Opinion of the Advocate General — ECLI:EU:C:2020:689
Date: 2020-09-10
Language of the case: German
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Germany

Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
13 June 2019 
Referring court: 
Finanzgericht Baden-Württemberg (Germany) 
Date of the decision to refer: 
12 September 2018 
Applicant: 
WEG Tevesstraße 
Defendant: 
Finanzamt Villingen-Schwenningen 
      
Subject matter of the case in the main proceedings 
Legislation of a Member State under which the supply of heat by associations of 
residential property owners to those owners is exempt from value added tax – 
Compatibility with the provisions of Directive 2006/112 
Subject matter and legal basis of the reference 
Interpretation of EU law, Article 267 TFEU 
Question referred for a preliminary ruling 
Are the provisions of Council Directive 2006/112/EC of 28 November 2006 on 
the common system of value added tax (OJ 2006 L 347, p. 1) to be interpreted as 
precluding legislation of a Member State under which the supply of heat by 
associations of residential property owners to those owners is exempt from value 
added tax? 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-449/19 
 
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Provisions of EU law cited 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax, in particular Article 135(1) 
Statement No 1 to the Council’s minutes relating to Directive 2006/112 
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 
Statement No 7 to the Council’s minutes relating to the Council meeting of 
17 May 1977 concerning Article 13 of Directive 77/388  
National legislation cited 
Umsatzsteuergesetz (Law on Turnover Tax) (UStG), in particular Paragraph 4.13 
Gesetz über das Wohnungseigentum und das Dauerwohnrecht 
(Wohnungseigentumsgesetz) (Law on the ownership and part-ownership of 
residential buildings) 
Brief summary of the facts and procedure 
1 In dispute is the amount of input tax deduction from the acquisition and operating 
costs of a combined heat and power unit (CHPU) in 2012. 
2 The applicant is an association of residential property owners and part-owners 
consisting of X GmbH, Y (a public authority) and Z (a municipality). In 2012, the 
applicant constructed a CHPU. It supplied the electricity generated by the CHPU 
to an energy company and supplied the heat also produced to the residential 
property owners and/or part-owners. 
3 For 2012, the applicant claimed a total of EUR 19 765.17 in input tax resulting 
from the acquisition and operating costs of the CHPU. The defendant authorised 
only an amount corresponding to 28% of the input tax deductions claimed, which, 
according to its calculation, was the proportion of the abovementioned costs 
attributable to the generation of electricity. It refused the share of 72% of input tax 
deduction attributable to the generation of heat on the ground that the supply of 
heat to residential property owners is exempt from tax (Paragraph 4.13 of the 
UStG). 
4 Following an unsuccessful objection, the action challenging that refusal was 
brought on 13 December 2016 before the referring court, alleging, inter alia, that 
Paragraph 4.13 of the UStG infringes EU law. 
WEG TEVESSTRAßE 
 
