This request for a preliminary ruling was made in main proceedings between The North of England P & I Association Ltd (NoE), an insurance company established in the United Kingdom, and the Bundeszentralamt für Steuern (Federal Central Tax Office, Germany) (BZS), concerning tax on insurance premiums paid with respect to the provision of insurance cover by NoE for various risks linked to the operation of sea-going vessels entered in the shipping register maintained by the Federal Republic of Germany, but flying the flag of another Member State or of a third State under a temporary flagging‑out authorisation.

NoE provided cover for 14 companies established in Germany and entered in the register of companies maintained by the Amtsgericht Hamburg as limited liability companies governed by German law (GmbH). The companies' sea-going vessels were all entered in the shipping register maintained by the Amtsgericht Hamburg. The shipping company managing those 14 companies, whose fleet included all of the relevant vessels, as well as bareboat charterers established in Liberia and Malta, were also parties to the insurance contracts at issue in the main proceedings, as policyholders or co-insured.

Under the German ship registration statute, the ships concerned were authorised to fly a national flag other than the German flag, namely the flag of Malta or the flag of Liberia. During the flagging‑out period, those vessels remained registered in the German shipping register.

NoE received payment in the form of insurance premiums which were not declared in Germany for the purposes of insurance tax. Following a tax inspection carried out in 2012, the BZS issued a notice for recovery of tax amounting to EUR 13,374.57. NoE brought an action before the referring Court challenging that decision, claiming that these insurance premiums were not taxable in Germany since the risks associated with the ships insured were not situated in that Member State. NoE argued that the Member State of registration, referred to in art 2.d of Directive 88/357, which has the power to tax those insurance premiums, is the State that has certified that the ship concerned is fit for use. More specifically, that is the State whose flag is flown by the ship, since it is that State which determines the quality standards to be met by ships flying its flag, and which therefore bears responsibility for the risk constituted by those ships.

The BZS contended that the payment of insurance premiums was taxable in Germany, since it was apparent that the German legislature correctly transposed Directive 88/357 by connecting liability to pay the insurance tax, not to the 'registration' of the ship concerned in the sense of the official grant of authorisation for its operation, but to the fact of its being entered in an official register and the attribution to that ship of an identification number. Only the shipping register whose essential function is to prove ownership of the ship concerned could constitute such an official register.

The referring Court agreed with the BZS, but was uncertain whether, with respect to insurance relating to 'vehicles of any type', referred to in Directive 88/357, the 'Zulassungsmitgliedstaat', namely the 'Member State of certification' or 'the Member State of registration', not being defined, could refer to the State whose flag is flown by the ship, namely the State that determines the legal rules applicable to the operation of a sea-going vessel in the general course of trade, and therefore, the conditions governing use of that ship.

Held: Where insurance contracts concern the provision of cover for various risks linked to the operation of sea-going vessels which are entered in the shipping register maintained by a Member State, but which fly the flag of another Member State or of a third State under a temporary flagging-out authorisation, the State that must be considered to be the 'Member State of registration' of the ship concerned and therefore, to be 'the Member State where the risk is situated', holding the exclusive power to tax premiums paid with respect to those insurance contracts, is the Member State which maintains the shipping register in which the primary purpose of entering that ship is to prove ownership of that ship.

This Court has previously held that, as EU law currently stands, it is for the Member States to determine, in accordance with the general rules of international law, the necessary conditions to permit the registration of ships in their registers and to grant to those ships the right to fly their flag, and that, in the exercise of that power, the Member States must have due regard to the rules of EU law (judgment of 25 July 1991, Factortame and Others, C‑221/89, EU:C:1991:320, [13] and [14]), although, in accordance with art 91.1 of UNCLOS, which the Court has jurisdiction to interpret (judgment of 7 May 2020, Rina, C‑641/18, EU:C:2020:349, [46]), there must exist a 'genuine link' between the State and the ships concerned, whether for the purposes of their registration in the territory of that State or for the grant of the right, or option, for those ships to fly the flag of that State.

