Opinion of the Advocate General — ECLI:EU:C:2021:17
Date: 2021-01-14
Language of the case: French
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Luxembourg

Summary C-846/19 — 1 
Case C-846/19 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
21 November 2019 
Referring court: 
Tribunal d’arrondissement (Luxembourg) 
Date of the decision to refer: 
20 November 2019 
Applicant: 
EQ 
Defendant: 
Administration de l’Enregistrement, des Domaines et de la TVA 
  
1. Subject matter and facts of the dispute: 
1 EQ is a lawyer in Luxembourg and has, since 2004, exercised powers of 
representation under schemes for the protection of adults lacking legal capacity 
(primarily as a curator and as a guardianship manager). 
2 Persons exercising powers of representation are appointed by a guardianship judge 
who may award those agents remuneration, the amount or the method of 
calculation of which is determined by the judge, taking into account the financial 
position of the person lacking legal capacity. 
3 The règlement grand-ducal du 23 décembre 1982 fixant les conditions de 
désignation d’un gérant de la tutelle (Grand-Ducal Regulation of 23 December 
1982 laying down the conditions for the appointment of a guardianship manager) 
(see below) applies in practice to all types of powers of representation conferred 
under schemes for the protection of adults lacking legal capacity. 
4 Up until 2013, the Administration de l’Enregistrement, des Domaines et de la 
TVA (Registration, Land and VAT Authority) (‘the tax authority’) took the view 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-846/19 
 
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that that activity was not subject to VAT. By two tax notices of 19 January 2018, 
the tax authority has now made those activities subject to VAT and claimed from 
EQ more than EUR 70 000 in VAT for the years 2014 and 2015. 
5 EQ challenges those additional assessments to VAT and brought the matter before 
the tribunal d’arrondissement (District Court). 
2. Legal context: 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax 
6 Article 9 provides: 
‘1. “Taxable person” shall mean any person who, independently, carries out in any 
place any economic activity, whatever the purpose or results of that activity. 
Any activity of producers, traders or persons supplying services, including mining 
and agricultural activities and activities of the professions, shall be regarded as 
“economic activity”. The exploitation of tangible or intangible property for the 
purposes of obtaining income therefrom on a continuing basis shall in particular 
be regarded as an economic activity. …’ 
7 Article 132 provides: 
‘1. Member States shall exempt the following transactions: 
… 
(g) the supply of services and of goods closely linked to welfare and social 
security work, including those supplied by old people’s homes, by bodies 
governed by public law or by other bodies recognised by the Member State 
concerned as being devoted to social wellbeing; …’ 
Grand-Ducal Regulation of 23 December 1982 laying down the conditions for 
the appointment of a guardianship manager 
8 Article 3 reads as follows: 
‘The guardianship judge may award to the guardianship manager remuneration, 
the amount or the method of calculation of which he shall determine, by reasoned 
decision, taking into account the financial position of the person lacking legal 
capacity. 
That remuneration shall consist of either a fixed amount, a percentage of the 
income of the person lacking legal capacity or a fee fixed according to the duties 
performed.’ 
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3. Positions of the parties: 
EQ 
9 The supplies of services at issue are not economic activities subject to VAT. 
10 The ‘allowance’ paid in respect of the exercise of powers of representation is of a 
different nature from that of lawyer’s ‘fees’. Such consideration for the exercise of 
powers of representation is flat-rate compensation which does not correspond to 
the real value of the services provided. In order to fall within the scope of VAT, a 
service must be performed for consideration, that is to say the remuneration must 
constitute the value actually given in return for the service provided or, in other 
words, its real value. 
11 EQ further argues that the fact that the activity is carried out for consideration 
means that the amount of the allowance must be determined in advance and in 
accordance with established criteria which guarantee that the taxable person’s 
operating costs are covered. Those conditions are not satisfied in the present case, 
since the Grand-Ducal Regulation of 23 December 1982 provides only for the 
possibility of remuneration (and not a right to remuneration) for the guardianship 
manager, makes that remuneration subject to an individual decision made by the 
guardianship judge, requires the guardianship judge to take account of the 
protected adult’s financial position and leaves to the guardianship judge the ability 
to determine that remuneration either in the form of a fixed amount or a 
percentage of the protected adult’s income or according to the duties performed. 
12 EQ adds that, where the remuneration is determined according to the duties 
performed, the hourly rate awarded by the guardianship judge does not equate to 
the hourly rates usually applied by lawyers to the legal services which they 
provide. 
