II —

After making these necessary preliminary observations on matters concerning the relevance of the question referred to the decision in the main action, I now turn my attention to the substance of the request for a preliminary ruling. This makes it necessary to consider whether Article 6 (4) of the directive on value-added tax is to be interpreted as meaning that in the case of works contracts the chargeable event occurs at the moment of issue of the invoice or of the receipt of the consideration, even if these events follow the provision of the service. Let me first of all recall the wording of the provision at issue. It reads as follows: ‘The chargeable event shall occur at the moment when the service is provided. In the case, however, of the provision of services of indeterminate length or exceeding a certain period or involving payments on account, it may be provided that the chargeable event shall already have occurred at the moment of issue of the invoice or, at the latest, at the moment of the receipt of the payment on account in respect of the whole of the amount invoiced or received’. It has become clear from my previous observations that the court making the reference was right to refer to Article 6 (4) of the directive concerning value-added tax. Whilst it is true that contracts of the kind at issue in this case are considered, on the basis of the definition of Italian civil law, as ‘supply of goods’ according to Article 5 of the directive concerning value-added tax, Article 6, however, has effect because Italy availed itself of the opportunity presented by paragraph 5 of Annex A. On the question of the construction of the expression ‘service is provided’, which is the principal issue in this case, the Italian Government expressed the view that having regard to the variety of possible legal relations which come into consideration in connexion with the provision of services, the stipulation in general terms of a time-limit in an abstract provision is not possible. It is often difficult to determine when services have been provided since at times an acceptance is necessary or a trial period must have elapsed. In addition the consideration is frequently not stipulated in advance. In particular in the case of public works experience shows that again and again the consideration which the parties had in mind has to be revised. Looked at in this light it must appear to be inappropriate to sever the coming into being of the tax liability from the basis of its assessment, namely the consideration, the payment of the tax falling due only when the consideration is provided. For all these reasons the acceptance by individual Member States of the payment of the consideration as the moment when the service is provided must, however, be considered as compliance with the directive. The Commission opposes this argument. It supports its view by relying on the wording, system and purpose of the rules on value-added tax. It also refers to events which preceded the adoption of the directive and throw light on the particular problem at issue. When considering this divergence of views it is above all necessary not to overlook the fact that Article 6 (4) of the directive on value-added tax and also the corresponding Article 5 (5) thereof are only concerned with the occurrence of the chargeable event, that is to say — according to the definition of paragraph 8 of Annex A — with the event giving rise to the tax. Other factors must of course supervene, which are not at issue in this case, before the amount of the tax can be determined and the tax becomes payable. When interpreting a legal provision one must in the first place proceed on the basis of its wording: it is therefore necessary to bear in mind that Article 6 (4) provides that the chargeable event shall occur at the moment when the service is provided. This clearly means that, in the case of contractual relations, which are of paramount importance in this case, what is of importance is the performance by one of the parties to a contract of his obligations thereunder. Moreover such performance must, by reason of its legal nature be clearly distinguished from the performance by the other party of his obligations, that is to say, the consideration. If this is borne in mind it can hardly be accepted that a legal text drafted in this way treats the provision of services on the same footing as the provision of the consideration or that it permits such equal treatment without any suggestion of the existence of a discretion. The fact that the concept of ‘consideration’ is used in another context in the directive itself is an additional argument against this assumption. This occurs first in Article 8 which defines the basis of assessment It happens again in the second sentence of Article 6 (4) which provides for derogations from the principle contained in the first sentence. However the important point to note is that it is clear from the wording that these derogations only apply to cases where part of the consideration is provided before the provision of services has been completed, where therefore, money passes before the moment at which in principle the tax liability arises and therefore the coming into being of the tax liability is brought forward. It is also worth noting that when the directive was being drafted the idea of making the coming into being of the tax liability dependent upon the provision of the consideration was fully considered. Thus the Economic and Social Committee in its opinion on the proposal for a second directive on the harmonization of the laws of the Member States concerning turnover taxes stated that in certain cases it is difficult to determine the moment when the service is provided and from this it drew the conclusion that it would be simpler to provide a single chargeable event,‘in which case the moment when payment is collected can be considered’ (JO 1966, p. 572). Although this proposal has not been accepted by the Commission and the Council, it is not however admissible to arrive at a similar result by means of an interpretation of another text which has been deliberately drafted in a different way. Finally the purpose of the value-added tax directive must be recalled. It is intended to bring about the widest possible harmonization of the law on value-added tax. It is therefore to be assumed that the directive uses the most precise concepts possible and is designed to be as complete as possible. In these circumstances it is scarcely possible to agree with the view that the freedom of action left to Member States is so wide that, for the purpose of establishing when the chargeable event occurs in the case of the provision of services, they can go beyond the provision of the service and take the moment when the consideration passes, which freqently happens much later. In fact in this way uniformity — one has in mind for example cases where the rate of the tax is altered — would be abandoned to an unacceptable extent if the determination of the moment when the chargeable event occurred in such cases depended in the final analysis upon the intention of the taxpayer. Even if it has to be admitted that the determination of the moment when the provision of services occurs can in some circumstances cause certain difficulties — we are certainly not concerned with exceptional problems which have to be settled in cases of dispute — and although we have been shown that other Member States have also not implemented the directive in a wholly correct manner, in view of the arguments which have been submitted I have no alternative but to acknowledge that the interpretation of Article 6 (4) of the second directive on value-added tax proposed by the Commission is the only one which is correct.