Judgment — ECLI:EU:C:2013:202
Date: 2013-03-21
Language of the case: French
Court formation: Tenth Chamber
Subject matter: Taxation;Value added tax
Procedure: Action for failure to fulfil obligations - successful
Origin: France

Action brought on 26 April 2012 - European Commission v French Republic (Case C-197/12) Language of the case: French Parties Applicant: European Commission (represented by: F. Dintilhac and C. Soulay, Agents) Defendant: French Republic Form of order sought declare that, by not making the exemption from VAT of transactions referred to in Article 262, Part II(2), (3), (6) and (7), of the Code général des impôts conditional on the requirement of use for navigation on the high seas, in respect of vessels carrying passengers for reward and those used for the purpose of commercial activities, the French Republic has failed to fulfil its obligations under the VAT Directive,  in particular Article 148(a), (c) and (d) thereof; order the French Republic to pay the costs. Pleas in law and main arguments By the present action, the Commission claims that the exemption from VAT of the transactions referred to in Article 262, Part II(2), (3), (6) and (7), of the Code général des impôts (French General Tax Code) (CGI) was not made conditional on the requirement of use for navigation on the high seas, in respect of vessels carrying passengers for reward and those used for the purpose of commercial activities. That condition that vessels must be used on the high seas was added to the legislative provisions regulating VAT in France in response to the Commission's reasoned opinion addressed to the national authorities. However, the bringing of Article 262, Part II(2), of the CGI into line with the VAT directive was rendered ineffective by an explanatory ministerial ruling binding on the administrative authorities, published subsequent to the legislative amendment, which does not mention the condition that vessels must be used for navigation on the high seas, although this was provided for by the legislation. In the Commission's view, none of the arguments put forward by the defendant in the course of the pre-litigation procedure, concerning, inter alia, the strict interpretation of Article 148(a) of the VAT Directive and the overly restrictive interpretation of the condition that vessels must be used for navigation on the high seas, can justify the failure to comply with the provisions of the aforementioned directive. Furthermore, as regards Article 131 of Directive 2006/112/EC, relied on by the French authorities, this cannot justify a derogation from the principle that exemptions must be subject to strict interpretation. ____________ 1 - Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1).