Opinion of the Advocate General — ECLI:EU:C:2018:205
Date: 2018-03-21
Language of the case: English
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling;Reference for a preliminary ruling - decision unnecessary
Origin: United Kingdom

summary that the supply at issue constituted, ‘as a matter of principle’, a transaction concerning payments which was exempt, unless it was debt collection or factoring. (37) 63. Subsequently, it did not establish new criteria by which to define the concept of a ‘transaction concerning payments or transfers’. 64. Finally, in the judgments in Bookit (38) and National Exhibition Centre, (39) which were delivered after the judgment in AXA UK, (40) the Court confirmed its traditional case-law, based on the criterion of a transfer of a sum of money. As I pointed out in Section A above, (41) those two judgments are of even greater relevance since, in my view, they concerned the supply of services which were more closely linked to transfers than the supplies at issue in the judgment in AXA UK and in the dispute in main proceedings. 65. In the light of the foregoing, I propose that the Court should not apply the solution adopted in the judgment in AXA UK (42) to the present case and, therefore, it should hold that a supply of services such as that at issue in the dispute in the main proceedings does not constitute a ‘transaction concerning payments or transfers’ within the meaning of Article 135(1)(d) of the VAT Directive. C. The identity of the formal recipient of the service is irrelevant for the purposes of applying Article 135(1)(d) of the VAT Directive (second question) 66. By its second question, the referring court asks, in essence, whether the supply of services at issue in the dispute in the main proceedings constitutes ‘debt collection’ within the meaning of Article 135(1)(d) of the VAT Directive. 67. In my view, there is no need to answer that question, in the light of my proposed answer to the first question referred. An answer is necessary only if the supply at issue falls, in principle, within the scope of the exemption provided for in Article 135(1)(d) of the VAT Directive in so far as it is a ‘transaction concerning payments or transfers’. In those circumstances, the question that arises is whether that supply falls under the exception provided for in respect of debt collection activities. 68. Since I am proposing that the Court should answer the question to the effect that the supply at issue in the dispute in the main proceedings does not constitute a ‘transaction concerning payments or transfers’, it is no longer necessary to examine the scope of the exception to that exemption. From a practical point of view, given that my proposed answer to the first question means that that supply is subject to VAT, it is no longer necessary to ask whether it is subject to VAT as a debt collection. 69. Nevertheless, I would again mention the relevance, for the purposes of applying the abovementioned exemption, of the fact, set out in the second question referred, that the supply at issue in the dispute in the main proceedings is formally provided by the taxable person (DPAS) to the person from whom the payment is due (the patient) and not to the creditor of that payment (the dentist), following the amendment to the contractual arrangements between those parties. 70. I note, in that regard, that, according to settled case-law, consideration of the economic reality is a fundamental criterion for the application of the common system of VAT. (43) In that regard, the Court has expressly accepted the possibility that contractual provisions do not reflect the economic reality of the services performed, on which the application of the VAT system must be based. (44) 71. It is clear from the description of the facts provided by the referring court that DPAS carried out a restructuring of the contractual arrangements implementing its dental payment plans in order to also designate the patient, and not only the dentist, as the recipient of those services. The stated intention of that restructuring was to prevent the part of the services provided to patients from being regarded as ‘debt collection and factoring’ following the judgment in AXA UK (45), so that that part remains exempt from VAT. (46) 72. In the context of that restructuring, DPAS maintained, to both dentists and patients, that the economic reality of its supply of services would remain unchanged since the changes were ‘purely administrative’ and made ‘no practical difference to the current arrangements’. (47) 73. In those circumstances, that restructuring of the contractual arrangements, which sought to also designate the patient and not only the dentist as being the recipient of those services, is irrelevant for the purposes of applying Article 135(1)(d) of the VAT Directive. That conclusion follows from the obligation to base the application of the VAT system on the economic reality of the services at issue, in accordance with the case-law cited above. 