Judgment;Summary — ECLI:EU:C:2020:193
Date: 2020-03-11
Language of the case: Italian
Court formation: Seventh Chamber
Subject matter: Taxation;Approximation of laws;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Italy

Translation C-94/19 — 1 
Case C-94/19 
Request for a preliminary ruling 
Date lodged: 
6 February 2019 
Referring court: 
Corte suprema di cassazione (Italy) 
Date of the decision to refer: 
27 November 2018 
Appellant: 
San Domenico Vetraria SpA 
Respondent: 
Agenzia delle Entrate 
  
LA CORTE SUPREMA DI CASSAZIONE 
SEZIONE V CIVILE 
… 
Hearing of 23/1/2018 
has made the following 
INTERLOCUTORY ORDER 
in the action … brought by 
SpA San Domenico Vetraria, … 
‒ appellant ‒ 
v 
Agenzia delle entrate, … 
EN 
REQUEST FOR A PRELIMINARY RULING OF 27. 11. 2018 — CASE C-94/19 
 
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‒ respondent and cross appellant ‒ 
and 
[Or.2] 
Ministero dell’economia e delle finanze, … 
‒ respondent ‒ 
 … [procedure] 
Facts 
1. It is apparent from the grounds of the judgment under appeal that, in the 
course of a partial VAT inspection in relation to the year 2004, it was established 
that a manager of Avir SpA, the parent company of San Domenico Vetraria SpA, 
had been seconded to that subsidiary to act as manager of one of its establishments 
and that the relevant costs had been charged to the subsidiary. 
2. San Domenico Vetraria SpA thus received from its parent company invoices 
setting out sums corresponding to the costs of the seconded manager. On 
reimbursing those costs, it applied VAT for the purpose of subsequently 
exercising the right to deduct. 
3. The Agenzia delle Entrate (tax authorities) maintained that the 
reimbursement did not relate to a supply of services between the parent and the 
subsidiary and fell outside the scope of VAT. It accordingly recovered the VAT 
which the taxable person had deducted. 
4. The Agenzia delle Entrate also maintained that the taxable person had 
acquired glass packaging waste and glass cullet, but had not applied VAT to the 
transactions. It accordingly recovered the relevant VAT that had not been paid. 
[Or.3] 
5. The company challenged the consequent tax assessment notice, but was 
unsuccessful at first instance and on appeal. 
6. In particular, as regards the first issue, the appeal court held that 
Article 8(35) of Law No 67 of 11 March 1988 applied and that, there being no 
evidence that the employee sent on secondment had received any extra payment or 
had carried out any duties different from those which he had performed within the 
parent company, the payments had merely constituted non-taxable 
reimbursements. 
7. As regards the second issue, the appeal court regarded the supplies of glass 
packaging waste as a supply of services falling under point 127o of Table A, Part 
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III, of the annex to Presidential Decree No 633/72, and therefore subject to VAT 
at 10%. 
8. San Domenico Vetraria SpA brought an appeal against that judgment on a 
point of law before this court. In its pleading it sets out four grounds of appeal, 
which the Agenzia delle Entrate, as cross-appellant, contests in its response. 
9. … [procedure] 
Grounds for the decision 
The terms of the questions 
10. This court takes the view that, having regard to the case-law [of the Court of 
Justice of the European Union and] national [case-law] in this field, the question 
[Or.4] concerning the VAT treatment of the reimbursement of the costs of 
seconded staff and whether such a transaction must be classified as a taxable 
transaction is of decisive importance to the resolution of the dispute. 
By its second ground of appeal, the appellant company alleges infringement or 
incorrect application of Article 8(35) of Law No 67/88, Article 12 of the general 
provisions constituting the introduction to the Civil Code and Articles 1321 and 
1322 of the Civil Code, in relation to Article 10(1) of Law No 212/00, and failure 
to state reasons or inadequate or contradictory reasoning, in that the appeal court 
found, in connection with the secondment of the employee, that there had been a 
mere reimbursement transaction not subject to tax, and had failed to have regard 
to the duties assigned to the manager and to the fact that the Public Treasury had 
not sustained any loss. 
10.1. … [Or.5] … [national law — dismissal of the first ground of appeal] 
European Union law 
The concept of taxable supply of services 
11. Generally speaking, as with 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, under 
Directive 2006/112/EC of 28 November 2006 the scope of VAT is very wide, 
Article 2 of the directive, which concerns taxable transactions, referring not only 
to the importation of goods but also to the supply of goods or services for 
consideration within the territory of the country by a taxable person acting as such 
(judgment of the Court of Justice of 3 September 2015, C-463/14, Asparuhovo 
Lake Investment Company OOD, paragraph 33). 
