C-359/97

OPINION OF MR ALBER — CASE C-359/97

OPINION OF ADVOCATE GENERAL ALBER delivered on 27 January 2000 *

I — Introduction 3. The first comprises the Erskine Bridge over the River Clyde, which is owned by the Secretary of State for Scotland and operated by him. The second comprises the Tyne and Mersey Tunnels and the Tay, Tamar, Itchen, Humber, Cleddau, Forth Road and Clifton Suspension bridges, each of which — apart from the Tamar Bridge — is owned by a local authority, 1. In these proceedings for failure to fulfil the local passenger transport authority Treaty obligations the Commission claims (hereinafter 'PTA'). 2The PTAs also operate that the United Kingdom has failed to fulfil the infrastructure except in the case of the its obligations under the EC Treaty in so far Tay, Humber and Forth Road Bridges. as value added tax was not levied on These are operated by a Bridge Board, charges for the use of roads and bridges which is set up and managed by the (tolls) and corresponding payments of own relevant local authority. The Tamar Bridge resources with interest were not made. 1 is owned by Cornwall County Council and Plymouth City Council. It is the responsi- bility of a joint committee not set up by statute or by a local authority. The third category — the so-called PFI (Private Finance Initiative) crossings — comprises the Dartford River Crossing (Thames) and the Severn Bridges and Skye Bridge. Their operation is entrusted to concessionaires by the relevant Secretary of State. 2. In the United Kingdom infrastructures subject to tolls essentially fall into three categories.

6. By letter of 3 July 1987, the British authorities replied that changes in the 9. The Commission raised the question of British VAT system could not be contem- own resources in a letter of 27 November plated until the question had been clarified 1987. It informed the British authorities by the VAT Committee. 3 that the failure to charge VAT on tolls could mean that contributions to own resources had been miscalculated. The British Gov- ernment was asked to calculate whether own resources had been underpaid for the years 1984 to 1986 and, if so, to make the appropriate amounts available to the Com- 7. In its letter of formal notice of 20 April mission. 1988, the Commission pointed out that the role of the VAT Committee was to consider questions relating to the implementation of Community legislation on VAT and that it had no power to decide whether or not there had been an infringement of the Sixth VAT Directive. The letter of formal notice 10. As no such calculations were received concluded that the failure to levy VAT on by the Commission, it sent a letter of formal notice on 31 January 1989. The British authorities were asked once again to 3 — See Article 29 of the Sixth VAT Directive. make the necessary calculations for the

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years 1984 to 1986 and to forward them to 14. The Commission therefore brought an the Commission. They were asked to make action under Article 169 of the EC Treaty the outstanding amounts together with (now Article 226 EC) — received by the interest for late payment from 31 March Registry of the Court of Justice on 1988 available to the Commission, and to 21 October 1997 — claiming that the make the calculations annually, subject to Court should interest, for subsequent years for as long as the infringement continued.

(3) if and to the extent that the application 16. Article 2 of the Directive provides: is not dismissed, impose a temporal limitation upon the effects of the judg- ment, alternatively such other limita- tion as the Court considers appropri- ate; and 'The following shall be subject to value added tax:

1. the supply of goods or services effected (4) order the Commission to bear the costs for consideration within the territory of of the proceedings. the country by a taxable person acting as such;

...'

III— Legal background

17. Under Article 4(1), (2) and (5) of the Directive:

1. The levying of VAT '1. "Taxable person" shall mean any per- son who independently carries out in any place any economic activity specified in paragraph 2 whatever the purpose or results of that activity.

