CELEX: 62005CJ0401
Sixth VAT Directive
Exemptions
Article 13A(1)(e)
Scope of the exemption
Manufacture and repair of dental prostheses by an intermediary who does not have the status of dentist or dental technician
Subcontracting to a dental technician

This reference for a preliminary ruling concerns the interpretation of Articles 13A(1)(e), 17(3)(a) and 28cA(a) of Sixth Council
Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common
system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1), as amended by Council Directive 95/7/EC of 10
April 1995 (OJ 1995 L 102, p. 18) (‘the Sixth Directive’).
This reference was made in the course of proceedings between VDP Dental Laboratory NV (‘VDP’) and the Staatssecretaris van
Financiën (State Secretary for Finances) as regards that undertaking’s right to deduct, for the years 1996 to 1998, the input
value added tax (‘VAT’) on supplies of dental prostheses made to dentists based in the Netherlands and in other Member States.

Legal context

Community legislation
Article 2(1) of the Sixth Directive makes subject to VAT ‘the supply of goods or services effected for consideration within
the territory of the country by a taxable person acting as such’.
Article 13A(1)(e) of the Sixth Directive provides:
‘Exemptions within the territory of the country
A. Exemptions for certain activities in the public interest
1. Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall
lay down for the purpose of ensuring the correct and straightforward application of such exemptions and of preventing any
possible evasion, avoidance or abuse:
…
(e)       services supplied by dental technicians in their professional capacity and dental prostheses supplied by dentists and dental
technicians’.
Article 17(2)(a) of the Sixth Directive, as amended by Article 28f(1) thereof, provides, under the heading ‘Origin and scope
of the right to deduct’:
‘2. In so far as the goods and services are used for the purposes of his taxable transactions, the taxable person shall be
entitled to deduct from the tax which he is liable to pay:
(a)       [VAT] due or paid within the territory of the country in respect of goods or services supplied or to be supplied to him by
another taxable person’.

National legislation
In the version in force before 1 December 1997, Article 11(1)(g) of the Law on turnover tax (Wet op de omzetbelasting) of
28 June 1968 (Stb. 1968, No 329; ‘the 1968 Law on VAT’) provided that the following were exempted from VAT:
‘supplies of goods and services made by dentists and dental technicians …’.
Since 1 December 1997, Article 11(1)(g) of the 1968 Law on VAT has provided that the following are exempt from VAT:
‘services supplied by psychologists and dental technicians; supplies of dental prostheses …’.
Article 15(2) of the 1968 Law on VAT provides:
‘In so far as the goods and services are used for the purposes of the supplies referred to [in Article 11] … , the right to
deduct arises only in respect of the supplies mentioned in subparagraphs (i), (j) and (k) of Article [11], provided that the
consignee of those supplies is resident or established outside the Community or that those supplies are directly linked with
goods to be exported to a country outside the Community.’

The main proceedings and the questions referred for a preliminary ruling
VDP is an undertaking established in the Netherlands and is engaged in having dental fittings such as crowns, inlays and bridges
manufactured to order for dentists established in the Netherlands, other Member States and non-member countries. After ascertaining
whether the dental plaster casts supplied by the dentists are usable for the purposes of making a dental prosthesis, VDP sends
those plaster casts to a laboratory (usually established outside the Community) and requests that a dental prosthesis be manufactured
on the basis thereof. When that prosthesis is finished, the laboratory supplies it to VDP which pays remuneration for it to
the laboratory and, where necessary, has it imported into the Community. VDP then supplies the prosthesis, in return for payment,
to the dentist who ordered it. VDP does not employ any dental technicians or dentists.
In its VAT declarations for the period 1 January 1996 to 31 December 1998, VDP took the view that the supplies it made to
dentists based in the Netherlands were exempt from VAT and consequently, under Article 15(2) of the 1968 Law on VAT, it did
not deduct the input VAT in respect of such supplies, with the exception of the input VAT relating to supplies made to dentists
based outside the Netherlands.
