Transport Levy by a Joint Syndicate: Illegal Before 2007 (Cass. civ., 20 Sept. 2012)

Imagine: you are the manager of a small plumbing company in Tonnay-Charente. Each month, you pay a contribution to the local transport joint syndicate, without giving it much thought. Until one day an advisor says to you: “But that syndicate may not have had the right to demand this money from you before 2008.” You then wonder: should I continue to pay? Can I recover the sums paid? This is precisely the question that the Court of Cassation decided in a judgment of 20 September 2012.

This decision, which concerns the SMIVOTU Agglobus (joint transport syndicate of the Bourges urban area), has national significance. It reiterates a fundamental principle: before the Act of 24 December 2007, inter-municipal joint syndicates did not have the power to institute the public transport levy. In other words, all resolutions taken before that date to create or modify this tax are illegal. What few people know is that this illegality may give rise to a right to reimbursement for companies that have paid incorrectly.

But beware: it is not all that simple. The decision specifies the limits of this illegality and the conditions for benefiting from it. So, concretely, what does this change for you, as an owner or business manager in Lagord or elsewhere? Let us delve into the details.

The facts: a story that happens every day

Our story begins in Bourges, in the Cher department. The SMIVOTU Agglobus, a joint syndicate composed of the Bourges urban area and other local authorities, had instituted a transport levy (a tax paid by companies to finance public transport) by a resolution of 27 June 2005, then set its rate at 0.55% by a resolution of 11 December 2006. A local company, company X, challenges this tax before the court. Its argument: the joint syndicate did not have the power to create this levy before the entry into force of Article 102 of Act No. 2007-1822 of 24 December 2007. This Act extended the power to joint syndicates, but not retroactively.

The Bourges Court of Appeal, in a judgment of 6 May 2011, ruled in favour of the syndicate. It considered that the SMIVOTU Agglobus was indeed competent, because it was composed partly of a public inter-municipal cooperation establishment (the Bourges urban area), which already had the power to institute the transport levy. According to the appeal judges, this was sufficient to validate the resolution. But the company did not give up and appealed to the Court of Cassation.

The Court of Cassation, in its judgment of 20 September 2012, set aside and annulled the appeal judgment. It held that the Court of Appeal had violated the law: before 2007, only public inter-municipal cooperation establishments (urban communities, communities of communes, etc.) could institute the transport levy, not joint syndicates, even if they included such an establishment. The decision is clear: the resolutions of the SMIVOTU Agglobus are illegal.

The reasoning of the court — dissected

The Court of Cassation relies on the law in force before the Act of 24 December 2007. At the time, Article L. 2333-64 of the General Code of Local Authorities (CGCT) listed exhaustively the authorities competent to institute the transport levy: communes, public inter-municipal cooperation establishments (EPCI) and urban transport organising authorities. Joint syndicates were not included. The 2007 Act added joint syndicates to this list, but only for the future.

The reasoning is simple but strict: since the law did not give joint syndicates competence before 2007, any resolution taken by them to institute or modify the transport levy is void. It does not matter that the joint syndicate is composed of a competent EPCI: competence is not transmitted by composition. In short, it is as if a mayor made a decision on behalf of the municipal council: even if the mayor is a member of the council, he does not alone have the power to decide.

The Court of Cassation does not rule on the merits of the case (it refers the case to another court of appeal, that of Orléans), but it gives a clear interpretation of the law. This is a confirmation of previous case law, not a reversal. The trial judges must now apply this principle. undefined, I have come across cases where companies had paid for years without knowing that the tax was illegal. This judgment gives them a weapon to claim a refund.

What this changes for you — in practical terms

If you are a business owner or a liberal professional (craftsman, trader, liberal profession) located within the area of a joint syndicate that instituted a transport levy before 2008, you may be entitled to a refund of the sums paid. However, be careful: this only concerns payments based on resolutions taken before 24 December 2007. If the syndicate renewed its resolution after that date, the tax is legal.

Let us take a concrete example: a company in Lagord (Charente-Maritime) that employs 10 employees and paid 0.55% transport levy on wages, i.e. approximately €3,000 per year. If it paid from 2005 to 2007, it could claim €9,000, plus interest. But be careful: the limitation period is 4 years (for indirect taxes, it is the ordinary limitation period). You need to act quickly.

For landlord owners: if you rent out commercial premises, the transport levy is the responsibility of the tenant (unless otherwise agreed). But if the tenant claims a refund from you because they paid incorrectly, you could be affected if you passed on the tax. Better check your leases.

For local authorities: this judgment is a warning. If you are a joint syndicate, make sure that your resolutions prior to 2007 have been regularised after the Act. Otherwise, you risk a series of disputes.

Four tips to avoid this type of dispute

• Check the date of the resolution instituting the transport levy. If it is before 24 December 2007, and the competent authority is a joint syndicate, it is very likely illegal. Gather the evidence (resolution, levy notice, receipts).
• Make a retroactive calculation of the sums paid. For each year, add up the amounts paid in respect of the transport levy. Do not forget any surcharges and penalties. This amount will be your basis for the claim.
• Make an amicable claim to the joint syndicate. Send a registered letter with acknowledgement of receipt setting out the reasons for the illegality and requesting a refund. Attach the supporting documents. The syndicate has 2 months to respond.
• If the syndicate refuses or does not respond, bring the matter before the administrative court. You have 2 months from the rejection decision to challenge it. The assistance of a lawyer is recommended, as the procedural rules are technical.

Further exploration: related case law and developments

The solution of the Court of Cassation is in line with consistent case law. Already, in a judgment of 8 July 2009 (No. 08-14.952), the Court had held that a joint syndicate could not institute the transport levy before the 2007 Act. The 2012 judgment merely confirms this principle, with a more precise application to the case of the SMIVOTU Agglobus.

Since the 2007 Act, the competence of joint syndicates is clear. But the question has arisen for “closed” joint syndicates (composed only of EPCIs) and “open” ones (including other legal persons). Case law has specified that all joint syndicates are now competent, provided that their resolution is subsequent to the Act. Trend of the courts: a strict reading of the texts, favourable to taxpayers.

For the future, it is likely that other disputes will arise concerning the regularity of rates set by joint syndicates before 2007, or the limitation of actions for refunds. Companies must therefore remain vigilant.

Summary and next steps

FAQ:

1. Can I claim a refund of the transport levy paid to a joint syndicate before 2008? Yes, if the resolution instituting the tax is before 24 December 2007. You have 4 years to act from the date of payment (or from knowledge of the illegality).
2. What if the joint syndicate adopted a new resolution after 2007? Then the tax is legal for subsequent payments. Only payments made before the new resolution can be challenged.
3. Should I stop paying the transport levy in the meantime? No, continue to pay, because if you refuse you risk penalties. Then claim a refund through litigation.
4. How much does a procedure cost? Legal fees vary, but a first 30-minute consultation with Maître Zakine costs €45. The administrative court is inexpensive (€35 stamp duty).
5. My tenant is claiming from me the refund of the transport levy that I passed on in the rent? Check your lease: if the clause provides that the tenant bears all taxes, you are not obliged to refund. But it is better to consult a lawyer.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →