A drop in the ocean is believed not to make a difference, but what is an ocean but a multitude of drops? This generic idea can be seen as the base and also the ideal of the European legislative construction which is regarded as an amalgam of regulations and decisions which provide a common base for the states to function properly and to create therefore an environment with a beneficial effect on the evolution of the states and its citizens.
European law is much more than a conglomerate of dispositions which provides states with concrete rules. These dispositions should be regarded as guidelines which shape the modern society in order to provide balance. This organism functions extremely complexly because these different types of documents which establish provisions have a various nature which permits them to have a rather unique effect on national legislative order.
As it is known, besides the primary sources of European law, secondary sources, which include Regulations, Directives and Decisions, have a mandatory effect on the national legislation, but are still different when it comes to the way they are applied in national order. Those documents provide with dispositions on certain domains which are considered important to be applied homogeneously throughout the states in order to guarantee leveling in legislation.
The principle which underlays this mechanism is called “The principle of Priority of the European Law Over the National law of the Member States” and serves the role of homogenising law of different states which are members of the European Union in order for this structure to function properly (Fabian, 2012)
If this was all, the mechanism would look rather utopian and the much wanted homogenisation would not be practically possible. This is why the application of law is considered one of the crucial passes which are extremely important to take, in order for the law to produce the demanded effects.
In this complex construction, one of the decisive roles is played by the local administration, which subjected to law, fulfills its content with life. However, as it was explained above, because of the numerous European legislative documents present in the European space order, a correct interpretation is occasionally extremely difficult to provide. In this case, the defining connecting link between law and its appliance is represented by the jurisprudence provided by Court of Justice of European Union (hereinafter “CJEU”), which by its decisions solves the preliminary rulings of national courts, that face the incoherencies between national and European legislation.
Its decisions are compulsory for all the Member States and they indicate the right way in which several dispositions have to be interpreted in order to not permit a severe difference in the appliance of European law throughout the states.
CJEU’s jurisprudence is extremely various and besides stating the fact that European law has priority among national dispositions (Case C-6/64 Costa/E.N.E.L), it has underlined also the fact that in collision with administrative acts European law still maintains its priority (for example, in Ciola C-224/1997). Therefore CJEU stated the obligation of administrative authorities to apply European law with priority even if a definitive decision exists on the disputed matter, such as in the CaseC-453/00, Kuhne & Heitz (Claudiu, 2012). Every decision plays an immensely important role in the correction of the inconsistencies which stop European law from producing effects properly. Therefore its jurisprudence gives to these provisions power to function correctly.
As it was explained above, administration is the one which is extremely important in this process. Administration is both close to law, by being the force that applies it, and also close to people by organising them according to the law.
I.Relevant Case-Law
In order to create a legislation which improves the functioning of the society, it is necessary for several values to be identified and protected. Taking into consideration that the consignees of European dispositions are primarily the European citizens, we realise that three defining qualities which have to be respected in the European modern society, are believed to be: (1) confidentiality, (2) freedom, and (3) security.
1.Confidentiality
In the modern society, due to a pronounced evolution of the means of communication, an important issue is the one concerning confidentiality, represented by data protection.
Recent statistics show that European society is concerned about the protection of their private data. According to the Special Eurobarometer 431, published in June 2015, even though over seven out of ten respondents agree that providing personal information is part of modern life, Europeans overwhelmingly believe they should always have the same rights and protections over their personal information regardless of the state in which public authority that is providing the service is established.
Also, regarding the question “Should your explicit approval be required before any personal information is collected and processed?” 69% of people answered “yes” in all of the cases, which shows an important demand from people to control their data. One more interesting question concerned the extent to which people trust different authorities and private companies to protect their personal information. According to people’s answers, 24% completely trust medical authorities, while 50% only tend to trust them. Second most trusted institutions were national public authorities (tax authorities, social security authorities) 18% of people totally trust them, while 48% tend to trust and finally the “hall of fame” is concluded by banks and financial institutions.