13 EQ is asking, at the very least, to be granted an exemption from VAT. He argues 
that agents working in the field of the protection of adults lacking legal capacity 
perform a social function for four reasons: 
1/ the cost of those agents is borne by the adult lacking legal capacity, or 
otherwise by the State if the adult lacking legal capacity does not have sufficient 
financial means; 
2/ the Grand-Ducal Regulation specifies that the remuneration of the agent is 
determined on the basis of a reasoned decision made by the judge according to the 
financial position of the adult concerned; 
3/ the allowance paid is most often a flat-rate allowance and equates only rarely to 
services provided; and 
4/ the ministère de la Justice (Ministry of Justice) does not add VAT to the 
compensation paid to the agent so as not to increase the cost charged to society. 
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14 An activity either has or does not have a social character by its very nature and not 
according to the person who carries out that activity or the profession of that 
person. 
15 The grant of the exemption is not limited to public bodies but extends to ‘other 
similar private-sector institutions’, and a particular legal form is neither required 
nor excluded. Furthermore, a natural person carrying on the profession of lawyer 
can therefore be covered. 
16 Lastly, EQ alleges that the tax authority infringed the principle of the protection of 
legitimate expectations by having decided with effect from the year 2014 to make 
his activities in the field of the protection of adults subject to VAT, whereas it 
refrained from so doing over the ten previous years. 
The tax authority 
17 The VAT system does not require that the price received equates to the economic 
value of the service provided. There need only be a relationship between the price 
and the service, and the price does not have to be proportionate to the value of the 
service. The tax authority observes that the grant of a price discount on a supply of 
services does not exclude that supply from the scope of VAT, and that there are 
other examples, in particular in the context of lawyer’s fees, where the financial 
consideration is not proportionate to the value of the service provided without that 
service falling outside the scope of VAT (it cites in this regard flat-rate fees, 
contingency fees, fees which vary according to the client or the case). The 
variable nature of the allowance at issue is therefore incapable of excluding the 
supplies of services from the scope of VAT. 
18 Furthermore, the lack of correlation between the financial consideration for the 
activity connected with the protection of adults and the fees for the legal services 
performed as a lawyer should have no bearing on the classification of the activity 
connected with the protection of adults as economic activity, since there is no 
scale for supplies of legal services and lawyer’s fees are subject to variation, as is 
the remuneration paid to the agent under the scheme for the protection of adults. 
19 With regard to the exemption sought, the tax authority points out that EQ’s 
citation of the legal provision concerned is incomplete and that that provision 
covers only other similar private-sector institutions ‘recognised by the competent 
public authorities as being devoted to social wellbeing’. It follows from that fact 
that the exemption is to apply only to a restricted list of certain persons and 
entities. The exemption may not be applied to a person carrying on the profession 
of lawyer who does not satisfy the condition of being a body having a social 
character. Such a person is not covered by the exemption which, since it derogates 
from the application of VAT to any economic activity, must be interpreted and 
applied restrictively. 
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20 It is for EQ to show that he is a body having a social character and that the 
competent public authorities have recognised him as having that character. It is 
not enough to point to an activity that has a social character. In addition, the scale 
of the income derived by EQ from his activity connected with the protection of 
adults (EUR 239 46[0.00] in 2014 and EUR 302 033.50 in 2015) is such as to 
demonstrate that his activity lacks a social character. 
21 Finally, with regard to the protection of legitimate expectations, the tax authority 
argues that that principle does not apply in the present case because failing to levy 
VAT on the services connected with the protection of adults would amount to 
committing an unlawful act, and that it has no leeway in the implementation of 
VAT legislation. 
4. Findings of the court: 
The nature of the activity 
22 EQ cites the case-law of the Court of Justice to the effect that ‘a supply of services 
is taxable only if there is a legal relationship between the provider of the service 
and the recipient pursuant to which there is reciprocal performance, the 
remuneration received by the provider of the service constituting the value 
actually given in return for the service supplied to the recipient’ (judgments of 
2 June 2016, Lajvér, C-263/15, EU:C:2016:392, paragraph 26; of 18 January 
2017, SAWP, C-37/16, EU:C:2017:22, paragraphs 25 and 26; and of 2 May 2019, 
Budimex, C-224/18, EU:C:2019:347, paragraph 30) and incorrectly concludes 
from that case-law that the words ‘the value actually given in return’ requires an 
equivalence in value between the service provided and the remuneration paid. On 
the basis of the facts of the case-law cited, the view should in fact be taken that the 
concept of ‘the value actually given in return’ (‘actually’ in the sense of ‘in 
reality’) requires that value is given in return, without consideration being given to 
the amount of that value or its financial correlation to the service provided. In that 
context, the court observes that other judgments specify that ‘the possibility of 
classifying a supply of services as a “transaction for consideration” which, as a 
general rule, is subject to VAT …, requires only that there be a direct link 
between that supply and the consideration actually received by the taxable person’ 
(emphasis added) (judgment of 22 February 2018, Nagyszénás 
Településszolgáltatási Nonprofit Kft., C-182/17, EU:C:2018:91, paragraph 32), 
thus stressing the reality of the consideration rather than its quantitative 
significance in absolute or relative terms. 