A notice of additional assessment was sent to VDP as regards that period. According to the Tax Inspector, since VDP makes
only the supplies referred to in Article 11 of the 1968 Law on VAT, it is not authorised to deduct that tax, even in respect
of supplies to dentists based outside the Netherlands, except where exclusion from deduction would lead to double taxation,
namely, firstly, where the goods were exported to a non-member country and, secondly, in the case of an intra-Community supply
provided that VDP states the VAT identification number of the purchaser and declares it to be an intra-Community supply. However,
those conditions were not satisfied in the present case.
By judgment of 13 January 2003, the Gerechtshof te Amsterdam (Amsterdam Regional Court of Appeal) (Netherlands) held, contrary
to the view of the Tax Inspector, that VDP’s supplies in the period from 1 January 1996 to 30 November 1997 were not exempt
under Article 11(1)(g) of the 1968 Law on VAT in the version in force prior to 1 December 1997 with the result that the additional
assessment to which VDP had been made subject was not justified for that period.
On the other hand, as regards the period from 1 December 1997 to 31 January 1998, the Gerechtshof te Amsterdam held that VDP’s
activities did meet the conditions laid down by Article 11(1)(g) of the 1968 Law on VAT in the version in force as from 1
December 1997. Although VDP’s activities cannot be considered to be a supply of dental prostheses by a dental technician for
the purposes of Article 13A(1)(e) of the Sixth Directive, as none of the people employed by VDP have a professional qualification
as a dental technician and VDP merely takes orders, assesses the usability of the plaster casts, commissions third parties
to manufacture the dental prostheses and supplies them to the customer, the fact remains, according to that court, that Article
11(1)(g) of the 1968 Law on VAT, unlike Article 13A(1)(e) of the Sixth Directive, lays down no condition as regards the status
of the supplier who makes the supply. Consequently, the Gerechtshof te Amsterdam refused the deductions made by VDP for that
period on the ground that as the application of Article 11(1)(g) of the 1968 Law on VAT is inextricably linked to the exclusion
of the right to deduct VAT, VDP could not at one and the same time rely on the exemption provided for in that article and,
for the purposes of deducting VAT, the provision of the Sixth Directive under which those services are not exempt.
In the appeal on a point of law it brought before the Hoge Raad der Nederlanden (Supreme Court of the Netherlands), VDP claims
that it was entitled to deduct VAT in respect of the supplies to France and Italy. Since, under the national laws on VAT of
those two Member States, no exemption applies to the supplies of dental fittings which VDP made to those countries, the goods
and services which it bought for the purposes of supplying dental prostheses to dentists based in those Member States are
used in connection with supplies which are subject to tax under the Sixth Directive. Article 17(2) of that directive therefore
means that VDP can, to that extent, deduct VAT.
In its order for reference, the Hoge Raad der Nederlanden observes that it cannot be inferred either from the wording of Article
11(1)(g) of the 1968 Law on VAT, in the version in force as from 1 December 1997, or from the history of that law, that the
application of the exemption is subject to the condition that the supplier has a particular status. However, that court raises
the question whether that finding constitutes a proper application of Article 13A(1)(e) of the Sixth Directive. On the one
hand, the objective of lowering healthcare costs could be an argument in favour of the exemption of the supplies at issue
(see, to that effect, Case C‑76/99
Commission
v
France
[2001] ECR I-249, paragraph 23). On the other hand, a stricter interpretation could lead to the conclusion that the words
‘dental prostheses supplied by dental technicians’ covers only a supply by a dental technician acting as such.
