C-828/24

Provisional text JUDGMENT OF THE COURT (Sixth Chamber) 5 March 2026 (*) ( Reference for a preliminary ruling – Taxation – Common system of taxation applicable to interest and royalty payments made between associated companies of different Member States – Directive 2003/49/EC – Decision to grant an exemption for a period prior to the provision of the attestation and supporting information – Article 1(12) – Time limit for provision of the attestation – Limitation on the period that may be subject to an exemption ) In Case C‑828/24, REQUEST for a preliminary ruling under Article 267 TFEU from the Nejvyšší správní soud (Supreme Administrative Court, Czech Republic), made by decision of 26 November 2024, received at the Court on 4 December 2024, in the proceedings Erdrich Umformtechnik GmbH v Odvolací finanční ředitelství, THE COURT (Sixth Chamber), composed of I. Ziemele, President of the Chamber, A. Kumin and S. Gervasoni (Rapporteur), Judges, Advocate General: L. Medina, Registrar: A. Calot Escobar, having regard to the written procedure, after considering the observations submitted on behalf of: –        the Odvolací finanční ředitelství, by T. Rozehnal, –        the Czech Government, by L. Březinová, M. Smolek and J. Vláčil, acting as Agents, –        the European Commission, by A. Ferrand and J. Hradil, acting as Agents, having decided, after hearing the Advocate General, to proceed to judgment without an Opinion, gives the following Judgment 1        This request for a preliminary ruling concerns the interpretation of Article 1(12) of Council Directive 2003/49/EC of 3 June 2003 on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States (OJ 2003 L 157, p. 49). 2        The request has been made in proceedings between Erdrich Umformtechnik GmbH, a company established under the laws of Germany, and the Odvolací finanční ředitelství (Appellate Tax Directorate, Czech Republic) concerning a refusal to grant an exemption from income tax on royalty payments.  Legal context  European Union law 3        Recitals 1 to 4 of Directive 2003/49 are worded as follows: ‘(1)      In a Single Market having the characteristics of a domestic market, transactions between companies of different Member States should not be subject to less favourable tax conditions than those applicable to the same transactions carried out between companies of the same Member State. (2)      This requirement is not currently met as regards interest and royalty payments; national tax laws coupled, where applicable, with bilateral or multilateral agreements may not always ensure that double taxation is eliminated, and their application often entails burdensome administrative formalities and cash-flow problems for the companies concerned. (3)      It is necessary to ensure that interest and royalty payments are subject to tax once in a Member State. (4)      The abolition of taxation on interest and royalty payments in the Member State where they arise, whether collected by deduction at source or by assessment, is the most appropriate means of eliminating the aforementioned formalities and problems and of ensuring the equality of tax treatment as between national and cross-border transactions; it is particularly necessary to abolish such taxes in respect of such payments made between associated companies of different Member States as well as between permanent establishments of such companies.’ 4        Under Article 1 of that directive: ‘1.      Interest or royalty payments arising in a Member State shall be exempt from any taxes imposed on those payments in that State, whether by deduction at source or by assessment, provided that the beneficial owner of the interest or royalties is a company of another Member State or a permanent establishment situated in another Member State of a company of a Member State. 2.      A payment made by a company of a Member State or by a permanent establishment situated in another Member State shall be deemed to arise in that Member State, hereafter referred to as the “source State”. … 11.      The source State may require that fulfilment of the requirements laid down in this Article and in Article 3 be substantiated at the time of payment of the interest or royalties by an attestation. If fulfilment of the requirements laid down in this Article has not been attested at the time of payment, the Member State shall be free to require deduction of tax at source. 12.      The source State may make it a condition for exemption under this Directive that it has issued a decision currently granting the exemption following an attestation certifying the fulfilment of the requirements laid down in this Article and in Article 3. A decision on exemption shall be given within three months at most after the attestation and such supporting information as the source State may reasonably ask for have been provided, and shall be valid for a period of at least one year after it has been issued. 13.      