Opinion of the Advocate General — ECLI:EU:C:2022:952
Date: 2022-12-01
Language of the case: Bulgarian
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Bulgaria

Summary C-620/21 – 1 
Case C-620/21 
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:  
6 October 2021  
Referring court:  
Varhoven administrativen sad (Bulgaria) 
Date of the decision to refer:  
27 September 2021 
Appellant in cassation and respondent in the cross-appeal:  
Momtrade Ruse OOD 
Respondent in cassation and appellant in the cross-appeal:  
Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’ 
Varna pri Tsentralno upravlenie na Natsionalnata agentsia za 
prihodite  
  
Subject matter of the main proceedings 
Appeal in cassation against the judgment of the Administrativen sad Ruse 
(Administrative Court, Ruse) of 26 June 2020. The tax audit notice of 4 October 
2018 issued by the Revenue Department of the TD na NAP Varna (Regional 
Office of the National Revenue Agency, Varna) and upheld by the decision of 
13 March 2019 of the Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna 
praktika’ Varna (Director of the ‘Appeals and Tax and Social Security’ 
Directorate, Varna) was annulled by judgment of the Administrative Court, Ruse, 
which established VAT debts against Momtrade Ruse for the tax period from 
24 June 2014 to 31 December 2015 equal to the difference between 
BGN 264 027.60 and BGN 316 833.05 for the principal sum and the difference 
between BGN 89 315.83 and BGN 107 178.98 for associated default interest, and 
dismissed the action as to the remainder. 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-620/21 
 
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Subject matter and legal basis of the request 
Interpretation of Article 132(1)(g) of Council Directive 2006/112/EC of 
28 November 2006 on the common system of value added tax (OJ 2006 L 347, 
p. 1) (‘the VAT Directive or Directive 2006/112). 
Questions referred for a preliminary ruling 
The referring court has referred the following questions for a preliminary ruling: 
1. Can Article 132(1)(g) of the VAT Directive be interpreted as meaning that it 
allows a commercial company registered as a social service provider in one 
Member State (in this case, Bulgaria) to rely on that provision in order to 
obtain a tax exemption for the social services which it provides in the 
territory of other Member States to private individuals who are nationals of 
those States? Is the answer to that question affected by the fact that the 
recipients of the services were referred to the provider by commercial 
companies registered in the Member States in which the services are 
provided? 
2. If Question 1 is answered in the affirmative, by what criteria and law 
(Bulgarian and/or Austrian and German law) is it necessary to assess, for the 
purposes of the interpretation and application of the aforesaid provision of 
EU law, whether the company audited is an ‘organisation recognised as 
being devoted to social wellbeing’ and whether it has been proven that the 
services are ‘closely linked to welfare and social security work’? 
3. Based on that interpretation, does the fact that a commercial company is 
registered as a provider of social services, as defined by national law, suffice 
in order for that company to be classed as an organisation ‘recognised by the 
Member State concerned as being devoted to social wellbeing’? 
Provisions of European Union law and case-law relied on 
Article 132(1)(g) and Article 133(1)(a) to (d) of Directive 2006/112 
Case-law of the Court of Justice: 
Judgment of 12 March 2015, ‘go fair’ Zeitarbeit, С-594/13, ЕU:С:2015:164, 
paragraph 17 
Judgment of 14 June 2007, Horizon College, С-434/05, ЕU:С:2007:343, 
paragraph 16 
Judgment of 25 March 2010, Commission v Netherlands, С-79/09, 
EU:С:2010:171, paragraph 49 
MOMTRADE RUSE 
 
