Judgment;Summary — ECLI:EU:C:2022:73
Date: 2022-02-03
Language of the case: German
Court formation: Sixth Chamber
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: 
14 October 2020 
Referring court: 
Bundesfinanzhof (Germany) 
Date of the decision to refer: 
10 June 2020 
Applicant: 
B AG 
Defendant: 
Finanzamt A 
  
Subject matter of the main proceedings 
Directive 2006/112/EC – Interpretation of the term ‘wood for use as firewood’ in 
Article 122 – Admissibility of the coverage of Article 122 established by a 
Member State using the Combined Nomenclature – Applicable criteria 
Subject matter and legal basis of the reference 
Interpretation of EU law, Article 267 TFEU 
Questions referred 
1. Is the term ‘wood for use as firewood’ in Article 122 of Directive 
2006/112/EC to be interpreted as meaning that it includes any wood which, 
on the basis of its objective properties, is intended exclusively for burning? 
2. Can a Member State which introduces a reduced rate for supplies of wood 
for use as firewood on the basis of Article 122 of Directive 2006/112/EC 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-515/20 
 
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establish its precise coverage using the Combined Nomenclature in 
accordance with Article 98(3) of Directive 2006/112/EC? 
3. If the answer to Question 2 is in the affirmative: May a Member State 
exercise the power conferred on it by Article 122 of Directive 2006/112/EC 
and Article 98(3) of Directive 2006/112/EC to establish the coverage of the 
reduced rate for supplies of wood for use as firewood using the Combined 
Nomenclature in keeping with the principle of tax neutrality, in such a way 
that supplies of various forms of wood for use as firewood, which differ in 
terms of their objective characteristics and properties but which, from the 
point of view of the average consumer, address the same need (in this case, 
heating), on the basis of the criterion of comparability in terms of use, and 
are thus in competition with each other, are subject to different rates of 
taxation? 
Provisions of EU law cited 
Annex 1 to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff 
and statistical nomenclature and on the Common Customs Tariff, as amended by 
Commission Implementing Regulation (EU) No 1101/2014 of 16 October 2014 
(the Combined Nomenclature; ‘the CN’) 
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 
92/77/EEC of 19 October 1992, in particular the third subparagraph of 
Article 12(3)(a), read in conjunction with Annex H thereto 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax, in particular Articles 98 and 122 
Provisions of national law cited 
Umsatzsteuergesetz (Law on Value Added Tax; ‘the UStG’), in particular 
Paragraph 12(2), point 1, read in conjunction with point 48 of Annex 2 
Brief summary of the facts and procedure 
1 The parties are in dispute over the application of the reduced rate of value added 
tax to the supply of wood chips. 
2 In December 2015, the applicant supplied wood chips to various customers and 
invoiced them for the cost of the wood chips plus 7% value added tax. 
FINANZAMT A 
 
3 
3 The defendant contends that the applicant’s supplies are subject to the standard 
rate of value added tax of 19%, not a reduced rate of 7%. The applicant contests 
that. 
Brief summary of the basis for the reference 
Legal framework 
EU law 
4 Article 98 of Directive 2006/112 provides as follows: 
‘1. Member States may apply either one or two reduced rates. 
2. The reduced rates shall apply only to supplies of goods or services in the 
categories set out in Annex III. 
… 
3. When applying the reduced rates provided for in paragraph 1 to categories of 
goods, Member States may use the Combined Nomenclature to establish the 
precise coverage of the category concerned.’ 
5 Article 122 of Directive 2006/112 allows the Member States to apply a reduced 
rate of VAT to; inter alia, supplies of wood for use as firewood. That article was 
included in the special provisions of the Directive that applied pending 
introduction of the definitive arrangements for value added tax (Article 109 et 
seq.). 
6 Heading 4401 of the CN includes the following subheadings: 
CN Code Description 
4401 Fuel wood, in logs, in billets, in twigs, in faggots or in similar 
forms; Wood in chips or particles; Sawdust and wood waste 
and scrap, whether or not agglomerated in logs, briquettes, 
pellets or similar forms 
4401 10 00 – Fuel wood, in logs, in billets, in twigs, in faggots or in 
similar forms 
 – Wood in chips or particles 
4401 21 00 – – Coniferous 
4401 22 00 – – Non-coniferous 
 – Sawdust and wood waste and scrap, whether or not 
agglomerated in logs, briquettes, pellets or similar forms 
4401 31 00 – – Wood pellets 
4401 39 – – Other 
4401 39 20 – – – Agglomerated (e.g. in briquettes) 
 – – – Other 
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4401 39 30 – – – – Sawdust 
4401 39 80 – – – – Other 
 
