Opinion of the Advocate General — ECLI:EU:C:2006:295
Date: 2006-05-04
Language of the case: English
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: United Kingdom

summary, I reach the following conclusion: The rules on determining the scope of a transaction cannot be understood in such a way that they require a national exemption under Article 28(2)(a) of the Sixth Directive to be extended to items which national law expressly excludes from the scope of the exception. 44. In the alternative, the United Kingdom, supported by the Commission, also submits that caravans and their removable contents in fact do not constitute a composite supply for the purposes of the case-law, because the items are physically and economically separable. (37) The Commission emphasises in particular that the provision at issue relates to removable equipment. 45. As the case-law on composite supplies is in any event not transferable systematically to the situation at issue here, this question can be left open. Only if the Court were not to adopt the solution put forward here would it be necessary for the national court to decide whether there may in fact be no composite supply. The contrary would however seem to be indicated by the fact that a normal consumer would regard a caravan without equipment or even equipment without a caravan as largely useless, even if those items could in principle be delivered separately. V – Conclusion 46. In conclusion I propose the following answer to the question referred by the Court of Appeal: The rules on determining the scope of a transaction do not preclude an exemption of a Member State, under Article 28(2)(a) of Sixth Directive 77/388/EC 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, which zero-rates the supply of specified goods and excludes other items from the scope of the zero-rating, even if the excluded items and the included items are delivered together. 1 – Original language: German. 2 – 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). 3 – Where reference is made in this Opinion simply to contents, the notion of ‘removable contents’ in national law is meant. 4 – The minimum standard rate was limited to this amount by Council Directive 92/111/EEC of 14 December 1992 amending Directive 77/388/EEC and introducing simplification measures with regard to value added tax (OJ 1992 L 384, p. 47). The duration of validity of the minimum standard rate was subsequently consistently extended, most recently until 2010 by Council Directive 2005/92/EC of 12 December 2005 amending Directive 77/388/EEC with regard to the length of time during which the minimum standard rate of VAT is to be applied (OJ 2005 L 345, p. 19). 5 – As amended by Council Directive 92/77/EEC of 19 October 1992 supplementing the common system of value added tax and amending Directive 77/388/EEC (approximation of VAT rates) (OJ 1992 L 316, p. 1). 6 – According to Article 28l(4), second sentence, of the Sixth Directive the validity of transitional rules is automatically extended until the entry into force of a final rule, which has, however, not yet occurred. 7 – The relevant passage of Second Council Directive 67/228/EEC of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes – Structure and procedures for application of the common system of value added tax (OJ, English Special Edition 1967 (I), p. 16), no longer in force, provided: ‘With a view to the transition from the present systems of turnover taxes to the common system of value added tax, Member States may: … provide for reduced rates or even exemptions with refund, if appropriate, of the tax paid at the preceding stage, where the total incidence of such measures does not exceed that of the reliefs applied under the present system. Such measures may only be taken for clearly defined social reasons and for the benefit of the final consumer …’. 8 – Section 96 of the VAT Act 1994 lays down that schedules are to be interpreted in accordance with the notes contained therein. 9 – Standard contents include: bathroom suites, floor coverings, curtain rails, curtains, cupboards, fitted kitchens (including cooking appliances), seating units with fitted banquettes, dining tables, chairs, stools, coffee tables, display units, mirrors, wardrobes, beds and mattresses. 10 – In that regard the United Kingdom Government refers to Case 416/85 Commission v United Kingdom [1988] ECR 3127, paragraph 34 et seq. in particular, in which the Commission did not object in that respect to the exemption in question. 11 – Cited in footnote 7. 12 – It appears still to be in dispute in the main proceedings what items are to be regarded as removable contents. 