However, when they engage in such activ- (a)... ities or transactions, they shall be consid- ered taxable persons in respect of these activities or transactions where treatment 5 — Annex D lists a total of 13 types of activity, including as non-taxable persons would lead to telecommunications, the supply of water, gas, electricity, significant distortions of competition. port and airport services, and the running of trade fairs and exhibitions. 6 — Article 13(A) lists 17 exemptions for certain activities in the public interest. Thus inter alia the following are exempt from tax: the supply of services by the public postal services, hospital and medical care, the supply of services and of goods closely linked to welfare and social security work and to the protection of children and young persons, supply of services for their members by non-profit-making organisa- tions with aims of a political, trade-union, religious, patriotic, philosophical, philanthropic or civic nature, and activities of public radio and television bodies other than those of a commercial nature. Article 13(B) provides for In any case, these bodies shall be consid- further exemptions for insurance and reinsurance transac- tions, certain credit activities and — with four excep- ered taxable persons in relation to the tions — the leasing or letting of immovable properry.

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(b) the leasing or letting of immovable dance with Decision 88/376/EEC, Eura- property excluding: tom, to the base determined in accordance with this Regulation.'

1. The provision of accommodation... in the hotel sector..., 2. The letting of premises and sites for 20. Article 2(1) provides: parking vehicles; 3. Lettings of permanently installed equipment and machinery; 4. Hire of safes.

OPINION OF MR ALBER — CASE C-359/97

rise to the payment of interest by the and tunnels are open to the public subject Member State concerned at the interest to the payment of a toll and that the rate applicable on the Member State's national VAT system makes no provision money market on the due date for short- for charging VAT on such tolls. The rele- term public financing operations, increased vant authorities 11 are able to grant conces- by two percentage points. This rate shall be sions for the design, construction or main- increased by 0.25 of a percentage point for tenance of roads. In Scotland the conces- each month of delay. The increased rate sion agreement can also cover the operation shall be applied to the entire period of or improvement of roads. In exchange, tolls delay.' may be charged for the use of the road. Those tolls are determined by the relevant local authority in conjunction with the Secretary of State for Transport. The period during which tolls may be levied, which may be linked to the achievement of (c) Council Decision 88/376/EEC, Eura- specific financial objectives or the passage tom, of 24 June 1988 on the system of of a specified number of vehicles, is also the Communities' own resources 9 defined.

22. Under this decision the missing income from VAT own resources is to be made up by own resources deriving from gross domestic product in order to provide the 24. For some roads toll collection is carried rest of the financing, which results in a out on behalf of the Secretary of State by a redistribution of the burden to the detri- third party under the terms of the conces- ment of the other Member States. sion. Other toll roads are privately owned. VAT should have been charged in both cases.

30. Nor, contrary to the view of the British Government, is this an instance of tax exempt leasing or letting of property. There can be leasing only where an identified area 27. In the Commission's submission Arti- or space is supplied to a lessee by a cle 4(5)(1) is not applicable in the present proprietor for exclusive occupation for an case as that article only covers activities agreed period of time and in exchange for which form part of trie core of public an appropriate payment. In the present case responsibilities borne by the public body there is no leasing as no exclusive right of itself. In contrast, where a private economic occupation is granted, but merely the right operator — the concessionaire — under- takes activities which are in the public to travel on a road. interest, such activities are not exempt from VAT.

31. The Commission does not consider that there should be a temporal limitation on 28. Road users have an economic choice to the judgment in these proceedings. In make. They must weigh the cost of the toll proceedings under Article 169 of the EC

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32. In the present case the British Govern- ment was informed at an early stage of the infringement of the provisions of the com- mon VAT system and requested to take appropriate measures, in particular as regards the payments to own resources. 35. In Article 174 of the EC Treaty (now As there was no objective, significant Article 231 EC) the Court has appropriate uncertainty regarding the application of means at its disposal which can also be the provisions of Community law, the applied in proceedings for failure to fulfil Court was not bound to limit the temporal Treaty obligations. First, it must be borne effects of its judgment. in mind that proceedings whose duration is unwarranted and excessive seriously pre- judice the rights of the defence of the defendant Member State. There is a general principle of Community law to the effect that proceedings should be of reasonable length. The Commission's conduct also 33. The United Kingdom contends that the cannot be accepted without demur or Commission's action is inadmissible at least challenge from the point of view of legal in so far as it relates to past consequences certainty and the protection of legitimate of the alleged failure to fulfil obligations. expectations. The pre-litigation procedure This view is based on the inordinate length demonstrated that there was objective, of the proceedings, amounting to over 10 significant uncertainty regarding the appli- years from the opening of the pre-litigation cation of Community provisions. There procedure to the bringing of the action. In was an imperative need to clarify this its action the Commission not only alleges swiftly.