23 Two other points are, however, less clear. 
24 First, with regard to the legal relationship within the context of which the supply 
of services is performed, the court asks about the scope in the present case of the 
Court of Justice’s assessment that ‘a supply of services is taxable only if there is a 
legal relationship between the provider of the service and the recipient pursuant to 
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which there is reciprocal performance, the remuneration received by the provider 
of the service constituting the value actually given in return for the service 
supplied to the recipient’, since the scheme for the protection of adults is 
characterised by a triangular relationship between, firstly, the service provider, 
secondly, the recipient of the services (the protected adult who is often, by 
definition, incapable of entering into a legal relationship validly and with whom 
the service provider therefore has no legal relationship), and, thirdly, the judicial 
authority which appointed the service provider to perform a management role and 
with which that provider therefore has a legal relationship. The court further asks 
about the effect of the finding that, in certain circumstances, the remuneration of 
the service provider is borne by the protected adult, whereas — if that adult’s 
financial position does not so allow — that remuneration is borne by the State. 
25 Second, with regard to the amount of the financial remuneration, the court notes 
that, although it follows from the case-law of the Court of Justice ‘that 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, is irrelevant for 
the purpose of establishing whether it was a transaction effected for consideration 
(see, to that effect, judgments of 20 January 2005, Hotel Scandic Gåsabäck, 
C-412/03, EU:C:2005:47, paragraph 22; of 9 June 2011, Campsa Estaciones de 
Servicio, C-285/10, EU:C:2011:381, paragraph 25; and of 27 March 2014, Le 
Rayon d’Or, C-151/13, EU:C:2014:185, paragraphs 36 and 37)’ (judgment of 
2 June 2016, Lajvér, C-263/15, EU:C:2016:392, paragraph 45), the Court of 
Justice further explains that ‘the direct nature of that link [between the supply of 
services and the financial remuneration] could not be called into question by the 
fact … that that amount [of the compensation] was fixed at a level lower than the 
open market value, provided that the amount of compensation was determined in 
advance on the basis of well-established criteria which ensured that it was 
sufficient to cover the operating costs of [the service provider] (see, to that effect, 
judgments of 29 October 2015, Saudaçor, C-174/14, EU:C:2015:733, 
paragraph 38, and of 2 June 2016, Lajvér, C-263/15, EU:C:2016:392, 
paragraphs 45 and 46)’ (judgment of 22 February 2018, Nagyszénás 
Településszolgáltatási Nonprofit Kft, C-182/17, ECLI:EU:C:2018:91, 
paragraph 38). The Court of Justice appears to require in this way that the amount 
of the remuneration is foreseeable and can cover the service provider’s operating 
costs. The court asks about the scope of those conditions, given the arrangements 
for determining the remuneration of a service provider working in the field of the 
protection of adults, as laid down in the Grand-Ducal Regulation of 23 December 
1982 laying down the conditions for the appointment of a guardianship manager. 
26 Although the services provided in the present case by EQ are akin in all aspects to 
an economic activity, the court therefore considers it necessary to clarify that 
assessment in the specific context of the circumstances of the present case which 
is characterised by 
1/ a triangular relationship in which the entity which appoints the service provider 
is not the same person as the recipient of the service and where, depending on the 
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situation, the service provider’s remuneration is borne either by the recipient of 
the services or by the State; and 
2/ by a mechanism for determining the service provider’s remuneration which 
(a) is based on a case-by-case assessment made by the court; 
(b) is always dependent on the financial position of the recipient of the 
services; and 
(c) uses a fixed amount or a percentage of the income of the recipient of the 
services or has regard to the services performed. 
On the basis of that mechanism for determining the remuneration, the view should 
be taken that the remuneration cannot be determined in advance and does not 
necessarily ensure in all circumstances that the operating costs incurred by the 
service provider are covered. 
The exemption scheme 
27 The court asks, first of all, whether the activity carried out in the field of the 
protection of adults falls within the concept of ‘welfare or social security work’ 
within the meaning of the VAT Directive. 
28 Furthermore, the court asks how ‘bodies recognised by the Member State 
concerned as being devoted to social wellbeing’ are to be defined. EQ focuses on 
the nature of the activity carried out regardless of the legal status of the service 
provider, whereas the tax authority argues that the legal status of the person 
concerned must be taken into account and, without expressly saying so, that 
service providers operating for profit must be excluded. 
