Opinion of the Advocate General — ECLI:EU:C:2005:283
Date: 2005-05-12
Language of the case: English
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: United Kingdom

Summary of the Judgment 1. Community law – Direct effect – National taxes incompatible with Community law – Repayment – Procedures – Application of national law – Limits – Observance of the principles of equivalence and of effectiveness of Community law 2. Preliminary rulings – Interpretation – Temporal effects of judgments interpreting Community law – Retroactive effect – Limitation by the Court (Art. 234 EC) 3. Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Special scheme for travel agents – Recalculation of value added tax liability in accordance with the method held by the Court to comply with Community law – Whether permissible – Conditions (Council Directive 77/388, Art. 26) 4. Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Special scheme for travel agents – Package tours comprising partly in-house services and partly services bought in from third parties – Calculation of the tax – Application of the criterion of market value to the in-house services – Conditions – Establishment by the national court or tribunal of the market value of flights (Council Directive 77/388, Art. 26) 1. In the absence of Community rules on applications for the repayment of taxes levied though not due, it is for the domestic legal system of each Member State to lay down the conditions under which such applications may be made; those conditions must observe the principles of equivalence and effectiveness, that is to say, they must not be less favourable than those relating to similar claims founded on provisions of domestic law or framed so as to render virtually impossible the exercise of rights conferred by the Community legal order. (see para. 17) 2. When the Court, in the exercise of the jurisdiction conferred on it by Article 234 EC, interprets a provision of Community law, it defines the meaning and scope of that provision as it ought to have been understood and applied from its entry into force. Thus, a judgment delivered on a reference for a preliminary ruling is such as to have effects on legal relationships which arose before its delivery. It follows, in particular, that a rule of Community law so interpreted must be applied by an administrative body within the sphere of its competence even to legal relationships which arose and were formed before delivery of the Court’s judgment ruling on the question referred to it. That is not the case only when in its judgment the Court, exceptionally, limits the temporal effect of the interpretation. (see paras 16-17) 3. A travel agent or a tour operator who has completed his value added tax return for a tax period using the method laid down by the national rules which transpose into domestic law Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes may recalculate his value added tax liability in accordance with the method held by the Court to comply with Community law, under the conditions laid down by national law, which have to observe the principles of equivalence and effectiveness. (see para. 18, operative part 1) 4. Article 26 of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes must be interpreted as meaning that a travel agent or tour operator who, in return for a package price, supplies to a traveller services bought in from third parties and in-house services must, in principle, identify the part of the package corresponding to his in-house services on the basis of their market value where that value can be established. In such a case, a taxable person may use the criterion of actual costs only if he proves that this criterion accurately reflects the actual structure of the package. Application of the criterion of market value is not subject to the condition that it must be simpler than application of the actual cost method or to the condition that it must produce a value added tax liability identical or close to that which would result from using the actual cost method. Accordingly: – a travel agent or tour operator may not use the market value method at his own discretion and – that method is applicable to in-house services whose market value may be established even if, in the same tax period, the value of certain in-house components of the package cannot be established inasmuch as the taxable person does not sell similar services on a non-package basis. It is for the national tribunal to establish, in the light of the circumstances of the main proceedings, the market value of the flights supplied in the main proceedings as part of package holidays. The national tribunal may establish this market value from average values. In this context, the market based on seats sold to other tour operators may constitute the most appropriate market. (see paras 41, 45, operative part 2-3)