For the purposes of paragraphs 11 and 12, the attestation to be given shall, in respect of each contract for the payment, be valid for at least one year but for not more than three years from the date of issue and shall contain the following information: (a)      proof of the receiving company’s residence for tax purposes and, where necessary, the existence of a permanent establishment certified by the tax authority of the Member State in which the receiving company is resident for tax purposes or in which the permanent establishment is situated; (b)      beneficial ownership by the receiving company in accordance with paragraph 4 or the existence of conditions in accordance with paragraph 5 where a permanent establishment is the recipient of the payment; (c)      fulfilment of the requirements in accordance with Article 3(a)(iii) in the case of the receiving company; (d)      a minimum holding or the criterion of a minimum holding of voting rights in accordance with Article 3(b); (e)      the period for which the holding referred to in (d) has existed. Member States may request in addition the legal justification for the payments under the contract (e.g. loan agreement or licensing contract). … 15.      If the paying company or permanent establishment has withheld tax at source to be exempted under this Article, a claim may be made for repayment of that tax at source. The Member State may require the information specified in paragraph 13. The application for repayment must be submitted within the period laid down. That period shall last for at least two years from the date when the interest or royalties are paid. …’ 5        Article 2 of that directive provides: ‘For the purposes of this Directive: … (b)      the term “royalties” means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work, including cinematograph films and software, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience; payments for the use of, or the right to use, industrial, commercial or scientific equipment shall be regarded as royalties. …’  Czech law 6        Paragraph 19(1)(zj)(1) and (2) of zákon č. 586/1992 Sb., o daních z příjmů (Law No 586/1992 on income tax), which transposes Directive 2003/49 into Czech law, exempts from income tax royalties arising for a trading company resident for tax purposes in a Member State of the European Union other than the Czech Republic, paid by a trading company resident for tax purposes in the Czech Republic or by a permanent establishment of a trading company resident for tax purposes in a Member State of the European Union other than the Czech Republic where that establishment is established in the territory of the Czech Republic. 7        Under Paragraph 19(5) of that law: ‘The exemption under subparagraph 1(zj) and (zk) may be applied when: 1.      the payer of interest on debt finance or the payer of royalty payments and the recipient of interest from debt finance or the recipient of royalty payments are persons directly linked through capital for a period of at least 24 consecutive months; and 2.      the recipient of interest from debt finance or the recipient of royalty payments is their beneficial owner; and 3.      the interest on debt finance or the royalty payments are not attributable to a permanent establishment in the Czech Republic or in a State that is not an EU Member State, in a State of the European Economic Area or in the Swiss Confederation; and 4.      a decision under Paragraph 38nb has been issued for the recipient of interest from debt finance or the recipient of royalty payments. The exemption may also be applied before the condition specified in point (1) is met, but the condition must be met subsequently. If this condition is not complied with, subparagraph (4) shall be followed mutatis mutandis.’ 8        Paragraph 38nb of that law, entitled ‘Decision granting a tax exemption for income from royalty payments and interest on debt finance’, provides, in subparagraph 1 thereof: ‘A taxable person who complies with the conditions for an exemption under Paragraph 19(1)(zj) and (zk), shall request from its locally competent tax authority a decision granting a tax exemption for its income from royalty payments and from interest on debt finance. …’ 9        Paragraph 38nb(2) of that law lists the information which must be included in or accompany the application for exemption. 10      Paragraph 38nb(3) of Law No 586/1992 states that the information in the application and its mandatory accompanying information must be valid for at least one year and must not be older than three years. 11      Under Paragraph 38nb(4) of that law: ‘On the basis of an application, the mandatory accompanying information of which is specified in paragraph (2), the tax authority shall issue a decision granting an exemption, provided that the conditions specified in Paragraph 19(1)(zj) and (zk), in Paragraph 19(5) and in Paragraph 23(7) are satisfied. The tax authority shall issue that decision within three months of the point when the taxable person provided all information and evidence required to document that the conditions for the exemption have been satisfied. The decision is also binding for the payer of the tax.’  