In this context, the following decision of CJEU against Romanian National Health Insurance (hereinafter “NHI”) and National Antifraud Agency (hereinafter “NAFA”) is clearly of a crucial and historical importance in terms of protecting this aim.
In the Case C-201/14 of Smaranda Bara and Others, a reference was addressed for preliminary ruling regarding Directive 95/46/EC “Processing of personal data” in order to underline exceptions and limitations when it comes to the transfer of personal tax data by a public administrative body of a Member State for processing by another public administrative body.
The subject of this litigation represents the fact that the NAFA transferred data relating to their declared income to the NHI. On the basis of that data, the NHI required the payment of arrears of contributions to the health insurance regime. Therefore, the applicant challenged the lawfulness of the transfer of tax data relating to their income in the light of Directive 95/46. They submitted that the personal data were, on the basis of a single internal protocol, transferred and used for purposes other than those for which they had initially been communicated to the NAFA, without their prior explicit consent and without being previously informed. According to the order for reference, public bodies are empowered, under Law 95/2006, to transfer personal data to the health insurance funds so that the latter may determine whether an individual qualifies as an insured person. The data concern the identification of persons: surname, first name, personal identity card number, address, but does not include data relating to income received.
The answer of the Court was of a big interest and it clearly stated the obligation of public authorities to inform the person whose private information is being transferred. Although the Law had provisions that permitted the transfer, it did not include data regarding the income, therefore Court stated that “Under those circumstances, Article 315 of Law 95/2006 cannot constitute, within the meaning of Article 10 of Directive 95/46, prior information enabling the data controller to dispense with his obligation to inform the person from whom data relating to their income are collected as to the recipients of those data. Therefore, it cannot be held that the transfer at issue was carried out in compliance with Article 10 of Directive 95/46.”
The abovementioned decision is extremely beneficial in order to fight intrusive policies of national administration, which regardless of the fact that such a transfer of information is illegal, has still done it in order to satisfy its interests.
2.Freedom
The four fundamental parts of freedom which are inherent for the European space are Freedom of movement for workers, right of establishment and freedom to provide services, free movement of capital and of course, free movement of goods. Restricting one of those freedoms would equate to reconsidering the idea of united Europe itself which could have a massive impact on the people of the state member who would try to establish such discriminations.
All of those freedoms form the European internal market, a concept which rises mixed opinions throughout the citizens of the states. However, overall, according to the polls of Eurobarometer 363 about the internal market itself, the people who are more thoroughly aware of the Internal Market are more likely to have positive perceptions and acknowledge the benefits.
Consequently, when answering the question “What comes to your mind when you hear “Internal market of EU?” more than a quarter of the people answered “Trade”, a fact that clearly shows that Europeans are extremely bound and used to this type of unified commerce.
This is the reason why the following litigation which appeared in Romania was extremely important to be solved by CJEU in order to maintain this type of unity.
In this case Government Emergency Order 50/2008 introduced a pollution tax which was created in order to improve the quality of the air in Romania, but its application caused numerous disputes whether or not it contradicts European Law on the matter.
More precisely, the citizen who bought the vehicle from a state member had to fulfill a request to the local administration of finance in order to receive from them a Decision which would state the concrete value which has to be paid.
Formally, the system of taxation introduced by OUG 50/2008 did not distinguish between motor vehicles according to their origin or between the owners of those vehicles according to their nationality therefore this national provision was theoretically in accordance to European law.
CJEU stated that the first paragraph of Article 110 TFEU prohibits all Member States from imposing on products of the other Member States internal taxation in excess of that imposed on similar domestic products. Therefore, this provision of the Treaty seeks to guarantee the complete neutrality of internal taxation as regards to competition between products already on the domestic market and imported products, in order for the internal market to be filled with goods of different states and ensure their free movement regardless of their provenience.