The Hoge Raad der Nederlanden raises the question whether, where a supply of dental prostheses is effected from a Member State
which, under the Sixth Directive, exempts that supply, to Member States such as the French Republic and the Italian Republic,
where the supply would be subject to tax under Article 28(3)(a) of the Sixth Directive in conjunction with point 2 of annex
E thereto, Article 17(3)(a) of the directive precludes deduction of VAT or whether the principle of fiscal neutrality requires
the Member State of dispatch to permit that deduction. The Hoge Raad der Nederlanden maintains in this connection that, although
Article 17(1) of the Sixth Directive does not attach any right to deduct VAT to the exemption provided for in Article 13 thereof,
Article 17(3)(b) of the directive does grant a right to deduct as regards the exemption provided for in Article 28c concerning
intra-Community supplies.
Noting that this issue is pending before the Court in Case C-240/05
Eurodental
, the Hoge Raad der Nederlanden decided to stay the proceedings and to refer the following questions to the Court for a preliminary
ruling:
‘(1)      Is Article 13A[(1)](e) of the Sixth Directive to be interpreted as meaning that dental prostheses supplied by a taxable person
who contracts out the manufacture thereof to a dental technician are covered by the notion of “dental prostheses supplied
by dental technicians”?
(2)      If the answer to that question is in the affirmative: Is Article 17(3)(a) of the Sixth Directive to be interpreted as meaning
that a Member State which has exempted the abovementioned supplies from VAT must attach the right to deduct to those supplies
in so far as (in particular under the first indent of Article 28bB(1) of the Sixth Directive) they take place in another Member
State which has excluded them from exemption pursuant to Article 28(3)(a) of the Sixth Directive, in conjunction with point
2 of Annex E thereto?’

The questions referred for a preliminary ruling
By its first question, the national court asks whether the exemption from VAT provided for in Article 13A(1)(e) of the Sixth
Directive applies to supplies of dental prostheses made by a supplier who has contracted out the manufacture thereof to dental
technicians.
It is apparent from the order for reference that that question is asked as regards supplies effected by a supplier, VDP, which
does not itself employ either dentists or dental technicians, but carries out commercial activities as an intermediary in
the course of which it buys dental prostheses from dental technicians in order to resell them to dentists or to private individuals.
An examination must therefore be made of whether supplies of dental prostheses made by such a commercial intermediary who
does not have the status of dentist or dental technician are covered by the provisions of Article 13A(1)(e) of the Sixth Directive.
According to the Netherlands Government, all supplies of dental prostheses manufactured by dental technicians are covered
by the exemption provided for in that provision, whether those prostheses are supplied directly by dental technicians or indirectly
by an intermediary. By contrast, VDP, the Greek Government and the Commission of the European Communities submit that the
exemption is not applicable.
In that regard, it must be borne in mind that the Sixth Directive confers a very wide scope on VAT comprising all economic
activities of producers, traders and persons supplying services (see, inter alia, Case 348/87
Stichting Uitvoering Financiële Acties
[1989] ECR 1737, paragraph 10).
However, Article 13 of the Sixth Directive exempts certain activities from VAT. According to the case-law, the terms used
to specify those exemptions are to be interpreted strictly since they constitute exceptions to the general principle that
VAT is to be levied on all supplies of goods or services for consideration by a taxable person (see, to that effect, Joined
Cases C-394/04 and C-395/04
Ygeia
[2005] ECR I-10373, paragraph 15; Case C-415/04
Stichting Kinderopvang Enschede
[2006] ECR I-1385, paragraph 13; and Case C-106/05
L.u.P.
[2006] ECR I‑0000, paragraph 24).
Furthermore, Article 13A of the Sixth Directive does not exempt from VAT every activity performed in the public interest,
but only those which are listed therein and described in great detail (see, to that effect, Case C-149/97
Institute of the Motor Industry
[1998] ECR I-7053, paragraph 18, and Case C-212/01
Unterpertinger
[2003] ECR I-13859, paragraph 36).
Moreover, although it is true that the exemptions are granted in favour of activities pursuing specific objectives, most of
the provisions in Article 13A of the Sixth Directive also define the bodies which are authorised to supply the exempted services
and those services are not therefore defined by reference to purely material or functional criteria (Case 107/84
Commission
v
Germany
[1985] ECR 2655, paragraph 13;
Stichting Uitvoering Financiële Acties
, paragraph 12; and Case C‑216/97
Gregg
[1999] ECR I-4947, paragraph 13).
