Judgment — ECLI:EU:C:2016:392
Date: 2016-06-02
Language of the case: Hungarian
Court formation: Eighth Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Hungary

Summary — Judgment of the Court (Eighth Chamber), 2 June 2016 1. Harmonisation of fiscal legislation — Common system of value added tax — Economic activity — Definition — Operation, by a non-profit company, of agricultural engineering works as a commercial activity on an ancillary basis — Included — Condition — Obtaining income on a continuing basis — Such activity funded by public subsidies and by charging modest fees — No effect (Council Directive 2006/112, Art. 9(1), second para.) 2. Harmonisation of fiscal legislation — Common system of value added tax — Supply of services effected for consideration — Meaning — Operation, by a non-profit company, of agricultural engineering works as a commercial activity on an ancillary basis — Included — Conditions — Verification a matter for the national court as regards the effect of the amount of the fee on the existence of a direct link between the services supplied and the consideration (Council Directive 2006/112, Arts 2(1)(c) and 24) 1. Article 9(1) of Directive 2006/112 on the common system of value added tax must be interpreted as meaning that the operation of agricultural engineering works by a non-profit company which engages in such commercial activities only on an ancillary basis constitutes an economic activity within the meaning of that provision, notwithstanding the fact that those works have in large part been financed by State aid and that their operation gives rise only to revenue from modest fees, provided that that fee can be regarded as having a ‘continuing basis’ on account of the period of time during which it is to be charged. Such an activity is to be regarded as falling within the concept of ‘economic activity’ if it is engaged in for the purposes of obtaining income on a continuing basis. Such income is to be found where the services provided or to be provided give or will give rise to remuneration as a result of the owners of the land concerned being charged an operating fee in relation to the engineering works for a predetermined period of eight years, with that period allowing the fee to be regarded as having a ‘continuing basis’. As regards the fact that the taxable persons concerned could engage in that commercial activity only on an ancillary basis, first, it is clear from the second subparagraph of Article 9(1) of Directive 2006/112 that, for a finding that the exploitation of tangible or intangible property is carried out for the purpose of obtaining income therefrom, it is irrelevant whether or not that exploitation is intended to make a profit. Secondly, engaging in such an activity on an ancillary basis has no bearing on the economic nature of that activity provided that, on account of the period of time during which it is to be charged, the fee can be regarded as having a ‘continuing basis’. Lastly, the fact that the investments are largely financed by aids granted by the Member State and the European Union cannot have a bearing on whether or not such an activity is to be regarded as an economic activity, since the concept of ‘economic activity’ is objective in nature and applies not only without regard to the purpose or results of the transactions concerned but also without regard to the method of financing chosen by the operator concerned, which also holds true in relation to public subsidies. (see paras 28, 30, 31, 33-35, 37, 38, 51, operative part 1) 2. Article 24 of Directive 2006/112 on the common system of value added tax must be interpreted as meaning that the operation of agricultural engineering works constitutes a supply of services for consideration, on the ground that the services rendered are directly linked to the fee received or to be received, provided that that modest fee constitutes remuneration for the service supplied and notwithstanding the fact that performance of those services is a legal obligation. The fact that the activity in question consists in the performance of duties conferred and regulated by law in the public interest and the fact that the price paid for an economic transaction is higher or lower than the cost price, and, therefore, higher or lower than the open market value, are both irrelevant for the purposes of determining whether that activity can be classified as a supply of services effected for consideration. It is for the referring court to determine whether the amount of the fee received or to be received, qua consideration, means that there exists a direct link between the services supplied or to be supplied and that consideration, and consequently allows those services to be classified as being effected for consideration. In particular, the referring court will have to ascertain that the planned fee does not only partly remunerate the services supplied or to be supplied and that its amount has not been determined as a result of other possible factors that could, depending on the circumstances, call into question the direct link between the services supplied and the consideration. (see paras 42, 45, 51, operative part 2)