74. To me, that approach also seems to be dictated by Article 131 of the VAT Directive, under which the exemptions provided for, inter alia, in Article 135(1)(d) of that directive, are to apply ‘in accordance with conditions which the Member States shall lay down for the purposes of ensuring the correct and straightforward application of those exemptions and of preventing any possible evasion, avoidance or abuse’. I would point out, in that regard, that it does not seem necessary to me to have recourse to the doctrine of abuse of rights, which is nevertheless well established in the area of VAT, (48) since the obligation to take as a basis the economic reality of the transactions in question enables the issue raised by the second question referred to be resolved. 75. In the light of the foregoing, I propose that the Court should answer that question as follows: Article 135(1)(d) of the VAT Directive must be interpreted as meaning that the fact that the supply at issue in the dispute in the main proceedings is formally provided by the taxable person to the person from whom the payment is due (the patient) and not to the creditor of that payment (the dentist), following an amendment to the contractual arrangements between those parties, is irrelevant for the purposes of applying the exemption provided for therein since the economic reality of that supply has remained unchanged. 76. I would point out that that answer is also relevant should the Court decide to apply the solution adopted in the judgment in AXA UK (49) to the present case, contrary to my proposals in Sections A and B above. In my view, should the Court find that a supply of services such as that at issue in the dispute in the main proceedings must be categorised as a ‘debt collection’ transaction (subject to VAT), it would be irrelevant, for the purposes of that categorisation, whether the contractual arrangements at issue in the main proceedings designate the dentist or the patient as being the formal recipient of that supply. The obligation to take as a basis the economic reality of the transactions for the purposes of applying VAT would also preclude, in those circumstances, merely playing around with the wording of the contracts having the ability to change the categorisation of a supply of services even though the economic reality has remained unchanged. (50) VI. Conclusion 77. In the light of the foregoing, I propose that the Court should answer the questions referred for a preliminary ruling by the Upper Tribunal (Tax and Chancery Chamber) (United Kingdom) as follows: (1) Article 135(1)(d) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that a supply of services such as that performed by the taxable person in the dispute in the main proceedings, consisting in requesting from the relevant financial institutions, first, that a sum of money be transferred from the patient’s bank account to that of the taxable person pursuant to a direct debit mandate and, second, that that sum be subsequently transferred from the latter account, after deduction of the remuneration due to the taxable person, to the dentist’s and the patient’s insurer’s respective bank accounts, does not constitute a ‘transaction concerning payments or transfers’ which is exempt under that provision since it does not, in itself, result in the legal and financial changes which characterise the transfer of a sum of money. (2) Article 135(1)(d) of Directive 2006/112 must be interpreted as meaning that the fact that the supply at issue in the dispute in the main proceedings is formally provided by the taxable person to the person from whom the payment is due (the patient) and not to the creditor of that payment (the dentist), following an amendment to the contractual arrangements between those parties, is irrelevant for the purposes of applying the exemption provided for therein since the economic reality of that supply has remained unchanged. 1 Original language: French. 2 Council Directive of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1). 3 Judgment of 28 October 2010 (C‑175/09, EU:C:2010:646). 4 Article 13B(d)(3) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1). 5 Judgment of 28 October 2010 (C‑175/09, EU:C:2010:646). 6 Judgment of 28 October 2010 (C‑175/09, EU:C:2010:646). 