In that regard, it must be borne in mind that, according to the case-law, the exemptions provided for in Article 13 of the
Sixth Directive have their own independent meaning in Community law and must therefore be given a Community definition. That
must also be true of the specific conditions laid down for those exemptions to apply and in particular of those concerning
the status or identity of the economic agent performing the services covered by the exemption. Although the introductory sentence
of Article 13A(1) of the Sixth Directive states that Member States are to lay down the conditions for exemptions in order
to ensure the correct and straightforward application of the exemptions and to prevent any possible evasion, avoidance or
abuse, those conditions cannot affect the definition of the subject-matter of the exemptions envisaged (see, inter alia, Case
C-498/03
Kingscrest Associates and Montecello
[2005] ECR I-4427, paragraphs 22 to 24 and the case-law cited).
As regards the exemption at issue in the main proceedings, Article 13A(1)(e) of the Sixth Directive provides, according to
the very wording of the second part of the sentence, for the exemption of ‘dental prostheses supplied by dentists and dental
technicians’.
Like most of the exemptions provided for in Article 13A of the Sixth Directive and unlike several of those provided for in
Article 13B thereof (see, inter alia, Case C-305/01
MKG-Kraftfahrzeuge-Factoring
[2003] ECR I-6729, paragraph 64, and Case C-169/04
Abbey National
[2006] ECR I-4027, paragraph 66), that exemption is thus not only defined according to the nature of the goods supplied,
but also according to the status of the supplier.
That restriction on the scope of the exemption is clear from all the language versions of Article 13A(1)(e) of the Sixth Directive
(see, in addition to the English version, for example, the following versions, Danish – ‘tandlaegers og tandteknikeres levering
af tandproteser’ –, German – ‘die Lieferungen von Zahnersatz durch Zahnärzte und Zahntechniker’ –, French – ‘fournitures de
prothèses dentaires effectuées par les dentistes et les mécaniciens-dentistes’ –, Italian – ‘le forniture di protesi dentarie
effettuate dai dentisti e dagli odontotecnici’, – and Dutch – ‘het verschaffen van tandprothesen door tandartsen en tandtechnici’).
It is also borne out by the fact that the first part of the sentence in Article 13A(1)(e) of the Sixth Directive exempts services
supplied by dental technicians in their professional capacity, that exemption thus applying to all the activities that constitute
the specific subject-matter of that profession.
It is thus clear from the wording of Article 13A(1)(e) of the Sixth Directive that that provision does not exempt from VAT
all supplies of dental prostheses, but only those which are made by the members of two particular professions, namely those
of ‘dentist’ and ‘dental technician’.
Consequently, supplies of dental prostheses made by an intermediary who does not have the status of dentist or dental technician
cannot be covered by the exemption provided for in that provision.
Therefore, the exemption provided for by the 1968 Law on VAT, which, since 1 December 1997, has applied to all supplies of
dental prostheses regardless of the status of the supplier, is inconsistent with the wording of the corresponding provisions
of the Sixth Directive. The broad interpretation advocated in that respect by the Netherlands Government is at variance with
the case-law of the Court cited in paragraph 23 of this judgment according to which the exemptions provided for in Article
13 of the directive, and in particular the terms ‘dentists’ and ‘dental technicians’, are to be strictly interpreted.