29 Finally, in order to apply those provisions, it is necessary to clarify what is meant 
by the ‘recognition’ of the social character of the body concerned. Although the 
Directive simply refers to recognition ‘by the Member State concerned’, it does 
not explain the recognition process or specify the body authorised for the purposes 
of recognition. The facts of the present case raise inter alia the questions whether 
the authority concerned can be a judicial authority and whether recognition can be 
carried out on a case-by-case basis. 
The principle of the protection of legitimate expectations 
30 The court recalls the principle of fiscal neutrality underlying the VAT system. 
VAT is ultimately payable by the end consumer and the taxable person collects 
the VAT on behalf of the State. VAT is collected individually on each economic 
transaction and it is remitted periodically by the taxable person to the State. It 
follows from the foregoing that the taxable person could collect VAT only on the 
transactions which he knew or ought to have known came under the scope of VAT 
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when they were carried out. Where, as in the present case, the VAT authority 
informs the taxable person after the transactions in question have been carried out 
that it intends to depart from its earlier position of not subjecting those 
transactions to VAT, the taxable person is in a position where he could not charge 
VAT to the recipient of those supplies, whilst having to remit it to the State. The 
taxable person would thus be required, contrary to the fiscal neutrality of VAT, to 
pay the amounts claimed by the State in respect of VAT from its own funds. 
5. The questions referred for a preliminary ruling: 
31 The District Court submits the following questions to the Court of Justice: 
1. Is the concept of ‘economic activity’ within the meaning of the second 
subparagraph of Article 9(1) of Directive 2006/112/EC to be interpreted as 
including or excluding supplies of services provided in the context of a triangular 
relationship in which the provider of the services is appointed to provide those 
services by an entity which is not the same person as the recipient of the supplies 
of services? 
2. Is the answer to the first question different according to whether the supplies 
of services are provided in the context of a role entrusted to the provider by an 
independent judicial authority? 
3. Is the answer to the first question different according to whether the 
remuneration of the service provider is borne by the recipient of the services or by 
the State, an entity of which appointed the service provider to provide those 
services? 
4. Is the concept of ‘economic activity’ within the meaning of the second 
subparagraph of Article 9(1) of Directive 2006/112/EC to be interpreted as 
including or excluding supplies of services where the remuneration of the service 
provider is not a legal requirement and the amount of the remuneration, where it is 
awarded, (a) is based on a case-by-case assessment, (b) is always dependent on 
the financial position of the recipient of the services and (c) is calculated by 
reference to a fixed amount, a percentage of the income of the recipient of the 
services or the services performed? 
5. Is the concept of ‘the supply of services and of goods closely linked to 
welfare and social security work’ contained in Article 132(1)(g) of Council 
Directive 2006/112/EC of 28 November 2006 on the common system of value 
added tax to be interpreted as including or excluding services performed in the 
context of a scheme for the protection of adults established by law and subject to 
the control of an independent judicial authority? 
6. Is the concept of ‘bodies recognised … as being devoted to social wellbeing’ 
contained in Article 132(1)(g) of Council Directive 2006/112/EC of 28 November 
2006 on the common system of value added tax to be interpreted, in view of the 
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recognition of the social character of the body, as laying down certain 
requirements vis-à-vis the way in which the service provider operates or as 
regards the not-for-profit or profit-making objective of the activity of the service 
provider, or more generally as restricting by other criteria or conditions the scope 
of the exemption provided for in Article 132(1)(g), or is the performance of 
services ‘linked to welfare and social security work’ alone sufficient to give the 
body at issue a social character? 
7. Is the concept of ‘bodies recognised … as being devoted to social wellbeing’ 
contained in Article 132(1)(g) of Council Directive 2006/112/EC of 28 November 
2006 on the common system of value added tax to be interpreted as requiring a 
recognition process based upon a pre-defined procedure and pre-determined 
criteria, or is ad hoc recognition possible on a case-by-case basis, where 
appropriate by a judicial authority? 
8. Does the principle of legitimate expectations as interpreted by the case-law 
of the Court of Justice of the European Union allow the authority responsible for 
recovering VAT to require that a person liable to VAT pays the VAT on economic 
transactions relating to a period which had ended when the authority’s decision to 
apply VAT was made after that authority has, for an extended time prior to that 
period, accepted VAT returns from that taxable person which do not include 
economic transactions of the same kind in its taxable transactions? Is that 
possibility on the part of the authority responsible for recovering VAT subject to 
certain conditions?