The dispute in the main proceedings and the questions referred for a preliminary ruling 12      On 5 June 2019, Erdrich Umformtechnik submitted an application to the Czech tax authorities to exempt income it had received from royalty payments from tax for the tax periods covering 2014 to 2018, in accordance with Paragraph 38nb of Law No 586/1992. 13      The Appellate Tax Directorate granted the exemption provided for in Article 38nb for the tax periods covering 2017 and 2018. By contrast, it refused that exemption for the years 2014 to 2016, on the ground that the application had been submitted after the two-year time limit had expired. 14      Erdrich Umformtechnik brought an action against the decision of the Appellate Tax Directorate before Městský soud v Praze (Prague City Court, Czech Republic). That court dismissed the action, finding that the Appellate Tax Directorate had, correctly, challenged Erdrich Umformtechnik on the basis of the belated nature of the exemption application, since it had been made after the two-year time limit had expired. According to that court, even though Czech legislation does not provide for a time limit for submitting such an application, that two-year time limit flows from Article 1(15) of Directive 2003/49, which has direct effect against Erdrich Umformtechnik. 15      Erdrich Umformtechnik brought an appeal on a point of law before Nejvyšší správní soud (Supreme Administrative Court, Czech Republic), which is the referring court. It disputes before that court that Article 1(15) of Directive 2003/49 has vertical direct effect against it. It also submits that the time limit set out in that provision constitutes a minimum time limit for the submission of an application for a refund of tax deducted at source, but cannot apply to an exemption application based on Article 1(12) of that directive. 16      In that context, the referring court considers it necessary to clarify two questions, the first of which concerns the possibility, for a Member State, by means of a decision taken pursuant to Article 1(12) of Directive 2003/49, to grant an income tax exemption in respect of a period prior to the date on which an attestation and such supporting information as that Member State may reasonably request was provided, or even in respect of a period prior to the date of the exemption decision. According to that court, such a possibility would be tantamount to retroactively validating the non-deduction of tax on royalty payments at source, in the event that the taxable person shows a posteriori that the conditions for exemption were satisfied for the tax period in question. 17      In the event that the Court answers the first question in the affirmative, the referring court asks, by a second question, whether Directive 2003/49 must be interpreted as setting a time limit for the provision of the attestation and such supporting information as may reasonably be requested by the source Member State under Article 1(12) of that directive or a time limit as regards the period, prior to that provision, to which an exemption may apply. 18      That court considers that it is not certain whether such time limits can be inferred from Article 1(15) of Directive 2003/49. That provision cannot, in recognition of its vertical direct effect, be interpreted, to the taxable person’s disadvantage, as setting the time limit given to him or her to submit the exemption application. Furthermore, the minimum time limit set out in that provision, which concerns the application for a refund of tax deducted at source, should not be confused with the time limit for submitting an exemption application. 19      That court considers that the only temporal limitation that may apply could flow from Article 1(13) of Directive 2003/49, which provides that ‘the attestation to be given shall, in respect of each contract for the payment, be valid for at least one year but for not more than three years from the date of issue’. 20      In those circumstances, the Nejvyšší správní soud (Supreme Administrative Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling: ‘(1)      Can [Directive 2003/49] be interpreted as meaning that it enables the source State to grant, on the basis of a decision pursuant to Article 1(12), a tax exemption in respect of a period that preceded the point when an attestation and such supporting information as the source State may reasonably request was provided, or that preceded the point when the decision itself was issued? (2)      If the answer to the first question is affirmative, does it follow from the Directive or another rule of EU law, either directly or indirectly, that there is (a)      any time limit for the provision of an attestation and such supporting information as the source State may reasonably request, for the purpose of a decision granting an exemption under Article 1(12); or (b)      any limit on the length of the period preceding the provision of an attestation and such supporting information as the source State may reasonably request, in respect of which a tax exemption can be granted?’  