Article 6 of the Sixth Directive, which applied at the time of the relevant facts, 
provided as follows: 
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‘1. “Supply of services” shall mean any transaction which does not constitute a 
supply of goods within the meaning of Article 5.’ 
11.1.  The concept of ‘supply of services’ within the meaning of the VAT 
Directive must be interpreted without regard to the purpose or results of the 
transactions concerned (judgment of the Court of Justice of 22 November 2018, 
C-295/17, MEO ‒ Servigos de Comunicagòes e Multimédia, paragraph 60). 
[Or.6] 
In any event, Article 9 of the Sixth Directive, like the corresponding Article 56 of 
the VAT Directive, lists ‘the supply of staff’ as a supply of services. One of the 
ways in which staff are supplied is by secondment. 
The concept of consideration 
12. The assessment of whether payment of a fee is made by way of 
consideration for a supply of services is a question of EU law which needs to be 
determined independently of the assessment made under national law (judgment 
of the Court of Justice in Case C-295/17, cited above, paragraph 69). It is 
therefore irrelevant if, under national law, a payment of money is regarded as 
reimbursement, rather than consideration. 
12.1.  A supply of services is made for consideration, within the meaning of the 
Sixth Directive and the VAT Directive, only if there is a legal relationship 
between the supplier of the service and the recipient pursuant to which there is 
reciprocal performance, the remuneration received by the supplier of the service 
constituting the value actually given in return for the service supplied to the 
recipient (see the judgment of the Court of Justice of 18 January 2017, C-37/16, 
paragraph 25). The Court has also held that that is the case if there is a direct link 
between the service supplied and the consideration received, the sums paid 
constituting actual consideration for an identifiable service supplied in the context 
of such a legal relationship (the judgment of the Court of Justice of 18 January 
2017, C-37/16, paragraph 26). 
12.2.  On the other hand, it is not necessary, for VAT purposes, that the exchange 
should be lucrative, since the result of an economic transaction is irrelevant 
(judgment of the Court of Justice of 22 June 2016, C-267/15, Gemeente Woerden, 
paragraph 40, with [Or.7] regard to the stipulation of a price than did not cover 
the costs incurred). 
The fact that the price paid for an economic transaction is equal to, higher than or 
lower than the cost price is in itself irrelevant to the question whether the 
transaction is to be regarded as a ‘transaction effected for consideration’, unless 
the difference between the costs sustained and the payment received as 
consideration is particularly great (judgment of the Court of Justice of 12 May 
2016, C-520/14, with regard to a case in which the contribution paid was only 3% 
of the overall school transportation costs met by the municipality). 
SAN DOMENICO VETRARIA 
 
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13. In order to determine whether a service is supplied ‘in return for 
remuneration’, so that the activity in question is to be classified as an economic 
activity, all the circumstances in which it is supplied have to be examined 
(judgment of the Court of Justice in Case C-520/14, paragraph 29). 
13.1.  In particular, it does not appear to be relevant in this regard that the 
expenditure borne by the subsidiary should correspond to the remuneration or fees 
of employees of the parent company, that is to say, of a third party to the party 
which ultimately bears that expenditure. 
The Court of Justice has in fact established (judgment of 18 July 2013, C-124/12, 
AES-3C Maritza East 1 EOOD) that Article 168(a) and the second paragraph of 
Article 176 of the VAT Directive (corresponding to Article 17(2)(a) and (6) of the 
Sixth Directive) are to be interpreted as precluding national legislation under 
which a taxable person which incurs costs for transport services, work clothing, 
protective gear and business trips for staff working for that taxable person does 
not have the right to deduct the VAT relating to those [Or.8] costs on the ground 
that such staff are supplied to it by another entity and accordingly cannot be 
regarded, for the purposes of that legislation, as members of the taxable person’s 
staff, despite the fact that those costs can be regarded as having a direct and 
immediate link with the general costs connected with all the economic activities of 
that taxable person. 