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Judgment of 15 November 2012, Zimmermann, С-174/11, ЕU:С:2012:716, 
paragraph 22 
Judgment of 13 March 2014, Klinikum Dortmund, С-366/12, ЕU:С:2014:143, 
paragraphs 26 and 27 
Judgment of 21 September 2017, Commission v Germany, С-616/15, 
ЕU:С:2017:721, paragraph 47 
Judgment of 5 October 2016, TMD, С-412/15, ЕU:С:2016:738, paragraph 30 and 
the case-law cited 
Judgment of 26 February 2015, VDP Dental Laboratory and Others, Joined Cases 
С-144/13, С-154/13 and С-160/13, ЕU:С:2015:116, paragraph 43 
Judgment of 21 February 2013, Město Žamberk, С-18/12, ЕU:С:2013:95, 
paragraph 17 
Judgment of 21 January 2016, Les Jardins de Jouvence, C-335/14, EU:C:2016:36, 
paragraph 46 
The referring court considers that the judgment in ‘go fair’ Zeitarbeit relied on by 
the court of first instance concerns a case that is substantially different from the 
present case, as the services were provided in a Member State in which both the 
provider and the recipient of the services were established. 
Provisions of national law relied on 
Danachno-osiguritelen protsesualen kodeks (Bulgarian Code of Fiscal and Social 
Security Procedure, ‘the DOPK’) 
Article 122 of the DOPK states that the Revenue Department may determine the 
taxable amount in accordance with the procedure laid down in that article, 
especially where factually incorrect documents have been used in the accounts of 
the person audited (point 3) or where the taxable amount cannot be determined 
based on the accounts (paragraph 4). 
Zakon za danaka varhu dobavenata stoynost (Bulgarian Law on Value Added Tax, 
‘the ZDDS’) 
According to Article 21 of the ZDDS, the place where the supplier has established 
its independent place of business is deemed to be the place of supply of a service 
provided to a non-taxable person. 
Article 38 of the ZDDS states that intra-Community supplies that would be 
exempt if made within the national territory are exempt (paragraph 2). Article 40 
of the ZDDS states that the provision of social services within the meaning of the 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-620/21 
 
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Zakon za sotsialnoto podpomagane (Bulgarian Law on Social Assistance) is an 
exempt supply. 
Article 67(2) of the ZDDS states that the tax is deemed to be included in the 
agreed price unless expressly indicated. 
Zakon za sotsialnoto podpomagane (Bulgarian Law on Social Assistance, ‘the 
ZSP’) 
Article 16 of the ZSP states that social services are based on targeted social work 
to help people with their day-to-day activities or social integration, and are 
provided at the person’s choice and request based on a personal needs assessment. 
Article 18 of the ZSP states that social services, including those provided by 
Bulgarian legal entities and legal entities incorporated under the law of another 
EU Member State, may be provided following registration with the Agentsia za 
sozialno podpomagane (Social Assistance Agency). 
According to the legal definition in Article 1, point 6, of the supplementary 
provisions of the ZSP, ‘social services’ means activities to support people and 
increase their opportunities to lead an independent life and, according to point 7, 
‘social services in the community’ are provided within a family or family 
environment. 
Pravilnik za prilagane na ZSP (ZSP Implementing Regulations, ‘the PPZSP’) 
Article 40 of the PPZSP states that persons wishing to avail themselves of social 
services provided by a legal entity must submit a written request to the managing 
body in the place where they are currently residing, accompanied by references in 
the form of a copy of an identity document, a copy of their personal medical file, 
if available, and a medical report, if available. The managing body conducts an 
assessment of the person’s need for social services and records the results in a 
standard-format report. 
According to Article 40d of the PPZSP, the social services provider must prepare 
a personal plan based on the needs assessment, in which it formulates objectives 
and sets out the activities required to meet those needs, including day-to-day 
needs and needs in terms of healthcare, education, rehabilitation, etc. 
Article 40e of the PPZSP requires social services providers to keep a client 
register containing data on the recipient and the service provided. 
Succinct presentation of the facts and procedure in the main proceedings 
1 Momtrade Ruse is a limited liability company which mainly provides outpatient 
social services and which registered voluntarily under the ZDDS on 24 June 2014. 
MOMTRADE RUSE 
 