It is clear that the concept of 'Member State of registration' in Directive 88/357 has not been defined by the EU legislature. That provision makes no express reference to the law of the Member States for the purpose of determining its meaning and scope. That concept must, therefore, be given an autonomous and uniform interpretation. As noted by the Advocate General in point 49 of his Opinion (CMI1180), all language versions of Directive 88/357 other than the German use either the concept of Member State 'of registration' or the concept of Member State 'where entered in a register'. In accordance with settled case law, the wording used in one language version of a provision of EU law cannot serve as the sole basis for the interpretation of that provision or be given preference over other language versions (judgment of 12 September 2019, A and Others, C‑347/17, EU:C:2019:720, [38]). The term 'Zulassungsmitgliedstaat', understood in one of its two senses, namely the sense of being the Member State of registration or where entered in a register, is consistent with the terminology used in all other language versions of that provision. The fact that, for ships, unlike other vehicles that are the subject of that provision, there is no legislation at EU level on certification or authorisation of operation, also militates against an interpretation of that provision as referring to the Member State of such certification or authorisation.

That said, it is not inconceivable that the concepts of 'Member State of registration' or 'Member State where entered in a register' might also encompass - in addition to the State which maintains the register in which the ships are registered for the purposes of proving ownership of those ships and, in some case, other rights in rem registered against those ships, including securities over those ships - the State whose flag the ship flies, given that it is also the case that, as provided by art 94.2.a of UNCLOS, every State is obliged to enter the ships flying its flag in the national flag register. The question that arises, therefore, is whether the concept of 'Member State of registration' must be interpreted as referring to the Member State which maintains a register, such as the shipping register, in which ships are entered for the purpose of identifying them as the property of their owners, who are responsible for those ships, or rather the State whose flag those ships fly, that State being a State which, under art 94 of UNCLOS, 'shall maintain a register of ships containing the names and particulars of ships flying its flag', 'shall effectively exercise its jurisdiction and control in administrative, technical and social matters over ships', and is to take 'measures ... necessary to ensure safety at sea'.

As regards the objective of avoiding double taxation, as EU law currently stands and in accordance with international law, each Member State must determine the necessary conditions governing the registration of ships in its territory and the grant to those ships of the right to fly its flag and therefore, governing whether those ships have its nationality, although, in accordance with art 91.1 of UNCLOS, there must exist a 'genuine link' between the State and the ships in question. In the absence of any harmonisation at EU level of the rules on the registration of ships, it is thus possible that a ship might be registered in more than one Member State, provided that there are genuine links between that ship and more than one Member State, which could lead to multiple taxation. However, as stated by the Advocate General in point 75 of his Opinion (CMI1180), legislation in the majority of Member States precludes multiple registration that might lead to multiple taxation. Further, it is clear that art 92.1 of UNCLOS provides that '[s]hips shall sail under the flag of one State only', which, if the criterion of connection to the flag State were adopted for the purposes of Directive 88/357, would be capable of precluding double registration and, therefore, double taxation.

However, to have recourse to the flag State in order to locate the risk for the purposes of Directive 88/357 fails to rule out the danger of tax avoidance, as is shown precisely by the case at issue in the main proceedings, where the ships concerned have been flagged out, albeit with the permission from the outset of the State in which those ships were and continue to be registered, and where another flag State has been chosen that has links with those ships that are manifestly less direct and concrete than has the Member State in which they are registered for the primary purpose of proving their ownership.

It follows, as also stated by the Advocate General in point 73 of his Opinion (CMI1180), that having recourse to the State which maintains the shipping register in which the ships are entered in order to locate the risk for the purposes of Directive 88/357 best serves all the objectives of that Directive, namely to avoid the risks of double taxation and tax avoidance.

The shipping register, in that its primary purpose is to identify the owner of the ship registered in it, the owner being the person primarily responsible for the risks linked to that ship and its operation, which is why the owner takes out an insurance contract providing cover for those risks in order to protect his or her financial interests in that ship, makes it possible to locate the risks linked to that ship in a specific Member State on the basis of a concrete and physical factor, namely the link that exists between the owner of that ship and the Member State in which that ship is registered, which can be further defined, in some cases, as the Member State of which that owner is a national and/or in which that owner is resident or is established. Such a connecting criterion also makes it possible to encompass complex situations which are common in the area of maritime insurance, as witnessed in the main proceedings, in that maritime insurance necessitates providing cover for very diverse risks arising from the operation of ships and the involvement of shipping companies and bareboat charterers.

Conversely, there is a priori no concrete and direct connection between the State whose flag the ship flies and the responsibility for the risk linked to the ship that makes it possible to locate that risk in the territory of that State. While it is true that the State whose flag the ship flies is to exercise control over that ship and to take measures to ensure its safety at sea, those considerations do not, as such, have any bearing on the risk inherent in the use of that ship that is linked to its owner, who has the primary interest in insuring that ship in order to protect his or her financial interests in it.