Consideration of the questions referred  The first question 21      By its first question, the referring court asks, in essence, if Directive 2003/49 must be interpreted as allowing the source Member State to grant, on the basis of a decision pursuant to Article 1(12) of that directive, an exemption in respect of a period prior to the date of that decision, or even in respect of a period prior to the date of the provision to the competent authority of the attestation and such supporting information as that Member State may reasonably request. 22      It should be recalled that Article 1(1) of Directive 2003/49 provides that interest or royalty payments arising in a Member State shall be exempt from any taxes imposed on those payments in that State, whether by deduction at source or by assessment, provided that the beneficial owner of the interest or royalties is a company of another Member State or a permanent establishment situated in another Member State of a company of a Member State. 23      Article 1(12) of that directive allows the source Member State to make an administrative decision, which is adopted after the submission of an attestation and such supporting information as that Member State may reasonably have requested, a condition for exemption from any taxes. 24      In that respect, according to settled case-law, in interpreting a provision of EU law, it is necessary to consider not only its wording but also the context in which it occurs and the objectives pursued by the rules of which it is part (see judgments of 17 November 1983, Merck, 292/82, EU:C:1983:335, paragraph 12, and of 25 February 2025, BSH Hausgeräte, C‑339/22, EU:C:2025:108, paragraph 27). 25      First of all, it should be noted that the wording of Article 1(12) of Directive 2003/49 does not preclude the source Member State from granting an exemption for a period prior to the date of the administrative decision, or even for a period prior to the date on which the attestation and supporting information were provided to the competent authority. Inasmuch as the second sentence of that paragraph states that the exemption decision ‘shall be valid for a period of at least one year after it has been issued’, it determines a minimal period of validity of that decision, but does not prohibit such a Member State from granting an exemption for a period prior to the date of that decision. 26      Next, as regards the context of that provision, it should be recalled that, in relation to the procedures for granting an exemption set out by Directive 2003/49, Article 1(11) thereof provides for the granting of an exemption on the basis of an attestation, while Article 1(12) allows the source Member State to grant such an exemption by means of a decision adopted at the taxable person’s request. 27      Furthermore, Article 1(13) of Directive 2003/49 specifies the period of validity and the content of the attestation to be submitted for the purposes of the application of Article 1(11) and (12), and the information that the source Member State may reasonably request. 28      It follows that the provisions of Directive 2003/49 do not provide for the scope of an exemption to be restricted solely to the period postdating that on which the decision referred to in Article 1(12) of Directive 2003/49 is adopted, or even postdating the provision of the attestation and supporting information to the competent authority. 29      Lastly, as regards the objectives pursued by Directive 2003/49, as is apparent from recitals 2 to 4 thereof, the purpose of that directive is that double taxation should be eliminated with respect to interest and royalty payments between associated companies of different Member States and that such payments should be subject to tax once in a single Member State, the abolition of all taxation of those payments in the Member State where they arise being the most appropriate means of ensuring equality of tax treatment as between national and cross-border transactions (judgment of 24 February 2022, Viva Telecom Bulgaria, C‑257/20, EU:C:2022:125, paragraph 48 and the case-law cited). The power of a Member State to grant an exemption under Article 1(12) of that directive for a period prior to the date of the exemption decision, or even for a period prior to the date of provision of the attestation and supporting information accompanying the exemption application, contributes to the attainment of that objective. 30      In the light of the foregoing, the answer to the first question is that Directive 2003/49 must be interpreted as allowing the source Member State to grant, on the basis of a decision pursuant to Article 1(12) of that directive, an exemption in respect of a period prior to the date of that decision, or even in respect of a period prior to the date of the provision to the competent authority of the attestation and such supporting information as that Member State may reasonably request.  The second question 31      By its second question, the referring court asks, in essence, whether Directive 2003/49 must be interpreted as setting a time limit for the provision of the attestation and such supporting information that the source Member State may reasonably request in order to adopt an exemption decision under Article 1(12) of that directive or as laying down a limit on the duration of the period prior to the provision of that attestation and supporting information in respect of which an exemption may be granted. 