3 
Legal framework 
5 According to Paragraph 4.13 of the UStG, inter alia, services which associations 
of residential property owners supply to such owners and part-owners, within the 
meaning of the Law on the ownership and part-ownership of residential buildings, 
are exempt from tax in so far as the services consist in the supply of heat. 
6 The rules on associations of residential property owners and part-owners are 
governed by the Law on the ownership and part-ownership of residential 
buildings. According to those rules – which depart from the rule laid down in the 
Bürgerliches Gesetzbuch (German Civil Code), according to which an area of 
immovable property and a building erected on it, in principle, constitute one unit 
and have the same owner or owners – special ownership of separate apartments or 
of areas which are not used as living accommodation may be established. The 
former case refers to ownership, the latter to part-ownership. In addition to the 
special ownership of the apartment or the areas which are not used as living 
accommodation, a share in the joint ownership also always forms part of the 
ownership and/or part-ownership. Joint ownership includes, inter alia, the heating 
installation. 
Brief summary of the basis for the reference 
7 The referring court has doubts as to whether Paragraph 4.13 of the UStG is 
compatible with Directive 2006/112. 
8 In accordance with the case-law of the Court of Justice, a Member State infringes 
EU law if it introduces and maintains a tax exemption which is not covered by EU 
law (judgment of 3 July 1997, Commission v France, C-60/96, EU:C:1997:340). 
9 It is a matter of dispute in German legal literature whether an enabling basis exists 
under EU law for the tax exemption in Paragraph 4.13 of the UStG. While some 
authors are of the view that it is incompatible with Directive 2006/112 and 
therefore not applicable, others affirm its compatibility with EU law but follow a 
number of different lines of reasoning. 
10 Some take the view that Article 135(1)(l) of Directive 2006/112, according to 
which Member States may exempt the leasing or letting of immovable property 
from tax, is a sufficient enabling basis. On the basis of its wording, however, the 
referring court does not consider that provision to be automatically applicable. 
The directive does not contain a definition of the concept of ‘leasing or letting of 
immovable property’. The Court of Justice has defined the concept as meaning 
that the owner of immovable property assigns to another person, in return for rent 
and for an agreed period, the right to occupy his property and to exclude other 
persons from it. The Court has also stated that the terms used to describe the 
exemptions envisaged by Article 135(1), including the concepts of ‘leasing or 
letting of immovable property’, are to be interpreted strictly since those 
exemptions constitute exceptions to the general principle that VAT is to be levied 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-449/19 
 
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on all services supplied for consideration by a taxable person (judgment of 
19 December 2018, Mailat, C-17/18, EU:C:2018:1038, paragraphs 36 and 37 and 
the case-law cited).  
11 The view is also taken that Paragraph 4.13 of the UStG is covered by Statement 
No 7 to the Council’s minutes concerning Article 13 of Directive 77/388, which 
provides: ‘The Council and the Commission state that Member States may exempt 
... the supply of heating and similar services by householders’ associations to the 
householders themselves.’ In part, the statement is directly regarded as an 
enabling basis, and in part as a clarification of Article 13.B(c) of Directive 77/388. 
The applicability of Directive 2006/112 is founded on Article 136(a), in 
conjunction with Statement No 1 to the Council’s minutes relating to Directive 
2006/112, which provides that, with regard to the earlier statement to Directive 
77/388 and the successive amending directives, the Council and the Commission 
affirm that these are not affected by the repeal of those directives. 
12 In the referring court’s view, however, it is not possible to base Paragraph 4.13 of 
the UStG on Statement No 7 to the Council’s minutes concerning Article 13 of 
Directive 77/388 or on Article 136 of Directive 2006/112 and Statement No 1 
relating thereto. According to the case-law of the Court of Justice, a statement 
relating to Council minutes cannot be used for the purpose of interpreting a 
provision in the case where no reference is made to the content of the statement in 
the wording of the provision in question. The statement therefore has no legal 
significance (see, for example, judgments of 26 February 1991, Antonissen, 
C-292/89, EU:C:1991:80, and of 29 May 1997, VAG Sverige, C-329/95, 
EU:C:1997:256). The referring court does not, either in Article 13 of Directive 
77/388 or in Article 136 of Directive 2006/112, find sufficient grounds pointing to 
any intention on the part of the legislature to exempt from tax the supply of heat 
by an association of residential property owners to those owners. 
13 Finally, the view is expressed that there is no taxable transaction in the case of a 
service provided by an association of residential property owners to the owners. In 
part, the view is taken that the association of residential property owners does not 
operate as an economic operator, and in part the view is taken that there is no 
service provided for consideration. In that regard, the referring court explains that 
Statement No 7 to the Council’s minutes concerning Article 13 of Directive 
77/388 could be understood as meaning that the Commission and the Council did 
not regard, inter alia, the supply of heat by associations of residential property 
owners to such owners as an economic activity within the meaning of Article 4(1) 
and (2) of Directive 77/388, the provisions which preceded Article 9(1) of 
Directive 2006/112. If that point of view is followed, the right to a deduction of 
input tax is ruled out simply because the applicant is not a taxable person within 
the meaning of Articles 2(1)(a), 9(1) and 168 of Directive 2006/112. In that case, 
Paragraph 4.13 of the UStG would be superfluous and merely declaratory in 
nature.