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2 The company is registered with the Agentsia ‘Sotsialno podpomagane’ (Social 
Assistance Agency) of the Ministerstvo na truda i sotsialnata politika (Ministry of 
Labour and Social Policy) as a provider of social services in the form of personal 
carers, social assistants and home help for elderly people. 
3 During the course of the tax audit concluded by the tax audit notice of 4 October 
2018, Momtrade Ruse produced contracts for the provision of services to various 
private individuals of German and/or Austrian nationality (clients). Based on 
those contracts, the company posted care workers and home help to the clients’ 
households. The various duties were detailed in a questionnaire attached to the 
contract, prepared by a placement agency registered in Germany or Austria, which 
referred clients to the company audited under a placement agreement. 
4 Aside from home help, the duties listed include caring for elderly people with 
health problems who are unable to take care of themselves. Each contract states 
both the client’s name and the name of the placement agency. The payments made 
by the private individuals to the company are not disputed. 
5 The German tax authorities initiated an exchange of information under Council 
Regulation (EU) No 904/2010 of 7 October 2010 on administrative cooperation 
and combating fraud in the field of value added tax (OJ 2010 L 268, p. 1). It was 
established further to that exchange that the services were not taxable in Germany, 
but were subject to tax in Bulgaria under the ZDDS. 
6 Based on the documents produced by the company audited, the revenue 
authorities found that there was no agreement on the provision of ‘social services’, 
as clients’ personal needs were not listed. They held that German and Austrian 
law are relevant, in addition to the ZSP, as the service is provided in fact in 
another Member State, and that, in order for Momtrade Ruse to be exempt under 
Article 40, point 1, of the ZDDS, evidence must be adduced confirming that, 
under the law of the other Member State, the services provided in its territory are 
services devoted to social wellbeing. 
7 The tax authorities conducting the audit also concluded that the original 
documents produced by the company on the supplies made were factually 
incorrect; that legal entities from Germany and Austria are registered as the 
recipients of the services, whereas the actual recipients are private individuals of 
German or Austrian nationality; that the services are recorded in the accounts as 
intra-Community supplies of services to legal entities, which are taxable at a rate 
of 0%, rather than supplies of services to private individuals; that, therefore, it 
should be assumed that the taxable amount cannot be determined from the 
accounts; and, moreover, that not all the documents and explanations expressly 
requested were provided. On that basis, the tax authorities decided that they had to 
determine the taxable amount from their own assessment in accordance with 
Article 122(2) of the DOPK. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-620/21 
 
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8 The court of first instance in the case, the Administrativen sad Ruse 
(Administrative Court, Ruse), held that Article 40, point 1, of the ZDDS 
corresponds to Article 132(1)(g) of Directive 2006/112, and that, in order for the 
exemption provided for in Article 40, point 1, of the ZDDS to apply, the person 
audited must prove that the service is devoted to social wellbeing under both 
Bulgarian law and the law of the Member State in whose territory the services are 
provided. The court held that, as the social assessment of the person’s needs 
required under those rules had not been carried out and documented for the 
foreign nationals, this had not been proven in accordance with the Bulgarian rules; 
that the person audited had simply produced the contracts and associated 
questionnaires and had failed to produce the social service requests, social 
assessments, proposals, personal plans and list of clients required under Bulgarian 
law; that, on the contrary, the statements by German nationals and the expert 
social opinions and expert opinions on care needs based on the Sozialgesetzbuch 
(German Social Code) and the invoices submitted to the court of first instance 
could not be correlated, temporally, with the persons to whom the contested 
invoices were issued; and that the invoices issued to private individuals and 
submitted in the court proceedings which, it was confirmed following review, 
corresponded to the invoices issued to the German placement agencies and 
produced during the tax audit, did not contain any specific details of the services 
and did not prove that they were services devoted to social wellbeing. 
9 The court of first instance reduced the tax debts assessed by the difference 
between BGN 264 027.60 and BGN 316 833.05 for the principal sum and by the 
difference between BGN 89 315.83 and BGN 107 178.98 for associated default 
interest, in application of Article 67(2) of the ZDDS, and upheld the tax debt 
assessed in the tax audit notice as to the remainder. 
10 The question that arises for the Cassation Chamber is whether it is necessary to 
assess the nature of the services provided by Momtrade Ruse. Based on the 
documentary evidence produced during the tax audit and the evidence adduced 
during the court proceedings (contracts, questionnaires and statements by the 
recipients of the services), the court finds that the private individuals who use the 
services provided by the company are elderly persons with health problems who 
require assistance due to their state of health, as well as home help in managing 
their household. 
11 The Administrative Court, Ruse, found in its judgment that the fact that the 
company had failed to produce any official documents from the German or 
Austrian authorities confirming that the services are devoted to social wellbeing 
proves that they are not. It held that the services provided in connection with the 
care of elderly persons are not social services, as they simply provide help in 
connection with household management, and that the workers are not required to 
perform duties relating to the state of health of those persons and had not received 
any training that might suggest they are able to provide medical care. 
MOMTRADE RUSE 
 