37. As to the merits, the United Kingdom contends that the bodies levying tolls are not taxable persons within the meaning of Article 4(1) of the Directive as the excep- tion in Article 4(5) is applicable. 40. In the case of the PFI crossings, the concessionaires are other bodies governed by public law. They are bound by the applicable statutes concerning the construc- tion and operation of toll roads. In the case of the Dartford River Crossing the Secre- tary of State has delegated his powers to maintain and improve the road to a con- 38. The Erskine Bridge is operated by the cessionaire. The Secretary of State none the Secretary of State for Scotland as a public less retains ultimate responsibility and body in the exercise of public authority. control. In particular, he sets the amount Notwithstanding the collection of the toll, of the toll and the conditions of its the Secretary of State is not a taxable collection. The grant of the concession is person within the meaning of the Directive. not, therefore, subject to the general law. The question as to when a public body is acting under public law or private law must be answered in the light of the relevant national legislation. However, as the Secre- tary of State carries out his activities under public law and the specific provisions applicable in that connection, he is not 41. In the case of the Severn Bridges too, liable to VAT in respect of the toll. The certain powers of the Secretary of State construction and maintenance of public may be transferred to a concessionaire. The roads is undertaken by a public body under legal framework and substance of the grant

of the concession follow the lines of those 44. The position of the concessionaires also in the case of the Dartford River Crossing. differs from that of other economic opera- tors because of the continuing influence of State bodies. They cannot therefore be taxable persons within the meaning of the Sixth Directive, as concessionaires are sub- ject to a different legal regime from that applicable to private operators. 42. The Skye Bridge is operated under the New Roads and Street Works Act 1991. The Secretary of State and the Councils, as local authorities, are responsible for the construction of roads under the Roads (Scotland) Act 1984. This also provides for the levying of a toll. Although the construction of roads is essentially the responsibility of public bodies, the planning 45. Moreover, there is no taxable supply, as and construction of certain roads can be responsibilities are being discharged in the delegated to private parties under the rules. exercise of public authority. Such roads can then be operated by con- cessionaires involved in the planning, con- struction, maintenance, operation or improvement of the relevant roads, in return for the payment of a toll. In such a case, the power to levy a toll is delegated to the concessionaires. However, this does not alter the fact that the roads remain public property. Public responsibilities are dele- 46. Finally, the United Kingdom also con- gated to concessionaires for the duration of tends that, even if this is a case of a taxable the concession. The legal regime applicable activity carried out by a taxable person, it is to the Skye Bridge is similar to the rules exempt from tax as it constitutes the applicable in the case of the Dartford leasing or letting of immovable property, Crossing and the Severn Bridges. The which is exempt from VAT. The definition concessionaires are merely entitled to of letting does not require a classic landlord obtain a reasonable return. and tenant relationship. A broad interpre- tation is called for, as the list in Arti- cle 13B(b) demonstrates. The arrangements listed do not fall within the classic defini- tion of letting either. Letting does not necessarily require that a lessee should have an exclusive right of possession over a piece 43. As the Secretary of State and the local of property. This is clear from the inclusion authorities retain responsibility for the of the letting of premises and sites for construction and maintenance of toll roads, parking vehicles in Article 13B(b) at (2). In it must be considered generally that the the present case the road user receives the supply of infrastructure by bodies governed right to use a particular stretch of road. The by public law is undertaken in exercise of time component required by the Commis- public authority. sion can easily be identified as it consists in