7 Judgment of 26 May 2016 (C‑607/14, EU:C:2016:355). 8 Judgment of 26 May 2016 (C‑130/15, not published, EU:C:2016:357). 9 Judgment of 28 October 2010 (C‑175/09, EU:C:2010:646). 10 Judgment of 5 June 1997 (C‑2/95, EU:C:1997:278, paragraph 53): ‘[A] transfer is a transaction consisting of the execution of an order for the transfer of a sum of money from one bank account to another. It is characterised in particular by the fact that it involves a change in the legal and financial situation existing between the person giving the order and the recipient and between those parties and their respective banks and, in some cases, between the banks. Moreover, the transaction which produces this change is solely the transfer of funds between accounts, irrespective of its cause. Thus, a transfer being only a means of transmitting funds, the functional aspects are decisive for the purpose of determining whether a transaction constitutes a transfer for the purposes of the Sixth Directive [replaced by the VAT Directive].’ 11 Moreover, that criterion corresponds with the usual definition of a ‘transfer’ and with the definition set out in Article 4(24) of Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC (OJ 2015 L 337, p. 35), in accordance with which credit transfer means ‘a payment service for crediting a payee’s payment account with a payment transaction or a series of payment transactions from a payer’s payment account by the payment service provider which holds the payer’s payment account, based on an instruction given by the payer’. 12 Judgments of 26 May 2016, Bookit (C‑607/14, EU:C:2016:355, paragraph 39); of 26 May 2016, National Exhibition Centre (C‑130/15, not published, EU:C:2016:357, paragraph 34); and, to that effect, of 5 June 1997, SDC (C‑2/95, EU:C:1997:278, paragraphs 64 to 66). 13 Judgment of 28 October 2010 (C‑175/09, EU:C:2010:646). 14 Judgments of 5 June 1997, SDC (C‑2/95, EU:C:1997:278, paragraph 53; of 28 July 2011, Nordea Pankki Suomi (C‑350/10, EU:C:2011:532, paragraph 25); of 13 March 2014, ATP PensionService (C‑464/12, EU:C:2014:139, paragraph 79); of 26 May 2016, Bookit (C‑607/14, EU:C:2016:355, paragraph 38); and of 26 May 2016, National Exhibition Centre (C‑130/15, not published, EU:C:2016:357, paragraph 33). 15 Judgments of 22 October 2015, Hedqvist (C‑264/14, EU:C:2015:718, paragraph 40) and, to that effect, of 12 June 2014, Granton Advertising (C‑461/12, EU:C:2014:1745, paragraphs 37 and 38). 16 See judgments of 5 June 1997, SDC (C‑2/95, EU:C:1997:278, paragraph 50); of 28 July 2011, Nordea Pankki Suomi (C‑350/10, EU:C:2011:532, paragraph 26); of 26 May 2016, Bookit (C‑607/14, EU:C:2016:355, paragraph 43); and of 26 May 2016, National Exhibition Centre (C‑130/15, not published, EU:C:2016:357, paragraph 38). 17 See, inter alia, judgment of 2 December 2010, Everything Everywhere (C‑276/09, EU:C:2010:730, paragraph 31). 18 See, in particular, judgments of 5 June 1997, SDC (C‑2/95, EU:C:1997:278, paragraph 32); of 26 June 2003, MKG-Kraftfahrzeuge-Factoring (C‑305/01, EU:C:2003:377, paragraph 64); of 13 March 2014, ATP PensionService (C‑464/12, EU:C:2014:139, paragraph 78); of 22 October 2015, Hedqvist (C‑264/14, EU:C:2015:718, paragraph 39); of 26 May 2016, Bookit (C‑607/14, EU:C:2016:355, paragraph 36); and of 26 May 2016, National Exhibition Centre (C‑130/15, not published, EU:C:2016:357, paragraph 31). 19 Judgment of 13 March 2014, ATP PensionService (C‑464/12, EU:C:2014:139, paragraphs 77 to 85). The Court stated that transactions establishing the rights of pension customers vis-à-vis pension funds by transforming the claim held by a worker vis-à-vis his employer into a claim held by that worker vis-à-vis the pension fund of which he is a member constituted ‘transactions concerning payments or transfers’ (paragraph 82 of that judgment). 20 See, to that effect, judgments of 5 June 1997, SDC (C‑2/95, EU:C:1997:278, paragraph 66); of 13 December 2001, CSC Financial Services (C‑235/00, EU:C:2001:696, paragraphs 26 to 28); of 28 July 2011, Nordea Pankki Suomi (C‑350/10, EU:C:2011:532, paragraphs 24 and 28 to 39); of 13 March 2014, ATP PensionService (C‑464/12, EU:C:2014:139, paragraph 79); of 26 May 2016, Bookit (C‑607/14, EU:C:2016:355, paragraphs 40 and 51); and of 26 May 2016, National Exhibition Centre (C‑130/15, not published, EU:C:2016:357, paragraphs 35 and 46). 21 Judgments of 5 June 1997, SDC (C‑2/95, EU:C:1997:278, paragraph 65; of 13 December 2001, CSC Financial Services (C‑235/00, EU:C:2001:696, paragraph 32); of 28 July 2011, Nordea Pankki Suomi (C‑350/10, EU:C:2011:532, paragraph 31); of 26 May 2016, Bookit (C‑607/14, EU:C:2016:355, paragraph 45); and of 26 May 2016, National Exhibition Centre (C‑130/15, not published, EU:C:2016:357, paragraph 40). 