# C_2014212EN.01001401.xml

| 7.7.2014 | EN | Official Journal of the European Union | C 212/14 |
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Action brought on 4 April 2014 — European Commission v United Kingdom of Great Britain and Northern Ireland

(Case C-161/14)

2014/C 212/14

Language of the case: English

Parties

Applicant: European Commission (represented by: C. Soulay, M. Clausen, agents)

Defendant: United Kingdom of Great Britain and Northern Ireland

The applicant claims that the Court should:

| (1) | declare that
—
by applying a reduced VAT rate to supplies of services of installing ‘energy-saving materials’ and to supplies of ‘energy-saving materials’ by a person who installs those materials in residential accommodation, to the extent that those supplies cannot be considered as ‘provision, construction, renovation and alteration of housing, as part of a social policy’ for the purposes of Category (10) of Annex III to the VAT Directive( 1 ), —
by applying a reduced VAT rate to supplies of services of installing ‘energy-saving materials’ and to supplies of ‘energy-saving materials’ by a person who installs those materials in residential accommodation, to the extent that those supplies fall outside the purview of renovation and repairing of private dwellings for the purposes of Category (10a) of Annex III to the VAT Directive, —
by applying a reduced VAT rate to supplies of services of installing ‘energy-saving materials’ and to supplies of ‘energy-saving materials’ by a person who installs those materials in residential accommodation, to the extent that those supplies, even falling in the purview of renovation and repairing of private dwellings for the purposes of Category (10a) of Annex III to the VAT Directive, include materials which account for a significant amount of the value of the services supplied, the United Kingdom of Great Britain and Northern Ireland has failed to fulfil its obligations under Article 98, read in conjunction with Annex III, of the VAT Directive; | — | by applying a reduced VAT rate to supplies of services of installing ‘energy-saving materials’ and to supplies of ‘energy-saving materials’ by a person who installs those materials in residential accommodation, to the extent that those supplies cannot be considered as ‘provision, construction, renovation and alteration of housing, as part of a social policy’ for the purposes of Category (10) of Annex III to the VAT Directive( 1 ), | — | by applying a reduced VAT rate to supplies of services of installing ‘energy-saving materials’ and to supplies of ‘energy-saving materials’ by a person who installs those materials in residential accommodation, to the extent that those supplies fall outside the purview of renovation and repairing of private dwellings for the purposes of Category (10a) of Annex III to the VAT Directive, | — | by applying a reduced VAT rate to supplies of services of installing ‘energy-saving materials’ and to supplies of ‘energy-saving materials’ by a person who installs those materials in residential accommodation, to the extent that those supplies, even falling in the purview of renovation and repairing of private dwellings for the purposes of Category (10a) of Annex III to the VAT Directive, include materials which account for a significant amount of the value of the services supplied, the United Kingdom of Great Britain and Northern Ireland has failed to fulfil its obligations under Article 98, read in conjunction with Annex III, of the VAT Directive; |
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| — | by applying a reduced VAT rate to supplies of services of installing ‘energy-saving materials’ and to supplies of ‘energy-saving materials’ by a person who installs those materials in residential accommodation, to the extent that those supplies cannot be considered as ‘provision, construction, renovation and alteration of housing, as part of a social policy’ for the purposes of Category (10) of Annex III to the VAT Directive( 1 ), | | | | | | |
| — | by applying a reduced VAT rate to supplies of services of installing ‘energy-saving materials’ and to supplies of ‘energy-saving materials’ by a person who installs those materials in residential accommodation, to the extent that those supplies fall outside the purview of renovation and repairing of private dwellings for the purposes of Category (10a) of Annex III to the VAT Directive, | | | | | | |
| — | by applying a reduced VAT rate to supplies of services of installing ‘energy-saving materials’ and to supplies of ‘energy-saving materials’ by a person who installs those materials in residential accommodation, to the extent that those supplies, even falling in the purview of renovation and repairing of private dwellings for the purposes of Category (10a) of Annex III to the VAT Directive, include materials which account for a significant amount of the value of the services supplied, the United Kingdom of Great Britain and Northern Ireland has failed to fulfil its obligations under Article 98, read in conjunction with Annex III, of the VAT Directive; | | | | | | |

| (2) | order United Kingdom of Great Britain and Northern Ireland to pay the costs. |
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Pleas in law and main arguments

Under article 96 of the VAT directive, the standard rate of VAT fixed by each Member State, subject to a minimum rate of 15 %, is applicable to all supplies of goods and services. A rate other than the standard rate may be applied only in so far as that is permitted by other provisions of the directive. Article 98 provides that Member States may apply one or two reduced rates to the supplies of goods and services listed in Annex III to the directive.

The Commission considers that the system of reduced rates applying to the supplies of energy-saving materials and to the installation thereof, laid down in the VAT Act 1994, section 29A, as specified in Schedule 7A to that Act, exceeds the possibilities offered to Member States by Categories (10) and (10a) of Annex III to the VAT Directive, which respectively cover ‘provision, construction, renovation and alteration of housing, as part of a social policy’ and ‘renovation and repairing of private dwellings, excluding materials which account for a significant part of the value of the service supplied’.

The UK reduced rate scheme as described in Schedule 7A, Part 2, Group 2 to the VAT Act 1994 cannot be directly linked to housing matters as part of a social policy, and it therefore goes beyond the scope allowed by category (10) of Annex III to the VAT Directive.

Schedule 7A, Part 2, Group 2 to the VAT Act 1994, by applying a reduced rate to the supply of services of installing ‘energy-saving materials’ and to the supply of ‘energy-saving materials’ by the person installing them in residential accommodation, where those supplies include the provision, construction and alteration of private dwellings and without regard to those materials' proportional value to the total value of the service supplied, goes beyond the requirement laid down in Category (10a), namely that a reduced rate may only be applied to renovation and repairing of private dwellings, excluding materials which account for a significant part of the value of the service supplied.

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( 1 )  Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax

OJ L 347, p. 1

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