13 – See Case C-136/97 Norbury Developments [1999] ECR I-2491, paragraph 19, and Case C‑36/99 Idéal toursime [2000] ECR I-6049, paragraph 32. 14 – Commission proposal of 29 June 1973 for a sixth Council Directive on the harmonisation of the legislation of the Member States concerning turnover taxes – Common system of value added tax: uniform basis of assessment, Bulletin of the European Communities, Volume 11/73, p. 31. 15 – The Court of Justice has emphasised the requirement for a narrow interpretation of the special schemes set out in the Sixth Directive (for the special scheme for farmers: Case C-43/04 Stadt Sundern [2005] ECR I-4491, paragraph 27, and Case C-321/02 Harbs [2004] ECR I-7101, paragraph 27, and for the special scheme for travel agents, Case C-308/96 and C-94/97 Madgett and Baldwin [1998] ECR I-6229, paragraph 34). 16 – See Article 12(3)(a), third subparagraph, in conjunction with Annex H, and (b) and (c ) of the Sixth Directive. 17 – This has a bearing on the intensity of the examination by the Court of Justice (see point 25 below). 18 – This follows simply from the wording of Article 17(2) of the Sixth Directive, which grants the right to deduct ‘insofar as the goods and services are used for the purposes of [the taxable person’s] taxable transactions’. See, in regard to the connection between the right to deduct and the taxability of transactions, also Case C-184/04 Uudenkaupungin kaupunki [2006] ECR I-0000, paragraph 24. 19 – See Terra/Kajus, Introduction to European VAT and other indirect taxes 2005, Vol. 1. 16.2., p 712 et seq. 20 – See Article 28c(A)(a) in conjunction with Article 17(2)(d) in the version of Article 28f of the Sixth Directive. 21 – The Court merely checks whether the identification of the social reasons would, by distorting that concept, lead to measures which, because of their effects or their true objectives, lie outside the scope of Community law (see Commission v United Kingdom (cited in footnote 10, paragraph 14). 22 – Case C-481/98 Commission v France [2001] ECR I-3369, paragraph 21. 23 – See my Opinion in Case C-41/04 Levob [2005] ECR I‑0000, point 65. 24 – Case C-349/96 [1999] ECR I-973, paragraph 29; see also Levob, cited in footnote 23, paragraph 20. 25 – Levob (cited in footnote 23, paragraph 19), referring to Case C-231/94 Faaborg-Gelting Linien [1996] ECR I-2395, paragraphs 12 to 14, and CPP (cited in footnote 24, paragraphs 28 and 29). 26 – See my Opinion in Levob (cited in footnote 23, paragraph 66). Some Opinions even indicate a tendency to give priority in such a situation to considerations of practicality rather than precision; see Opinion of Advocate General Cosmas in Faaborg Gelting Linien (cited in footnote 25, paragraph 14); Opinions of Advocate General Fennelly in Case C-327/94 Dudda [1996] ECR I-4595, paragraph 35, and in CPP (cited in footnote 24, paragraph 47 et seq.). 27 – CPP (cited in footnote 24, paragraph 30), Case C-34/99 Primback [2001] ECR I-3833 (paragraph 45) and Levob (cited in footnote 24, paragraph 21). 28 – CPP (cited in footnote 24, paragraph 30) and Madgett and Baldwin (cited in footnote 15, paragraph 24). 29 – Levob (cited in footnote 23, paragraph 22). 30 – CPP (cited in footnote 24, paragraph 27) and Levob (cited in footnote 23, paragraph 18). 31 – See Case 173/88 Henriksen [1989] ECR 2763. In this case the Court extended the exemption under Article 13B(b) of the Sixth Directive for the letting of immovable property to a car parking space let in connection with residential property, even though the letting of car parking spaces is as such taxable. In CPP (cited in footnote 24) the issue was whether the tax exemption for insurance services under Article 13B(a) of the Sixth Directive was to be extended to certain ancillary services connected with the insurance service. 32 – [2003] ECR I-4395, paragraph 26. 33 – Levob (cited in footnote 23, paragraph 18). 34 – Alternatively a situation in conformity with the principles of taxation of composite supplies could be achieved by subjecting the composite supply of caravan and removable contents as a whole to the standard rate of taxation. As directives cannot have direct effect to the disadvantage of individuals, the national legislature would have to act in order to adopt this solution and abolish the exception. 35 – CPP (cited in footnote 24, paragraph 27). 36 – See point 31 above. 37 – The United Kingdom Government refers in this respect to Case 353/85 Commission v United Kingdom [1988] ECR 817, paragraph 33, although it is not particularly pertinent to the situation at issue here.