Joined Cases C-453/02 and C-462/02

Finanzamt Gladbeck

v

Edith Linneweber and Finanzamt Herne-WestcontreSavvas Akritidis

(Reference for a preliminary ruling from the Bundesfinanzhof)

(Sixth VAT Directive – Exemption for games of chance – Determination of the conditions and limitations to which the exemption is subject – Liability of games organised outside public casinos – Respect for the principle of fiscal neutrality – Article 13B(f) – Direct effect)

Opinion of Advocate General Stix-Hackl delivered on 8 July 2004

Judgment of the Court (Second Chamber), 17 February 2005

Summary of the Judgment

1. Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Exemptions provided for by the Sixth Directive – Exemption for games of chance – National legislation excluding from the exemption the operation of such games by traders other than those running licensed public casinos – Not permissible – Individuals may rely on the relevant provision before the national court

(Council Directive 77/388, Art. 13B(f))

2. Preliminary rulings – Interpretation – Effect of interpretative judgments ratione temporis – Retroactive effect – Limits imposed by the Court – Significance for the Member State concerned of the financial consequences of the judgment – Not decisive

(Art. 234 EC)

1. Article 13B(f) of the Sixth Directive, according to which the operation of all games of chance and gaming machines is in principle to be exempted from value added tax while the Member States retain the power to lay down the conditions and limitations of that exemption, must be interpreted as meaning that it precludes national legislation which provides that the operation of all games of chance and gaming machines is exempt from VAT where it is carried out in licensed public casinos, while the operation of the same activity by traders other than those running casinos does not enjoy that exemption.

In exercising the powers conferred on them by that provision, the Member States must respect the principle of fiscal neutrality and cannot validly make that exemption dependent upon the identity of the operator of such games and machines.

Moreover, that provision has direct effect in the sense that it can be relied on by an operator of games of chance or gaming machines before national courts to prevent the application of rules of national law which are inconsistent with that provision. Where the conditions or limitations which a Member State imposes on the exemption from VAT for games of chance or gambling are contrary to the principle of fiscal neutrality, that Member State cannot rely on such conditions or limitations to refuse an operator of such games the exemption which he may legitimately claim under the Sixth Directive.

(see paras 23-24, 29-30, 37-38, operative part 1-2)

2. It is only exceptionally that, in application of a general principle of legal certainty which is inherent in the Community legal order, the Court may decide to restrict the right to rely upon a provision it has interpreted with a view to calling in question legal relations established in good faith. In that regard, the financial consequences which might ensue for a Member State from a preliminary ruling have never in themselves justified limiting the temporal effect of such a ruling

(see paras 42, 44)