Judgment — ECLI:EU:C:2008:184
Date: 2008-04-03
Language of the case: German
Court formation: Second Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Taxation;Value added tax
Concepts: Bodies governed by public law;Rates
Procedure: Reference for a preliminary ruling
Origin: Germany

Summary of the Judgment 1. Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Taxable persons (Council Directive 77/388, Art. 4(5), and Annex D, point 2) 2. Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Member States’ option to apply a reduced rate to certain supplies of goods and services (Council Directive 77/388, Art. 12(3)(a), and Annex H) 1. Article 4(5) of Sixth Council Directive 77/388/EEC on the harmonisation of the laws of the Member States relating to turnover taxes and point 2 of Annex D thereto must be interpreted as meaning that the laying of a mains connection which consists in the installation of piping permitting the connection of a building’s water system to the fixed water supply network forms part of the supply of water, listed in that annex, since, first, the objective of the third subparagraph of Article 4(5) of the Sixth Directive is to ensure that the categories of economic activity of a certain importance that are listed in Annex D, which include the supply of water, are not exempted from value added tax on the ground that the service is rendered by a public body and, secondly, the supply of water is characterised by making water available to the public and a mains connection is essential for making it available. Consequently, a body governed by public law acting as a public authority is a taxable person in respect of that transaction. (see paras 35, 37, operative part 1) 2. Article 12(3)(a) of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes and Category 2 of Annex H thereto must be interpreted as meaning that the laying of a mains connection which consists in the installation of piping permitting the connection of a building’s water system to the fixed water supply network forms part of water supplies. While the Sixth Directive does not define the concept of water supply, it is also not apparent from its provisions that that term should be interpreted differently according to the annex in which it is mentioned. Since a mains connection is essential in order to make water available to the public, such a connection also forms part of the water supplies referred to in Category 2 of Annex H to the Sixth Directive. Furthermore, Member States may apply a reduced rate of value added tax to concrete and specific aspects of water supplies, such as the laying of mains connections, provided that they comply with the principle of fiscal neutrality inherent in the common system of value added tax. (see paras 40, 44, operative part 2)