National law 
7 The German legislature provided in Paragraph 12(2), point 1, of the UStG, read in 
conjunction with point 48 of Annex 2 to the UStG, for the rate on supplies of 
certain forms of wood, namely (a) fuel wood, in logs, in billets, in twigs, in 
faggots or in similar forms; and (b) sawdust and wood waste and scrap, whether or 
not agglomerated in logs, briquettes, pellets or similar forms, to be reduced to 7%. 
8 Annex 2 to the UStG refers to the CN. According to the case-law of the referring 
court, the classification of goods under the headings or subheadings of the CN, 
and thus the coverage of the reduced rate, depends exclusively on customs 
provisions and definitions. 
9 Where coverage for customs purposes is established thus, the reduced rate cannot 
apply to supplies of wood chips, which, as wood in the form of particles, have to 
be classified under subheading 4401 21 00 or 4401 22 00 of the CN and is 
therefore not covered by Article 12(2), point 1, of the UStG, read in conjunction 
with point 48 of Annex 2 thereto. 
10 The wood chips at issue in this case are intended solely for use as fuel. They 
compete with other forms of wood which, like sawdust agglomerated in pellets or 
briquettes, are usually used as fuel and are supplied subject to the reduced rate in 
accordance with Paragraph 12(2), point 1, of the UStG, read in conjunction with 
point 48 of Annex 2 thereto. 
Question 1 
11 The first question referred seeks interpretation of the term ‘wood for use as 
firewood’ in Article 122 of Directive 2006/112. Where EU law (in this case, 
Article 122) makes no express reference to the law of the Member States, the 
Member States are required, when specifying the categories of goods to which 
they apply a reduced rate of VAT, to respect the limits of the categories as 
interpreted by the Court of Justice (see judgment of 17 January 2013, Commission 
v Spain, C-360/11, EU:C:2013:17, paragraph 19 et seq.). 
12 When interpreting the term ‘wood for use as firewood’ in Article 122 of Directive 
2006/112, the way in which it is used in everyday language (judgment of 
17 January 2013, Commission v Spain, C-360/11, EU:C:2013:17, paragraph 63 on 
Annex III to Directive 2006/112) might suggest that it includes any wood which, 
on the basis of its objective properties, is intended exclusively for burning. 
FINANZAMT A 
 
5 
Question 2 
13 The referring court has doubts as to whether, in exercising the possibility provided 
in Article 122 of Directive 2006/112, the Member States have the power to 
establish the precise coverage of a reduced rate on supplies of wood for use as 
firewood using the CN. Although Article 98(3) of Directive 2006/112 provides for 
such a power in principle, the referring court has doubts as to whether that power 
extends to Article 122 or whether it is restricted to supplies of goods in the 
categories listed in Annex III to the Directive. 
14 The fact that the term ‘category concerned’ in Article 98(3) of Directive 2006/112 
echoes the wording in Article 98(2) referring to the ‘categories listed in Annex III’ 
might corroborate such a restriction. Furthermore, on the basis of the scheme of 
the provision, Article 98(2) gives specific expression to the rule laid down in 
Article 98(1), to which Article 98(3) explicitly refers. 
15 On the other hand, the words ‘applying the reduced rates provided for in 
paragraph 1’ in Article 98(3) of Directive 2006/112 might also be understood as 
meaning that the power to establish coverage using the CN exists independently of 
the provision on which the possibility afforded to the Member State to apply a 
reduced rate is based. This would be consistent with the fact that Article 122 
(provisionally) extends the possibility derived from Article 98(1) and (2) of 
applying a reduced rate of VAT (see judgment of 5 September 2019, Regards 
Photographiques, C-145/18, EU:C:2019:668, paragraph 44 on Article 103 of the 
Directive). 
16 Given its provisional nature, it would have been difficult, from a technical and 
legal point of view, to include the categories listed in Article 122 of Directive 
2006/112 in Article 98(2) of, read in conjunction to, Annex III to the Directive. 
That being so, the fact that the power to establish coverage using the CN is now 
regulated outside Annex III to Directive 2006/112, which was not the case under 
the earlier legislation enacted in the third subparagraph of Article 12(3)(a) of, read 
in conjunction with Annex H to, Directive 77/388, might suggest that the 
legislature deliberately decided to extend that power to the possibility of applying 
a reduced rate included in the transitional provisions of Article 109 et seq. of 
Directive 2006/112. 
Question 3 
Selective application of the reduced rate of VAT (only) in keeping with the 
principle of tax neutrality 
17 Inasmuch as the Member States are authorised to apply a reduced rate to certain 
categories of supplies, they may decide, in keeping with the case-law of the Court 
of Justice, to apply the reduced rate to just one particular and specific aspect of the 
respective category. If a Member State decides to apply the reduced rate of VAT 
selectively, it must do so in keeping with the principle of tax neutrality. That 
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principle precludes similar goods or services which are in competition with each 
other from being treated differently for VAT purposes (see judgment of 27 June 
2019, Belgisch Syndicaat van Chiropraxie and Others, C-597/17, EU:C:2019:544, 
paragraph 44 et seq.). 
Doubts as to the criterion for determining the similarity of two items 
18 The referring court has doubts as to the criterion that has to be applied to 
determine the similarity of two items for the purposes of selective application of 
the reduced rate of VAT. 
19 In that regard, the referring court has ruled in connection with the third 
subparagraph of Article 12(3)(a) of, read in conjunction with Annex H to, 
Directive 77/388, that goods classified under different subheadings of the CN are 
not similar, irrespective of any identical application, and therefore need not be 
subject to the same rate of VAT, even taking account of the principle of tax 
neutrality. 
20 However, the Court of Justice has since found, with regard to the principle of tax 
neutrality, that, in order to determine whether two goods or services are similar, 
account must primarily be taken of the point of view of a typical consumer, 
avoiding artificial distinctions based on insignificant differences (judgments of 
27 February 2014, Pro Med Logistik and Pongratz, C-454/12 and C-455/12, 
EU:C:2014:111, paragraph 53, and of 10 November 2011, The Rank Group, 
C-259/10 and C-260/10, EU:C:2011:719, paragraph 43). Two goods or services 
are therefore similar where they have similar characteristics and meet the same 
needs from the point of view of consumers, the test being whether their use is 
comparable, and where the differences between them do not have a significant 
influence on the average consumer's decision between the goods or services 
(judgments of 27 June 2019, Belgisch Syndicaat van Chiropraxie and Others, 
C-597/17, EU:C:2019:544, paragraph 48, and of 10 November 2011, The Rank 
Group, C-259/10 and C-260/10, EU:C:2011:719, paragraph 44). 
21 In the light of the foregoing, the referring Chamber has doubts as to whether it can 
abide by its case-law whereby a different classification for customs purposes 
means that the goods concerned cannot be similar. That is because whereas, 
according to the case-law of the Court of Justice cited, the primary point of view 
of a typical consumer requires an examination of similarity in terms of how the 
supply is used by a typical consumer, classification for customs purposes 
fundamentally depends solely on the objective characteristics and properties of the 
goods (see, most recently, judgment of 30 April 2020, DHL Logistics (Slovakia), 
C-810/18, EU:C:2020:336, paragraph 25). Although the intended use of the goods 
may also constitute an objective criterion for classification if it is inherent in the 
product (judgment of 30 April 2020, DHL Logistics (Slovakia), C-810/18, 
EU:C:2020:336, paragraph 26), the intended use may be a relevant criterion only 
where the classification cannot be made on the sole basis of the objective 
FINANZAMT A 
 