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12 In its judgment in Les Jardins de Jouvence cited above, the Court found that the 
exemption attaches importance to ‘the intrinsic nature of the transactions carried 
out and to the status of the operator providing the services or supplying the goods 
at issue’. The referring court therefore considers that, in order to deliver proper 
judgment in the dispute between the parties, it requires clarification of the criteria 
by which it must assess whether these activities are devoted to social wellbeing: 
should it do so on the basis of documents provided by the competent authorities of 
the State in which the activities were performed or does it suffice if it establishes 
the nature of the care provided? 
Succinct presentation of the reasoning in the request for a preliminary ruling 
13 The referring court observes that the exemptions envisaged in Article 132 of 
Directive 2006/112 are to be interpreted strictly since they constitute exceptions to 
the general principle that VAT is to be levied on all services supplied for 
consideration by a taxable person. However, the interpretation of the terms used to 
specify the exemptions must be consistent with the objectives underlying the 
exemptions and must comply with the requirements of the principle of fiscal 
neutrality; it cannot deprive the exemptions of their intended effects (judgments in 
‘go fair’ Zeitarbeit, Horizon College, Commission v Netherlands, Zimmermann 
and Klinikum Dortmund cited above). 
14 The purpose of all the provisions of Article 132 of Directive 2006/112 is to 
exempt certain activities in the public interest from VAT with a view to 
facilitating access to certain services and the supply of certain goods by avoiding 
the increased costs that would result if those services and the supply of those 
goods were subject to VAT (judgments in Commission v Germany, TMD and 
VDP Dental Laboratory and Others cited above). 
15 The Varhoven administrativen sad (Supreme Administrative Court) has already 
ruled in a comparable case on the interpretation of the provision of the directive 
cited. By its judgment 10652 of 3 August 2020 in administrative case 11597/2019, 
it found that EU law did not require the Member States to exempt social services 
provided to nationals of other Member States outside their own national territory. 
That judgment was based on Article 26(2) of the Constitution [of the Republic of 
Bulgaria], which states that only foreigners residing in the territory of the 
Republic of Bulgaria have all the rights and obligations conferred under the 
Constitution of Bulgaria, with the exception of the rights and obligations for 
which Bulgarian nationality is required. 
16 The Chamber of the referring court seised of the present case considers that it is 
irrelevant for the stated purpose of Article 132 of Directive 2006/112 whether the 
parties to the services are located in the territory of a Member State or whether, as 
in the present case, the service provider is registered in one Member State and the 
recipients are nationals of another Member State, in which the services are 
provided. However, as the place of supply of a service is deemed to be the place 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-620/21 
 
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where the supplier has established its economic activity, suppliers of services 
devoted to social wellbeing established in Bulgaria would be treated differently 
for tax purposes, based on the above interpretation of EU law by the Supreme 
Administrative Court, depending on whether they supply services in the territory 
of Bulgaria or to foreign nationals in the territory of another Member State, an 
outcome which the referring court does not find acceptable. 
17 For those reasons, the referring court requires interpretation of Article 132(1)(g) 
of Directive 2006/112, in order to be able to answer the question of whether that 
article allows a commercial company registered as a provider of social services in 
one Member State (in this case, Bulgaria) to rely on that provision in order to 
obtain a tax exemption for social services which it provides in the territory of 
other Member States to private individuals who are nationals of those Member 
States, and whether the answer to that question is affected by the fact that the 
recipients of the services were referred to the provider by commercial companies 
registered in the Member States in which the services are provided. 
18 Next, if that question is answered in the affirmative and the services exempted 
under Article 132(1) of Directive 2006/112 are independent concepts of European 
law (judgment in Žamberk cited above), but the directive contains neither criteria 
for defining those concepts nor rules for proving legally relevant facts, the 
referring court requires clarification on the interpretation and application of that 
provision of EU law, including whether it is necessary to assess in each case, in 
accordance with Bulgarian and/or Austrian and German law, whether the 
company audited is an organisation ‘recognised as being devoted to social 
wellbeing’ and whether it has been proven that the services provided are ‘closely 
linked to welfare and social security work’. 
19 Lastly, the referring court wishes to know, in that same context, whether the fact 
that a commercial company is registered as a provider of social services, as 
defined by national law, suffices in order for that company to be classed as an 
organisation ‘recognised by the Member State concerned as being devoted to 
social wellbeing’?