47. The United Kingdom contends that the fact that almost 10 years elapsed between the date of the Commission's letter of formal notice, 20 April 1988, 12 and the date on which this action was brought 50. In the present case, the defendant before the Court of Justice, 21 October merely asserts that there was an extremely 1997, demonstrates that the length of the long time between the institution of the proceedings is excessive and unwarranted. pre-litigation procedure and the bringing of the action and that the Commission's inaction had implications for its defence. However, it did not put forward any specific argument to demonstrate that this length of time made it more difficult to 48. On that ground, the defendant contests refute the arguments of the Commission the admissibility of the action in so far as and that its rights of defence were thereby the claim is for the payment of contribu- 13 — Case C-207/97 Commission v Belgium [1999] ECR I-275, paragraph 24, and the references contained therein. 12 — The reasoned opinion was sent by letter of 10 August 14 — Case C-96/89 Commission v Netherlands [1991] ECR 1989. I-2461, paragraphs 15 and 16.

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infringed. The action is, therefore, not ded for consideration the Court has ruled inadmissible. that, for the provision of services to be taxable, there must be a direct link between the service provided and the consideration received. 15

Merits

54. There is such a direct link in that a toll is paid for the provision of infrastructure, 1. Levying of VAT on tolls the amount of which, in turn, depends on the type of vehicle concerned and the length of the road.

57. Under Artide 4(1) and (2) of the 60. This means, first, that not all activities Directive, a taxable person is any person of bodies governed by public law are who independently carries out any eco- automatically exempt from tax, but only nomic activity — and that includes all those which also serve to discharge a activities of producers, traders or persons specific responsibility in the exercise of supplying services. public authority. Second, an activity carried on by a private individual is not exempted from VAT merely because it consists in carrying out acts falling within the prero- gatives of the public authority. 17

58. Under Article 4(5)(1) of the Directive, States, regional and local government authorities and other bodies governed by public law are not to be considered taxable 61. The subject-matter or purpose of the persons in respect of the activities or activity of the public body does not deter- transactions in which they engage as public mine whether activities are carried out as authorities. This is so even where they public authorities. According to the case- collect dues, fees, contributions or other law of the Court, it is the way in which the payments in connection with these activ- activities are carried out that determines to ities or transactions. what extent public bodies are to be treated as non-taxable persons. 18

(aa) State activity 62. The Court has thus ruled that the bodies governed by public law referred to in the first subparagraph of Article 4(5) of the Sixth Directive engage in activities as public authorities when they do so under

63. Since, under Article 6(1) of the Sixth 65. It is true that the provision of roads is VAT Directive, even activities carried out in not expressly classified as an activity sub- pursuance of the law are taxable, it is clear ject to VAT, as the supply of water, gas and that the mere fact that an activity falls electricity is in Annex D. In reality, the within the remit of public law is not provision of road infrastructure without sufficient to fulfil the requirements for charge must be seen as an activity of the VAT exemption in Article 4(5)(1). As that State. The question remains whether, con- provision constitutes an exception to the versely, the whole network of roads built definition of taxable person, it must be with taxpayers' money in discharge of a interpreted strictly. Thus, only those activ- State responsibility can be operated by ities of public authorities which constitute private economic operators on payment of the essential core of State activity can be a toll which is collected from everyone. In considered exempt from VAT. This is also any event, making available a stretch of confirmed by Article 4(5)(3), which refers road in a manner which is selective, inas- to the activities listed in Annex D (see much as payment is required, cannot be above at point 17), in respect of which even seen as an activity performed in the exercise bodies governed by public law are liable to of public authority. The levying of a toll is, VAT. indeed, also possible in connection with a State activity and, in itself, does not give rise to tax liability, as Article 4(5)(1) expressly confirms. It should, however, be borne in mind that, in the present case, the road user has a choice between using the toll-free road infrastructure and using toll roads. In providing the toll-free road net- work, the State responsibility has, in any 64. The planning and construction of event, been discharged and the provision of roads, bridges and tunnels are State respon- additional stretches of road on payment of sibilities which can only be discharged by a toll must be viewed as a purely private bodies governed by public law. Such activ- economic activity. Anyone who needs plan- ities concern an essential part and thus the ning permission which is subject to a fee core of public responsibilities. They can be has no option but to pay the fee. Anyone who is following a course of study for which everyone must pay fees has no other 19 — Carpaneto, cited above at footnote 16, paragraph 16. means of achieving the same goal, i.e. the