National law 
14. Article 3 of Decree No 633 of the President of the Republic of 26 October 
1972 establishing and laying down rules on value added tax, provides that: 
‘Supplies for consideration under contracts for work, procurement, transport, 
representation, haulage, agency, brokerage, or deposit and generally under 
obligations to do or refrain from doing or to permit something to be done, 
whatever the basis thereof, constitute supplies of services. Supplies for the 
personal or family use of a contractor or of a person who pursues an art or a 
profession or for other purposes unconnected with the undertaking or the pursuit 
of an art or a profession constitute supplies of services for consideration.’ 
Article 30 of Legislative Decree No 276 of 10 September 2003 implementing the 
delegations concerning employment and the labour market referred to in Law 
No 30 of 14 February 2003, provides that: 
‘The temporary placing, by an employer, of one of more employees at the disposal 
of another person, for the purpose of carrying out a specific occupational activity 
in the employer’s own interests, constitutes secondment’ (paragraph 1). 
[Or.9] 
‘In the event of secondment, the employer shall remain legally and financially 
liable for the worker’ (paragraph 2). 
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However, Article 8(35) of Law No 67 of 11 March 1988 laying down provisions 
for drawing up the annual and multiannual State budget (Finance Act for 1988), 
provides that: 
‘The lending or secondment of staff in respect of whom only the related cost is 
reimbursed shall not be regarded as relevant for the purposes of value added tax’. 
14.1.  Against that legislative background, the combined chambers of this court 
… have established that the special provision contained in Article 8(35) of Law 
No 67/88 cannot be interpreted in the sense that, where the remuneration to be 
paid is greater than the cost, only the excess is subject to VAT and, where the 
remuneration is lower than the cost, VAT is not applicable. 
That is because, in the case of secondment ‘ ... it is not a question of the basis of 
assessment; it is a question of whether or not the transaction is relevant; if there 
is a relevant operation, then, in accordance with the rules, the (entire) amount 
paid by the person hosting the seconded employee will be taxable.’ The combined 
chambers added that ‘the opposite conclusion drawn in Judgments Nos 19129 and 
19132 of 2010 is not convincing … in so far as concerns the claim that where the 
sum to be reimbursed is less than the costs the transaction is not subject to VAT   ’ 
14.2.  Where, on the other hand, the sum to be reimbursed is equal to the 
expenditure borne in respect of the seconded staff, the secondment, not being 
‘relevant for VAT purposes’, will apparently not be taxable. 
[Or.10] 
The combined chambers of this court have emphasised that, in this regard, the 
rules are different from those which govern the similar case of the supply of staff 
by authorised undertakings. In such a case, in so far as VAT is concerned, there is 
no irrelevant transaction, but instead, ‘the exemption of reimbursements in every 
case, and thus no deduction of tax, not even where the total consideration is 
greater than the costs of the workers’. 
Indeed, in accordance with Article 86(4) of Legislative Decree No 276/03, which 
provides that the provisions of Article 26a of Law No 196/97 apply to the supply 
of staff governed by the decree, read in conjunction with Article 26a of Law 
No 196/97, contracts for the supply of staff are governed by the provision under 
which ‘costs relating to wages and social security, which the user of temporary 
workers is required, in accordance with Article 1(5)(f), to reimburse to the 
undertaking providing the temporary labour and which the latter has actually 
borne in respect of the temporary worker shall not be included in the basis of 
assessment for VAT purposes referred to in Article 13 of Presidential Decree 
No 633 of 26 October 1972. The tax treatment applied in the past shall not change 
and there shall be no reimbursement of tax already paid; the variation referred to 
in Article 26 of Decree No 633/1972 shall not be permitted.’ 
SAN DOMENICO VETRARIA 
 
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14.3.  That approach, resulting from the decision of the combined chambers of 
this court (and from subsequent decisions following that decision) may now be 
regarded as consolidated case-law (diritto vivente). On one occasion, however, 
doubts arose as to its compliance with [EU] law, when it was held (Judgment of 
the Court of Cassation No 3285 of 19 February 2016) that ‘the breadth of the 
concept of “supply of services” … and the fundamental principle of the [Or.11] 
fiscal neutrality of VAT, which the Court of Justice has emphasised on a number 
of occasions (see, ex plurimis, the judgment of 5 March 2015, C- 479/13), could 
preclude, as is argued in works of legal theory, the different treatment of services 
that may be regarded variously as staff secondment or as the supply of labour by 
authorised undertakings.’ 
Grounds for the request for a preliminary ruling 
15. The national legislation, as interpreted by this court, raises a question as to 
the exclusion from the scope of VAT of a supply of services such as the supply of 
staff by way of secondment, when compared with the reimbursement of the cost 
of providing such services, which is, on the other hand, taxable. 
