Case C-463/02: Action brought on 23 December 2002 by Commission of the European Communities against the Kingdom of Sweden
Date: 2003-03-08
Institutions: Court of Justice
Subjects: European Commission, Sweden, VAT, action for failure to fulfil an obligation, agro-industry, basis of tax assessment, economic support, fodder, selling price

C 55/10

EN

Official Journal of the European Union

8.3.2003

Article 20 of Legislative Decree No 18/99 relates to contracts
of employment under various organisational arrangements or
contractual conditions in force on 19 November 1998. Such
contracts concern staff working for users which carry out self-
handling services, which are different from those defined in
the directive. Those contracts remain in force and unchanged
until expiry; however, they may not be for longer than 6 years.
fact, undertakings with ‘various organisational
In actual
arrangements’ are in practice authorised to act as self-handling
operators alongside other self-handling operators and service
suppliers.

The directive provides a clear definition for groundhandling
services operators — groundhandling for third parties and
users which carry out self-handling operations. Entities which
do not fulfil the ‘self-handling’ criteria laid down in Article 2(f)
may only operate groundhandling services for third parties.
Furthermore, Article 7(2) and Article 11(2) of the directive lay
down the specific procedures to follow when appointing self-
handling operators and suppliers of groundhandling services
for third parties. In light of the foregoing considerations,
Article 20 appears to infringe those obligations.

( 1) OJ 1996 L 272, p. 36.
( 2) OJ 1977 L 61, p. 26.
( 3) OJ 1998 L 201, p. 88.
( 4) OJ 2001 L 82, p. 16.

Action brought on 23 December 2002 by Commission
of the European Communities against the Kingdom of
Sweden

(Case C-463/02)

(2003/C 55/18)

An action against the Kingdom of Sweden was brought
before the Court of Justice of the European Communities on
23 December 2002 by the Commission of the European
Communities, represented by E. Traversa and K. Simonsson,
acting as Agents, with an address for service in Luxembourg.

The Commission claims that the Court should:

1. Declare that, by failing to levy value added tax on the
amount of aid paid under Council Regulation (EC)
No 603/95 (1) of 21 February 1995 on the common
organisation of the market in dried fodder, Sweden has

failed to fulfil its obligations under Article 11 of the Sixth
Council Directive 77/388/EC (2) 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; and

2. Order Sweden to pay the costs.

Pleas in law and main arguments

The three conditions for inclusion of a subsidy in the taxable
amount are satisfied. It is clear from Regulation No 603/95
that only the undertaking which processes fresh fodder can be
granted aid and not producers of fresh fodder, and that the
processing undertaking both enters into a sales agreement
with undertakings which consume dried fodder (supply of
goods) and processing agreements with producers of fresh
fodder (supply of services). In the present case there is no
doubt that the intervention body which pays the aid in
accordance with Regulation No 603/95 is a third person in
relation to the processing undertaking and the buyer and that
this intervention takes place in accordance with a procedure
for the award of public subsidies.

Article 11 A point 1(a) of the Sixth Directive would be
interpreted excessively narrowly if only types of aid which are
calculated on the basis of the product price are included in the
taxable amount for VAT. By its general reference to ‘subsidies
directly linked to the price of [the taxable] supplies’, the
Community legislature actually intended to include in the
taxable amount for VAT all aid which is directly linked to the
price of the goods or services, ie the subsidies which directly
influence the size of
the supplier’s remuneration. Those
subsidies must, in turn, be directly linked to or have a causal
connection with precisely indicated or quantifiable supplies of
goods or services, ie the aid paid, if and to the extent that the
goods or services are actually sold on the market. That is why
the subsidy has a direct influence on the product’s sale price
and that clearly shows the underlying idea that subsidies
should be included in the taxable amount for VAT, on the
basis of a non-restrictive interpretation of Article 11 A
point 1(a) of the Sixth Directive and in accordance with the
general purpose of the article, namely taxation of all the
remuneration paid in whole or in part by a person, no matter
who, and which is actually received by the supplier as a
consequence of the sale of the goods or services.

(1) OJ L 63, 21.3.1995, p. 1.
(2) OJ L 145, 13.6.1977, p. 1.