66. Article 4(5)(1) is, therefore, not applic- able to the present case, since the provision of infrastructure on payment of a toll cannot be regarded as an activity carried out in the exercise of public authority. The bodies empowered to collect the tolls must, therefore, be considered to be taxable persons. 70. Under this wide definition of economic activity it is not necessary for services to be primarily or exclusively orientated towards the market or economic life. It is sufficient that they are actually connected with economic life in some way or other. 21 In the present case, the road infrastructure is provided, on payment of a toll, by the competent authorities or by third parties to (bb) Economic activity whom the activity is delegated. Even if such delegation is subject to public law and the toll roads form part of the public roads network, this is of no relevance in deter- mining whether there is an economic activity. Under Article 6(1) of the Sixth

67. As I have already pointed out, under 20 — Case 235/85, cited above at footnote 11, Case 348/87 Article 4(1) of the Directive any person Stichting Uitvoering Financiële Acties v Staatsecretaris van Financiën [1989] ECR 1737, paragraph 10, and Case who independently carries out any eco- C-186/89 Van Tiem [1990] ECR I-4363, paragraph 17. nomic activity is deemed to be a taxable 21 — Opinion of Advocate General Lenz of 12 February 1987 in Case 235/85, point 22, and judgment in that case, cited person. above at footnote 16.

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VAT Directive taxable transactions may may be exempt from tax under Arti- include the performance of services in cle 13B(b). pursuance of an order made by or in the name of a public authority or in pursuance of the law. The objective nature of the definition of economic activity also calls for the classification of the activity in this case as an economic one as the activity itself must be considered, regardless of its pur- 73. Under that Article the provision of pose or result. infrastructure on payment of a toll would be exempt from tax if it constituted the letting of immovable property.

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contract which has some characteristics of 79. There is, further, no letting here since a letting is automatically covered by the the user has no protection from unauthor- term. This would constitute a wide inter- ised use by third parties, nor can he make pretation of the exemptions from tax which general use of the property; his right to use is precisely what is not intended. The the property is limited to the possibility of requirement is, therefore, that the charac- travelling along the road. teristics of a letting should predominate in the contract.

80. The chief purpose of the 'contract' between the parties is not so much the use 77. The provision of roads infrastructure of the property as the one-time provision of on payment of a toll does not, however, a service using that property. For car fulfil that condition. It is true that an drivers the brief use of the property is in identified area of space (the road travelled fact of secondary importance, as their along) is made available to the user for an priority is to reach their destination quickly agreed period of time (the length of the and safely. journey) in exchange for payment. How- ever, the characteristics of a letting do not predominate here, as the user's priority is to travel along a given stretch of road as quickly and as safely as possible. The use of the property, on the other hand, is of secondary importance.

85. The examples of distortions of compe- (d) (In the alternative) Distortion of com- tition given by the Commission do not petition stand up to scrutiny here. First, the scope of the Directive — as is clear from a number of provisions — is limited to transactions at national level. There is no breach of the duty to treat other nationals equally in the present case. Second, the cases of distortion 83. Under Article 4(5)(2) States, regional mentioned — no right to deduct input tax and local government authorities and other on the one hand and reduced costs on the bodies governed by public law are consid- other — are not the result of waiving tax or ered taxable persons even in respect of the charging tax as the case may be, but of the activities or transactions in which they misapplication of the law. Following clar- engage as public authorities, where treat- ification by the Court, the Member States ment as non-taxable persons would lead to will certainly levy VAT in a uniform significant distortions of competition. In manner. (The same will then be true of the light of the observations made above, payments to own resources.) If the Com- this sub-case should not require analysis as mission's argument is taken to its logical such activity must be considered not to conclusion, distortions of competition form part of State activities. The following would most of all prejudice those countries analysis is thus given only in the alterna- where no road tolls are levied at all. tive.

