Case C-231/03: Reference for a preliminary ruling by the Tribunale Amministrativo Regionale per la Lombardia — Sezione staccata di Brescia — by order of that Court of 8 October 2002, 17 December 2002 and 14 February 2003 in the case of Consorzio Aziende Metano — CO.NA.ME. against il Comune di Cingia de' Botti; with the participation of Padania Acque S.p.A.
Date: 2003-09-20
Institutions: Court of Justice
Subjects: EU national, competition law, energy distribution, freedom to provide services, gas, interpretation of the law, public service, right of establishment

C 226/4

EN

Official Journal of the European Union

20.9.2003

the taxable person who receives it, the subsidy concerned
will be liable to VAT twice. Although Article 19 provides
expressly that the Member States may include in the
deductible proportions for mixed taxable persons those
subsidies which are not part of the basis of assessment,
that exception to the ‘normal’ method of calculation is a
tool available to the national legislature to prevent a body
which is ‘by its nature’ subsidised obtaining repayment of
VAT for carrying out a merely nominal activity in order to
qualify as a taxable person. However, that provision is to
be interpreted restrictively. On the other hand, it is clear
that, by including subsidies in the deductible proportion,
the right to deduct of mixed taxable persons is reduced,
while that is not possible with regard to fully taxable
persons. Article 19 is an optional provision and the
Member States may determine the procedures
for
implementing it provided they observe, as a whole, the
basic principles and provisions of the Sixth Directive,
which contains other provisions which make it possible to
prevent deductions considered to be abusive.

Court of Justice, inasmuch as it is a special rule which has
no basis in the directive, applies to all taxable persons in
receipt of a subsidy, including fully taxable persons, and,
even it if its applied to mixed taxable persons, it may in
certain circumstances be less advantageous than using the
option provided for by Article 19 of the directive.

(1) OJ 1977 L 145, p. 1.

Reference for a preliminary ruling by the Tribunale
Amministrativo Regionale per la Lombardia — Sezione
staccata di Brescia — by order of
that Court of
8 October 2002, 17 December 2002 and 14 February
2003 in the case of Consorzio Aziende Metano —
CO.NA.ME. against il Comune di Cingia de' Botti; with
the participation of Padania Acque S.p.A.

2.

Laying down of a special rule which limits the right to
deduct VAT owed for the purchase of goods or services
financed in whole or in part by subsidies (second para-
graph of Article 104(2) of the Spanish Law on VAT).

(Case C-231/03)

(2003/C 226/05)

the directive is the inclusion of

That special rule, according to which subsidies to finance
the purchase of certain goods or services do not give rise
to the application of the deductible proportion and are
not included in the denominator but instead limit the right
to deduct the VAT paid on the portion of the price of the
goods or services financed by the subsidy, is incompatible
with the Sixth Directive. Indeed, the Spanish provision
establishes a limit on the right to deduct in respect of fully
taxable persons which is not provided for under the
directive. As for mixed taxable persons, the only limitation
possible under
the
subsidies in the denominator of the deductible proportion.
The VAT which a taxable person has paid for a certain
service or certain goods is always deductible in accordance
with the rules on the right to deduct provided for by the
directive and, to that end, the source of the financing for
the goods or services are of no relevance whatever. The
Member States may take into account only those subsidies
which are not linked to the price of the transaction, and
may choose whether or not
to include them in the
deductible proportion only if the taxable person carries
out, at the same time, taxed and exempt transactions.
Application of the provision is optional and the Member
States may determine the procedures for implementing it
provided they observe the basic principles and provisions
of the Sixth Directive as a whole.

The Spanish provision infringes the fundamental right to
deduct VAT, acknowledged as such in the case-law of the

of

order

Justice of
the

the
Reference has been made to the Court of
Tribunale
European Communities
by
Amministrativo Regionale per la Lombardia — Sezione stac-
cata di Brescia (Lombardy Regional Administrative Court —
Separate Chamber
for Brescia) of 8 October 2002,
17 December 2002 and 14 February 2003, received at the
Court Registry on 28 May 2003, for a preliminary ruling in the
case of Consorzio Aziende Metano — CO.NA.ME. against il
Comune di Cingia de' Botti; with the participation of Padania
Acque S.p.A. on the following question:

Do Articles 43, 49 and 81 EC,
in so far as they prohibit,
respectively, restrictions on the freedom of establishment of
nationals of a Member State in the territory of another Member
State and on the freedom to provide services within the
Community in respect of nationals of Member States and the
commercial practices of undertakings which have as their effect
the prevention, restriction or distortion of competition within
the European Union, preclude provision for the direct award,
without the announcement of a tender, of the management of a
public contract for the distribution of gas to a company in
which a local authority participates, whenever that participa-
tion in the share capital is such as to preclude any direct control
over the management itself and must it therefore be declared
that, as is the case in these proceedings where the shareholding
amounts to 0,97 % of the share capital, the essential precondi-
tions for ‘in-house’ management are not met?