to obtain compensation. “You cannot legislate violating community law and not compensate the affected individuals”, he settles.