84. A distortion of competition in the above sense would arise where a non- taxable State body was competing for the supply of the same services with a taxable 86. There are thus no distortions of com- private person and was therefore able to petition within the meaning of Arti- offer its services at a lower price because of cle 4(5)(2) which would justify treatment the tax exemption. In the provision of road as a taxable person. However, as I

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3. Temporal limitation on the effects of the 95. The practical implications of the Uni- judgment ted Kingdom's obligation to remedy its failure to fulfil Treaty obligations and the effect of the length of the proceedings must therefore be considered.

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the action thereby affected cannot be ruled fulfil Treaty obligations as regards the out entirely. 26 Nevertheless, the case-law of correction of annual statements. 28 The the Court tends to reject the idea that the possibility of invoking the principle of legal Commission's right of action can be forfei- certainty in the absence of a limitation ted. 27 period has been acknowledged by the Court of Justice in its case-law. 29

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declaration, this might result in the inad- 103. According to the case-law of the missibility of the action, but would not Court, a dispute between the Commission prejudice the claim for a declaration as and a Member State over the collection of such, which could be made afresh to the own resources may not cause the financial Court at any time. equilibrium of the Community to be dis- rupted. 31 In the present case, a temporal imitation on correction could have the result that some Member States paid resources to the Community in accordance with Community law, whilst others were exempted from payment. However, on that point, it must be observed that the Member States which have levied VAT and paid a share of it to the Community have not 101. However, in the present case, there is suffered a disadvantage. They, after all, a claim by the Communities for payment retain a proportion of the VAT which is from the defendant Member States greater than that paid to the Community. attached to the declaration of failure to fulfil Treaty obligations. The financial implications of this also require careful consideration from the point of view of legal certainty.

108. Moreover, the Member States cannot settle the matter themselves, if the proceed- ings for failure to fulfil Treaty obligations 106. It is clear from the time-limit in stagnate, as here, in the pre-litigation Article 9(2) of Regulation No 1553/89 that phase. The Commission is not bound to Member States are not intended to be bring an action and the Member State exposed for more than four years to the cannot challenge the reasoned opinion. risk of paying to the Community a percen- Taken together, these factors could be an tage of VAT which has mistakenly not been incentive to circumvent proceedings for levied. On the other hand, Member States failure to fulfil Treaty obligations. How- have in principle no protection if they have ever, such conduct on the part of the notice of a clear objection of the Commis- Commission would be contrary to the spirit sion before expiry of the time-limit. It is the of the correction procedure. responsibility of the Member State con- cerned if it does not act on an objection by the Commission and, for example, fails to levy VAT generally. Having notice of the objection it is able to assess in principle the obligations which arise from the VAT 109. In the context of the Commission's Directive and proceed accordingly. relationship to the Member State, it must be considered that the previous financial years are closed and no correction is to be made.