32      It is not apparent from the wording of Article 1(12) of Directive 2003/49 that that paragraph lays down a time limit for the provision of the attestation and supporting information to the competent authority or that it sets a limit on the duration of the period prior to the provision of that attestation and supporting information in respect of which an exemption may be granted. 33      The same is true of Article 1(13) of that directive. It is true that paragraph 13 provides that the attestation required for each contract for the payment has a maximum period of validity of three years from the date of issue. However, it does not impose a time limit on the applicant for the submission of the attestation and the supporting information to the competent authority. Nor does it set a limit on the duration of the period prior to the provision of that attestation and supporting information in respect of which an exemption may be granted. 34      As regards Article 1(15) of that directive, it does not lay down a time limit applicable to exemption applications submitted under Article 1(12) thereof. 35      Article 1(15) of that directive, which envisages the possibility, for the paying company or permanent establishment that has withheld tax at source to be exempted, to submit an application for repayment, corresponds to a procedural scheme distinct from exemption applications submitted under Article 1(12) thereof. While Article 1(15) of Directive 2003/49 specifies that the time limit set by the Member State for submitting an application for repayment is a minimal period of two years from the date when the interest or royalties are paid, that time limit does not apply to the procedures covered in Article 1(12) of the directive. 36      That interpretation is supported by the purpose of Directive 2003/49 referred to in paragraph 29 of the present judgment. The setting, by the directive itself, of a time limit for the provision of the attestation and supporting information or of a limit on the duration of the period prior to the provision of that attestation and supporting information in respect of which an exemption may be granted, is not necessary for achieving that purpose. 37      As regards the dispute in the main proceedings, it appears, subject to verification by the referring court, that there was no obligation on Erdrich Umformtechnik under Article 1(15) of Directive 2003/49. In addition, it should be recalled that a directive cannot of itself impose obligations on an individual and cannot therefore be relied on as such against that individual (judgment of 3 May 2005, Berlusconi and Others, C‑387/02, C‑391/02 and C‑403/02, EU:C:2005:270, paragraph 73 and the case-law cited). 38      As Directive 2003/49 does not set a time limit for the provision of the attestation and supporting information for an application for an exemption from tax on royalty income, it is for the domestic legal system of each Member State to set that time limit, by virtue of the principle of procedural autonomy (see, by analogy, judgment of 22 December 2022, Shell Deutschland Oil, C‑553/21, EU:C:2022:1030, paragraphs 25 and 26 and the case-law cited). In the present case, as the European Commission states in its written observations, it is for the referring court to verify whether there is, under Czech law, a time limit applicable to the situation at issue in the main proceedings. 39      In the light of all the foregoing considerations, the answer to the second question is that Directive 2003/49 must be interpreted as not setting a time limit for the provision of the attestation and such supporting information that the source Member State may reasonably request in order to adopt an exemption decision under Article 1(12) of that directive, or a limit on the duration of the period prior to the provision of that attestation and supporting information in respect of which an exemption may be granted.  Costs 40      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable. On those grounds, the Court (Sixth Chamber) hereby rules: 1.      Council Directive 2003/49/EC of 3 June 2003 on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States must be interpreted as allowing the source Member State to grant, on the basis of a decision pursuant to Article 1(12) of that directive, an exemption in respect of a period prior to the date of that decision, or even in respect of a period prior to the date of the provision to the competent authority of the attestation and such supporting information as that Member State may reasonably request. 2.      Directive 2003/49 must be interpreted as not setting a time limit for the provision of the attestation and such supporting information that the source Member State may reasonably request in order to adopt an exemption decision under Article 1(12) of that directive, or a limit on the duration of the period prior to the provision of that attestation and supporting information in respect of which an exemption may be granted. [Signatures] *      Language of the case: Czech.