Case C-651/11

Staatssecretaris van Financiën

v

X BV

(Request for a preliminary ruling from the Hoge Raad der Nederlanden)

‛VAT — Sixth Directive 77/388/EEC — Article 5(8) — Concept of ‘transfer of a totality of assets or part thereof’ — Disposal of 30% of the shares in a company to which the transferor supplies services that are subject to VAT’

Summary — Judgment of the Court (Ninth Chamber), 30 May 2013

Harmonisation of fiscal legislation — Common system of value added tax — Sixth Directive — Transfer of a totality of assets or part thereof — Concept — Disposal of 30% of the shares in a company by a shareholder supplying services to that company that are subject to VAT — Not included — Simultaneous disposal of all the other shares to the same transferee by the other shareholders — Disposal closely linked to management activities carried out for the company — No effect

(Council Directive 77/388, Arts 5(8) and 6(5))

Articles 5(8) and/or 6(5) 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 the disposal of 30% of the shares in a company to which the transferor supplies services that are subject to value added tax does not amount to the transfer of a totality of assets or services or part thereof within the meaning of those provisions, irrespective of the fact that the other shareholders transfer all the other shares in that company to the same person at practically the same time and that that disposal is closely linked to management activities carried out for that company.

The concept of a transfer of a totality of assets or part thereof covers the transfer of a business or an independent part of an undertaking including tangible elements and, as the case may be, intangible elements which, together, constitute an undertaking or a part of an undertaking capable of carrying on an independent economic activity. However, the mere acquisition, holding and sale of shares in a company do not, in themselves, amount to an economic activity within the meaning of the Sixth Directive, since the mere acquisition of financial holdings in other undertakings does not amount to the exploitation of property for the purpose of obtaining income therefrom on a continuing basis. Therefore, the transfer of shares in a company cannot, irrespective of the size of the shareholding, be regarded as equivalent to the transfer of a totality of assets or part thereof unless the holding is part of an independent unit which allows an independent economic activity to be carried out, and that activity is carried on by the transferee. The mere disposal of shares, unaccompanied by the transfer of assets, does not allow the transferee to carry on an independent economic activity as the transferor’s successor. Shareholders are not owners of the assets of the undertaking in which they hold their shares; they are owners of the shares and, as such, are entitled to a dividend.

Moreover, according to the fundamental principle which underlies the value added tax system, that tax applies to each transaction by way of production or distribution after deduction of the value added tax directly borne by the various cost components. Article 5(8) of the Sixth Directive uses the term ‘transferor’ in the singular, which implies that it is not envisaged that that provision will apply where a number of transferors are selling their shares to the same transferee. It follows that each transaction must be assessed individually and independently.

(see paras 32, 36, 38, 39, 45-47, 58, operative part)

Case C-651/11

Staatssecretaris van Financiën

v

X BV

(Request for a preliminary ruling from the Hoge Raad der Nederlanden)

‛VAT — Sixth Directive 77/388/EEC — Article 5(8) — Concept of ‘transfer of a totality of assets or part thereof’ — Disposal of 30% of the shares in a company to which the transferor supplies services that are subject to VAT’

Summary — Judgment of the Court (Ninth Chamber), 30 May 2013

Harmonisation of fiscal legislation — Common system of value added tax — Sixth Directive — Transfer of a totality of assets or part thereof — Concept — Disposal of 30% of the shares in a company by a shareholder supplying services to that company that are subject to VAT — Not included — Simultaneous disposal of all the other shares to the same transferee by the other shareholders — Disposal closely linked to management activities carried out for the company — No effect

(Council Directive 77/388, Arts 5(8) and 6(5))

Articles 5(8) and/or 6(5) 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 the disposal of 30% of the shares in a company to which the transferor supplies services that are subject to value added tax does not amount to the transfer of a totality of assets or services or part thereof within the meaning of those provisions, irrespective of the fact that the other shareholders transfer all the other shares in that company to the same person at practically the same time and that that disposal is closely linked to management activities carried out for that company.

The concept of a transfer of a totality of assets or part thereof covers the transfer of a business or an independent part of an undertaking including tangible elements and, as the case may be, intangible elements which, together, constitute an undertaking or a part of an undertaking capable of carrying on an independent economic activity. However, the mere acquisition, holding and sale of shares in a company do not, in themselves, amount to an economic activity within the meaning of the Sixth Directive, since the mere acquisition of financial holdings in other undertakings does not amount to the exploitation of property for the purpose of obtaining income therefrom on a continuing basis. Therefore, the transfer of shares in a company cannot, irrespective of the size of the shareholding, be regarded as equivalent to the transfer of a totality of assets or part thereof unless the holding is part of an independent unit which allows an independent economic activity to be carried out, and that activity is carried on by the transferee. The mere disposal of shares, unaccompanied by the transfer of assets, does not allow the transferee to carry on an independent economic activity as the transferor’s successor. Shareholders are not owners of the assets of the undertaking in which they hold their shares; they are owners of the shares and, as such, are entitled to a dividend.

Moreover, according to the fundamental principle which underlies the value added tax system, that tax applies to each transaction by way of production or distribution after deduction of the value added tax directly borne by the various cost components. Article 5(8) of the Sixth Directive uses the term ‘transferor’ in the singular, which implies that it is not envisaged that that provision will apply where a number of transferors are selling their shares to the same transferee. It follows that each transaction must be assessed individually and independently.

(see paras 32, 36, 38, 39, 45-47, 58, operative part)