22 The circumstances of the dispute in the main proceedings must, therefore, be distinguished from those which gave rise to the judgment in ATP PensionService (C‑464/12, EU:C:2014:139). See footnote 19 of the present Opinion. 23 It is clear from that letter, which is cited by the referring court and of which I have reproduced extracts below, that DPAS provides administrative management services: ‘[Your] monthly Direct Debit is paid through [DPAS], which devised, provides and administers your dental plan using its Direct Debit administrator status. Although in the past, of course, DPAS has had a relationship with you, we, the dental practice, have paid an administration charge to DPAS out of the Direct Debit payment that you made. … From now on, it is proposed … that part of the total monthly Direct Debit amount to be paid by you to DPAS will be retained by DPAS in respect of its obligation to you to manage and administer your dental plan payments and to manage and administer your Supplementary Insurance cover and dental emergency helpline’ (emphasis added). See also points 17 to 19 of the present Opinion. 24 Judgment of 26 May 2016 (C‑607/14, EU:C:2016:355). 25 Judgment of 26 May 2016 (C‑130/15, not published, EU:C:2016:357). 26 Judgment of 28 October 2010 (C‑175/09, EU:C:2010:646). 27 Judgments of 26 May 2016, Bookit (C‑607/14, EU:C:2016:355, paragraph 44), and National Exhibition Centre (C‑130/15, not published, EU:C:2016:357, paragraph 39). 28 See, to that effect, judgments of 26 May 2016, Bookit (C‑607/14, EU:C:2016:355, paragraphs 45 to 51), and National Exhibition Centre (C‑130/15, not published, EU:C:2016:357, paragraphs 40 to 46). 29 See, to that effect, judgments of 26 May 2016, Bookit (C‑607/14, EU:C:2016:355, paragraphs 53 to 56), and National Exhibition Centre (C‑130/15, not published, EU:C:2016:357, paragraphs 48 to 51). 30 Judgments of 19 April 2007, Velvet & Steel Immobilien (C‑455/05, EU:C:2007:232, paragraph 22); of 22 October 2009, Swiss Re Germany Holding (C‑242/08, EU:C:2009:647, paragraph 46); of 12 June 2014, Granton Advertising (C‑461/12, EU:C:2014:1745, paragraph 29); of 13 March 2014, ATP PensionService (C‑464/12, EU:C:2014:139, paragraph 78); of 22 October 2015, Hedqvist (C‑264/14, EU:C:2015:718, paragraph 37); of 26 May 2016, Bookit (C‑607/14, EU:C:2016:355, paragraph 36); and of 26 May 2016, National Exhibition Centre (C‑130/15, not published, EU:C:2016:357, paragraph 31). 31 Judgments of 19 April 2007, Velvet & Steel Immobilien (C‑455/05, EU:C:2007:232, paragraph 24); of 10 March 2011, Skandinaviska Enskilda Banken (C‑540/09, EU:C:2011:137, paragraph 21); of 12 June 2014, Granton Advertising (C‑461/12, EU:C:2014:1745, paragraph 30); of 22 October 2015, Hedqvist (C‑264/14, EU:C:2015:718, paragraph 36); of 26 May 2016, Bookit (C‑607/14, EU:C:2016:355, paragraph 55); and of 26 May 2016, National Exhibition Centre (C‑130/15, not published, EU:C:2016:357, paragraph 50). 32 Judgment of 28 October 2010 (C‑175/09, EU:C:2010:646). 33 See point 12 of the present Opinion. 34 See points 16 to 19 of the present Opinion. 35 Judgment of 28 October 2010 (C‑175/09, EU:C:2010:646). 36 Judgment of 28 October 2010 (C‑175/09, EU:C:2010:646). 37 Judgment of 28 October 2010, AXA UK (C‑175/09, EU:C:2010:646, paragraph 28). 38 Judgment of 26 May 2016 (C‑607/14, EU:C:2016:355). 39 Judgment of 26 May 2016 (C‑130/15, not published, EU:C:2016:357). 40 Judgment of 28 October 2010 (C‑175/09, EU:C:2010:646). 41 See points 47 to 51 of the present Opinion. 42 Judgment of 28 October 2010 (C‑175/09, EU:C:2010:646). 43 Judgments of 20 February 1997, DFDS (C‑260/95, EU:C:1997:77, paragraph 23); of 28 June 2007, Planzer Luxembourg (C‑73/06, EU:C:2007:397, paragraph 43); of 7 October 2010, Loyalty Management UK and Baxi Group (C‑53/09 and C‑55/09, EU:C:2010:590, paragraph 39); and of 20 June 2013, Newey (C‑653/11, EU:C:2013:409, paragraph 42). 44 See, in particular, judgment of 20 June 2013, Newey (C‑653/11, EU:C:2013:409, paragraph 44). 45 Judgment of 28 October 2010 (C‑175/09, EU:C:2010:646). 46 See points 16 to 19 of the present Opinion. 47 See points 18 and 19 of the present Opinion. 48 See, inter alia, judgments of 21 February 2006, Halifax and Others (C‑255/02, EU:C:2006:121, paragraphs 74 and 75); of 17 December 2015, WebMindLicenses (C‑419/14, EU:C:2015:832, paragraphs 35 and 36); and of 22 November 2017, Cussens and Others (C‑251/16, EU:C:2017:881). 49 Judgment of 28 October 2010 (C-175/09, EU:C:2010:646). 50 See point 72 of the present Opinion.