However, that government submits that the principle of strict interpretation of exemptions is not the only one of relevance
for establishing the scope of the exemptions and that both their objective and the principle of fiscal neutrality must also
be taken into account. Firstly, Article 13A(1)(e) of the Sixth Directive, like Article 13A(1)(b) and (c), has the objective
of preventing medical care, in this case dental care, from becoming inaccessible on account of the increased costs that would
follow if that care were subject to VAT (see, to that effect, Case C‑76/99
Commission
v
France
[2001] ECR I-249, paragraph 23, and Case C-141/00
Kügler
[2002] ECR I-6833, paragraph 29). That would, however, be the case if supplies of dental prostheses made by intermediaries
were not exempt, as dentists, who effect exempt transactions themselves, would not be able to deduct input VAT and would,
therefore, pass that tax on to their patients. Secondly, intermediaries and dental technicians effect the same supplies since
it is of no account to dentists whether the supplier manufactures the dental prostheses himself or whether he subcontracts
that transaction to a dental technician.
In this respect, it must be stated that the terms ‘dentists’ and ‘dental technicians’ in Article 13A(1)(e) of the Sixth Directive
are unambiguous. If the wording of that provision is not to be radically altered and the condition relating to the status
of the supplier rendered inoperative, those terms clearly cannot be understood as including intermediaries who are not specifically
either dentists or dental technicians.
Consequently, since the Community legislature did not intend to extend the exemption referred to in that provision to supplies
of dental prostheses which are not made by dentists or dental technicians, neither the objectives of that exemption nor the
principle of fiscal neutrality can compel a broad interpretation of Article 13A of the Sixth Directive in that respect.
On the contrary, having regard to the specific wording of the conditions for the exemption provided for in Article 13A(1)(e)
of the Sixth Directive, any interpretation which extends the wording of that provision must be regarded as incompatible with
the purpose thereof as intended by the Community legislature (see, to that effect,
Stichting Uitvoering Financiële Acties
, paragraph 14).
Furthermore, a strict interpretation of the exemption provided for in that provision is not such as to render it ineffective,
as supplies made by a dental technician to an intermediary like the one in question in the main proceedings are exempt from
VAT with the result that the intermediary does not have to pay VAT on such supplies.
It follows that supplies of dental prostheses made by an intermediary who does not have the status of dentist or dental technician
are not covered by the exemption provided for in Article 13A(1)(e) of the Sixth Directive and that, therefore, they remain
subject to the general rule making them subject to VAT laid down in Article 2(1) of the directive. Under Article 17(2)(a)
of the Sixth Directive, such supplies therefore give rise to entitlement to deduct input VAT.
In that regard, it follows from the case-law that the provisions of Article 17(2) of the Sixth Directive, read together with
Articles 2 and 13A(1)(e) of that directive, confer on individuals rights on which they may rely as against the Member State
concerned before a national court (see, to that effect, Case C-62/93
Soupergaz
[1995] ECR I-1883, paragraphs 35 and 36, and Case C-150/99
Stockholm Lindöpark
[2001] ECR I-493, paragraphs 32, 33 and 35).
Therefore, an undertaking like VDP, which objects to national legislation such as that at issue in the main proceedings on
the ground that it is inconsistent with the Sixth Directive, can rely directly on the provisions of that directive for the
purpose of securing a decision that the supplies of dental prostheses concerned are liable to VAT and, consequently, deduct
input VAT relating to such supplies.
Consequently, the answer to the first question referred for a preliminary ruling must be that Article 13A(1)(e) of the Sixth
Directive must be interpreted as meaning that it does not apply to supplies of dental prostheses effected by an intermediary
like the one in question in the main proceedings who does not have the status of dentist or dental technician, but has acquired
such prostheses from a dental technician.
In those circumstances, there is no need to answer the second question referred for a preliminary ruling.

Costs
Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national 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 (Third Chamber) hereby rules:
Article 13A(1)(e) of  Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States
relating to turnover taxes – Common system of value added tax: uniform basis of assessment, as amended by Council Directive
95/7/EC of 10 April 1995, must be interpreted as meaning that it does not apply to supplies of dental prostheses effected
by an intermediary like the one in question in the main proceedings who does not have the status of dentist or dental technician,
but has acquired such prostheses from a dental technician.
[Signatures]
*
Language of the case: Dutch.