15.1.  The fact that the activity in question is economic in nature seems to be 
clear from the requirement, under Article 30 of Legislative Decree No 276/30, that 
the employer providing the secondment should have a specific interest in it, which 
this court has found, in its case-law, to be present in the interest in ensuring that 
the functioning of the organisation is improved, which is common to both the 
parent and the subsidiary (judgment No 8068 of the Court of Cassation of 21 April 
2016 and, with reference to the secondment of a manager, judgment No 13673 of 
the Court of Cassation of 3 July 2015). 
The existence of such an interest is not in dispute in the present case: it is the 
interest of the undertaking providing the secondment, which has sent the worker 
(in this case, the manager) on secondment to its own production unit. 
15.2.  Next, the fact that the economic activity in question has taken the form of a 
supply of services for consideration could be inferred from the amount paid by the 
undertaking hosting the seconded employee, equivalent to the costs and fees 
[Or.12] to be borne for the workers, that being a not insignificant sum. 
16. In addition, the national legislation appears to give rise to unjustified 
inequality of treatment, for VAT purposes, between the various mechanisms for 
‘the supply of staff’, which could affect the principle of fiscal neutrality, which is 
an expression of the general principle of equal treatment (see, most recently, the 
judgment of the Court of Justice of 19 December 2018, C-51/18, paragraph 55), in 
accordance with which goods and services of the same type, which are potentially 
in competition with each other, should be treated in the same way for VAT 
purposes. 
16.1. The hiring out of staff is another method of supplying staff (judgment of the 
Court of Justice of 12 March 2015, C-594/13, ‘go fair’ Zeitarbeit OHG), one that 
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differs from secondment in the nature of the interest served, which is based on 
profit in the case of a hiring-out agency. On the basis of the same characterisation 
in the case-law of this court, it always gives rise to a taxable supply, in relation to 
which the amount to be reimbursed has an effect only on the basis of assessment. 
16.2.  Moreover, the difference in treatment would remain, this time in the 
opposite sense, even where the consideration paid is greater or less than the mere 
cost of the staff, and even within the same organisation in which the secondment 
takes place. 
In such a case, following the interpretation of the combined chambers of this 
court, the secondment service would be taxable and be so in relation to the entire 
amount paid by the undertaking hosting the seconded employee. 
In the case of the hiring out of staff, on the other hand, the basis of assessment, 
pursuant to Article 26a of Law No 196/97, to which Article 86 of Legislative 
Decree No 276/03 refers, [Or.13] would be equal only to the margin between the 
consideration and the wage and social security costs. 
17. These doubts regarding consistency with [EU] law do not mean that it is 
necessary to refer the question of the interpretation of Article 8(35) of Law 
No 67/88, with reference to the aspects mentioned, back to the combined 
chambers. 
Indeed, the Court of Justice has established (in its judgment of 5 April 2016, 
C-689/13, Puligienica Facility Esco v Airgest) that Article 267 TFEU must be 
interpreted as precluding a provision of national law, in so far as that provision is 
interpreted to the effect that, where a question concerning the interpretation or 
validity of EU law arises, a chamber of a court of final instance must, if it does not 
concur with the position adopted by decision of that court sitting in plenary 
session, refer the question to the plenary session and is thus precluded from itself 
making a request to the Court of Justice for a preliminary ruling. 
… [national rules] 
18. Thus, it is necessary to clarify whether the provisions of EU law mentioned 
above permit or preclude provisions of national law which exclude from the scope 
of the Sixth VAT Directive the supply of staff by way of secondment by a parent 
company to its subsidiary in exchange for which the parent company is 
reimbursed only in respect of the related costs. 
19. In conclusion, it is necessary to request the Court of Justice to give a 
preliminary ruling, pursuant to Article 267 of the Treaty on the Functioning of the 
European Union, on the following question: 
[Or.14] 
SAN DOMENICO VETRARIA 
 
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Must Articles 2 and 6 of Sixth Council Directive 77/388/EEC of 17 May 1977 and 
the principal of fiscal neutrality be interpreted as precluding national legislation 
under which the lending or secondment of staff by a parent company in respect of 
which the subsidiary merely reimburses the related costs is regarded as irrelevant 
for value added tax purposes? 
… [stay of the proceedings and internal instructions] 
… Rome, 23 January and 27 November 2018 
…