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characteristics and properties of the goods (judgment of 5 September 2019, TDK-
Lambda Germany, C-559/18, EU:C:2019:667, paragraph 27). 
22 In this case, those two criteria give different results: From the point of view of an 
average consumer, the wood chips at issue in this case are not fundamentally 
different from other forms of wood for use as firewood which are supplied subject 
to the reduced rate, as they are likewise used for burning and generating heat in 
stoves. In terms of their objective characteristics and properties, however, wood 
chips are visibly different from other such forms of wood for use as firewood due 
to the particular way in which they are processed (chopped), their resultant form 
and the circumstances in which they are used as fuel. Depending on the criterion 
applied, wood chips are or are not similar to other forms of wood for use as 
firewood. 
Meaning of power to establish coverage using the CN 
23 The doubt as to the criterion that must be applied to determine similarity revolves 
around the meaning of the power of the Member States to establish the precise 
coverage of a reduced rate using the CN. If similarity has to be determined solely 
from the point of view of a typical consumer, the possibility of determining 
coverage using the CN would ultimately be pointless in this case and would be 
significantly restricted in general, over and beyond this case, even though the 
Member States are expressly empowered to do so under Article 98(3) of Directive 
2006/112. 
24 The Court of Justice too has previously noted in a different context that the 
principle of tax neutrality cannot preclude an exemption expressly authorised by 
the legislature or impair its effectiveness (judgment of 8 February 2018, 
Commission v Germany, C-380/16, EU:C:2018:76, paragraph 58; see also 
Opinion of Advocate General Sharpston of 8 May 2012 in Case C-44/11, 
EU:C:2012:276, point 60). However, the restriction on the principle of tax 
neutrality in this case depends on the Member State exercising the power to 
establish coverage using the CN and is therefore based only indirectly on 
legislation enacted in Directive 2006/112. 
25 If, nonetheless, the power provided for in Article 98(3) of Directive 2006/112 is 
an exemption expressly authorised by the legislature in the aforesaid sense, a use 
that need not be taken into account for the purpose of classification – and the point 
of view of a typical consumer based on it – could not be invoked against the 
application of the standard rate based on coverage established using the CN. This 
would also be in keeping with the principle of strict interpretation of reduced 
rates, which is to be applied concurrently with the principle of tax neutrality 
(judgment of 9 March 2017, Oxycure Belgium, C-573/15, EU:C:2017:189, 
paragraph 32). Such a strict interpretation might be even more appropriate in this 
case, in that Article 122 of Directive 2006/112 constitutes an exemption 
authorised only for a transitional period (see judgments of 28 February 2012, 
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Commission v France, C-119/11, EU:C:2012:104, paragraph 29, and of 7 March 
2002, Commission v Finland, C-169/00, EU:C:2002:149, paragraph 34).