However, it is clear from the documents presented before the Court that the legislation has the effect that imported second-hand vehicles of considerable age and wear are, despite the application of a large reduction in tax to take account of the depreciation, subject to a tax which may approach 30% of their market value, while similar vehicles offered for sale on the domestic second-hand vehicle market are not burdened by such a tax charge. It is undisputable that, in those circumstances, OUG 50/2008 has the effect of discouraging the import and placing in circulation in Romania of second-hand vehicles purchased in other Member States.
Therefore, it was considered that Order 50/2008 had an indirect discrimination effect on the goods which were imported from other Member States and its effects could severely damage the unity and scope of internal market. In this case the Central administration’s order was considered incompatible with the Union’s principles and once again CJEU underlined the importance of maintaining the Internal Market free and untouched by national provisions, even though formally the provisions serve a different declared role.
3.Security
Security from a legal perspective is regarded as one of the most important issues in the EU and this concept includes, in a broad sense, important principles which guide European legislator when creating new provisions. Some of those important principles are the Principle of protection of legitimate expectations and Principle of legal certainty.
As it is known, in order to guarantee a proper evolution of the country, its citizens have to understand the way it functions and also contribute to its welfare. From this point of view one of the most important sources of income for a state represents Value-Added Tax (hereinafter “VAT”).
Over eight in ten Europeans consider VAT an extremely important source of national revenue according to the Eurobarometer 424. In Romania, 25% of citizens considered it very important, while 47% fairly important, and approximately the same number of people were aware of the low VAT rates in their country.
In the light of this information following case seems important for the Romanian state because of the fact that people are mostly aware of the effects that VAT has on the purchasing of the goods.
Several problems which regarded VAT from a rather interesting aspect were brought before the Court. Parties signed an agreement where they did not indicate how VAT will be calculated and after an audit, Ms Tulicǎ and Mr Plavoşin were found to be taxable people subject to the VAT by the tax authorities, who issued tax assessment notices to them, by which they ordered the payment of the VAT, calculated by adding that amount to the price agreed by the contracting parties, plus overdue interest.
In the course of the proceedings giving rise to Case C 249/12, Ms Tulicǎ argued that the tax authorities’ practice of calculating the VAT by adding that amount to the price agreed by the contracting parties infringed a number of legal principles, including the principle of contractual freedom. The VAT is a component of the price, not an addition to it.
Contractual freedom is vitally important in order for the business matters to evolve properly because authorities could adopt a rather intrusive and abusive behavior regarding it which could influence extremely harmfully the evolution of local business.
Therefore, to the preliminary ruling CJEU answered that the Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, in particular Articles 73 and 78, must be interpreted as meaning that, when the price of a good has been established by the parties without any reference to value added tax and the supplier of that good is the taxable person for the value added tax owing on the taxed transaction, in a case where the supplier is not able to recover from the purchaser the value added tax claimed by the tax authorities, the price agreed must be regarded as already including the value added tax.
II.Conclusion
The ideas which represent the base of European Union are preserved, at first hand by people from this area because they represent mainly their idea of life and also, culture, but on the other hand, those ideas were slightly adapted by the government in order to create a better collision between states.
In this way, freedom became the base of the modern democracy which helped people feel citizens of Europe and not just of a particular country by moving or buying any product or service they need regardless of its origin. Security and confidentiality became principles in European legislation which helped people to feel safe against the abuse which could interfere in their everyday life from government or another person.
It is easy to observe from the explained cases that CJEU’s interpretation of the national dispositions in the light of European law helps in a decisive manner fight the abusive practices of administration. Therefore, its jurisprudential influence is extremely important in order for the Member States to create a better legislative environment for all of their citizens and each little drop in the ocean must be examined and understood in this context, as every case which is solved by CJEU, helps on a high level to create a unified space for Europeans.
By Maria Cojocaru
This article was originally published in issue 4.3 of the magazine.