107. However, if the Member States have reasonable grounds for disputing the Com- 110. The period to which the Commis- mission's view as to whether certain trans- sion's action relates does not appear to be actions are subject to VAT or not, the clearly defined. The application merely practical arrangements for the correction seeks a declaration of failure, without procedure, and in particular their applica- citing a particular period. The application tion by the Commission in the present case, must be considered in the light of the may have unreasonable consequences. As apparent aim of the request for legal the Community is a Community governed protection: in other words, the purpose of

the action is to be determined in the light of 113. However, it is not clear how the the grounds stated. exception in the second part of Article 9(2) is to be understood. It states, on the subject of the annual statements to which no corrections may be made: 'unless they concern points previously notified either by the Commission or by the Member State concerned.' For the 1984 to 1990 financial years, the underlying issues and various legal points which also underlie this appli- 111. It is clear from the Commission's cation were discussed with the United letter of formal notice of 20 April 1988 Kingdom. amongst the documents on the Court file that the Commission's claims relate to the period from 1984 until cessation of the alleged infringement. It must therefore be assumed that this is the period at issue in the Court action too. Although the Com- mission took no further action in respect of subsequent years between the end of the pre-litigation procedure and the bringing of the action, it must be assumed that its 114. There is a strong case for interpreting intention was to put an end to the infringe- the second part of Article 9(2) to mean that ment with all that this implied for the exceptions to the 43-month time-limit are subsequent years. The extent to which the only to be allowed if those concerned have financial years since 1984 are now closed continued in the intervening period to make so that the annual statements cannot now an effort to solve the problems raised. be corrected must therefore be examined. However, if the proceedings come to a lengthy and unwarranted standstill, it would be contrary to the spirit and purpose of the provision to continue to apply it. In the present case there was not sufficient further dialogue in the years between 1990 and 1997 to enable a solution to the problems to be found. In response to questioning in the oral procedure the 112. The first part of Article 9(2) of Reg- Commission stated that it regularly raised ulation No 1553/89 provides that no fur- the problem of own resources with the ther corrections may be made to the annual Member States concerned and that there statement after 31 July of the fourth year was an ongoing dialogue on the question of following the financial year concerned, that levying VAT. 32 However, this cannot be is to say, after 43 months. The annual viewed as sufficient to have enabled an statement for the 1984 financial year could amicable agreement to be reached. That accordingly no longer be corrected after was not possible because of the stance 31 July 1988. The equivalent calculation is taken by the parties. It should also be borne to be made for subsequent years. It would, therefore, no longer be possible for the Commission to collect own resources for 32 — At the oral procedure, the United Kingdom and Greece disputed that there had been any dialogue with the those years. Commission.

115. Whilst the objective of this provision is to grant an extension of the time allowed in complex cases raising many problems, the parties must be seen to be making an effort to reach a solution; otherwise the 118. Even if one were to take the view that Commission could circumvent the 43- the pre-litigation procedure itself had the month time-limit under the first part of effect of interrupting the running of the Article 9(2) by routinely raising objections time allowed, such interruption cannot to the Member States' annual statements. It continue beyond the 43-month time-limit. would then be able to investigate the As there were more than four years — circumstances for an unlimited time and seven to be exact — between the last postpone the closure of the financial year exchange of letters in the pre-litigation indefinitely. However, that would be nei- procedure and the bringing of the action, ther desirable on economic grounds, nor an argument on the basis of the interrup- compatible with the principle of legal tion of the time allowed cannot be sus- certainty. The Commission would be able, tained. without having to justify it, to circumvent the requirements of the first part of Arti- cle 9(2) according to which the time-limit for the closure of the annual statements is 31 July of the fourth year following the relevant financial year. 119. The principle of the protection of legitimate expectations and the general timetable resulting from the 43-month time-limit for the correction of annual statements mean that the collection of contributions to own resources must be limited to the four years before the bringing 116. As the provisions of Article 9(2) do of the action. In the present case, since the not impose a limitation period, it is of no Commission's action was lodged at the relevance that the Member State has not Court of Justice on 21 October 1997, that raised a plea that the action is time-barred. means that the financial years since 1994 Only claims can be out of time. However, are not yet closed and that corrections are Article 9(2) does not provide for any still possible. 33 claims, but merely regulates the time allowed for the correction of annual state- ments. 33 — See point 111 for the calculations.

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however, the Commission is entitled to collect the own resources retro- spectively and claim interest for late payment only as from 1994 (the financial year).

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

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