Judgment of the Court (Fifth Chamber) of 29 April 2004 in Case C-77/01 (Reference for a preliminary ruling from the Tribunal Central Administrativo): Empresa de Desenvolvimento Mineiro SGPS SA (EDM) v Fazenda Pública (Sixth VAT Directive — Articles 2, 4(2), 13B(d) and 19(2) — Meaning of ‘economic activities’ — Meaning of ‘incidental financial transactions’ — Services effected for consideration)
Date: 2004-04-30
Institutions: Court of Justice
Subjects: consortium, economic activity, holding company, interpretation of the law, loan

C 118/6

EN

Official Journal of the European Union

30.4.2004

1. Examination of the procedure leading to the adoption of Council
Decision 2000/186/EC of 28 February 2000 authorising the
Federal Republic of Germany to apply measures derogating from
Articles 6 and 17 of the Sixth Directive 77/388/EEC 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 has disclosed no irregularity such as
to affect the validity of that decision.

2. Article 3 of Decision 2000/186/EC is invalid in that it provides
for the authorisation granted by the Council of
the European
Union to the Federal Republic of Germany to have retroactive
effect from 1 April 1999.

3. Article 2 of Decision 2000/186 meets the substantive require-
ments of Article 27(1) of Sixth Council Directive 77/388/EEC 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, as amended by Council Directive
95/7/EC of 10 April 1995, and is not invalid.

(1) OJ C 79, 10.3.2001.

the interpretation of Articles 2, 4(2), 13B(d) and 19(2) of Sixth
Council Directive 77/388/EEC of 17 May 1977 on the harmo-
nisation of the laws of the Member States relating to turnover
taxes — Common system of value added tax: uniform basis of
assessment (OJ 1977 L 145, p. 1) — the Court (Fifth Chamber),
composed of: P.
Jann, acting for the President of the Fifth
Chamber, C.W.A. Timmermans and S. von Bahr (Rapporteur),
Judges; P. Léger, Advocate General; H.A. Rühl, Principal
Administrator, for the Registrar, has given a judgment on 29
April 2004, in which it has ruled:

1. In a situation such as that in the main proceedings:

— activities which consist in the simple sale of shares and other
securities, such as holdings in investment funds, do not consti-
tute economic activities within the meaning of Article 4(2) of
Sixth Council Directive 77/388/EEC 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 therefore do not come within
the scope of that directive;

JUDGMENT OF THE COURT

(Fifth Chamber)

of 29 April 2004

in Case C-77/01 (Reference for a preliminary ruling from
the Tribunal Central Administrativo): Empresa de Desen-
volvimento Mineiro SGPS SA (EDM) v Fazenda Pública (1)

(Sixth VAT Directive — Articles 2, 4(2), 13B(d) and 19(2)
— Meaning of ‘economic activities’ — Meaning of ‘incidental
financial transactions’ — Services effected for consideration)

(2004/C 118/11)

(Language of the case: Portuguese)

(Provisional translation; the definitive translation will be published in
the European Court Reports)

In Case C-77/01: Reference to the Court under Article 234 EC
from the Tribunal Central Administrativo (Portugal) for a preli-
minary ruling in the proceedings pending before that court
between Empresa de Desenvolvimento Mineiro SGPS SA
(EDM),
formerly Empresa de Desenvolvimento Mineiro SA
(EDM), and Fazenda Pública, intervener: Ministério Público, on

‘effected for

placements in investment funds do not constitute supplies of
services
consideration’ within the meaning of
Article 2(1) of Sixth Directive 77/388 and therefore likewise
do not come within the scope thereof;

the amount of turnover relating to those transactions must
consequently be excluded from the calculation of the deductible
proportion referred to in Articles 17 and 19 of that directive;

— by contrast the annual granting by a holding company of
interest-bearing loans to companies in which it has a share-
holding and placements by that holding company in bank
deposits or in securities, such as Treasury notes or certificates
of deposit, constitute economic activities carried out by a
taxable person acting as such within the meaning of Articles
2(1) and 4(2) of Sixth Directive 77/388;

however, the said transactions are exempted from value added
tax under points 1 and 5 of Article 13B(d) of that directive;

in calculating the deductible proportion referred to in Articles
17 and 19 of Sixth Directive 77/388, those transactions are
to be regarded as incidental transactions within the meaning
of the second sentence of Article 19(2) thereof in so far as
they involve only very limited use of assets or services subject
to value added tax; although the scale of the income generated
by financial transactions within the scope of Sixth Directive
77/388 may be an indication that those transactions should
not be regarded as incidental within the meaning of
that
provision, the fact that income greater than that produced by
the activity stated by the undertaking concerned to be its main
activity is generated by such transactions does not suffice to
preclude their classification as ‘incidental transactions’;

30.4.2004

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Official Journal of the European Union

C 118/7

it is for the national court to establish whether the transactions
concerned in the main proceedings involve only very limited
use of assets or services subject to value added tax and, if so,
to exclude interest generated by those transactions from the
denominator of the fraction used to calculate the deductible
proportion.

2. Operations such as those at issue in the main proceedings, carried
out by the members of a consortium in accordance with the provi-
sions of a consortium contract and corresponding to the share
assigned to each of
them in that contract, do not constitute
supplies of goods or services ‘effected for consideration’ within the
meaning of Article 2(1) of Sixth Directive 77/388, nor, conse-
quently, a taxable transaction under that directive. The fact that
such operations are carried out by the member of the consortium
which manages it is irrelevant in that respect. On the other hand,
where the performance of more of the operations than the share
thereof fixed by the said contract for a consortium member involves
payment by the other members against the operations exceeding
that share, those operations constitute a supply of goods or services
‘effected for consideration’ within the meaning of that provision.

(1) OJ C 118, 21.4.2001.

JUDGMENT OF THE COURT

(Fifth Chamber)

of 29 April 2004

in Case C-91/01: Italian Republic v Commission of the
European Communities (1)

(State aid — Recommendation concerning the definition of
small and medium-sized enterprises — Guidelines for State
aid to small and medium-sized enterprises — Independence
criterion — Protection of legitimate expectations — Legal
certainty)

(2004/C 118/12)

(Language of the case: Italian)

(Provisional translation; the definitive translation will be published in
the European Court Reports)

In Case C-91/01: Italian Republic (Agent: I. Braguglia, assisted
by D. Del Gaizo), with an address for service in Luxembourg v
the European Communities (Agents: V. Di
Commission of
Bucci and J. M. Flett), with an address for service in Luxem-
bourg — application for annulment of Commission Decision
2001/779/EC of 15 November 2000 on the State aid which
Italy is planning to grant to Solar Tech Srl (OJ 2001 L 292, p.
45), in so far as it did not allow the application to that aid of
the bonus of 15 % gross grant equivalent provided for for small
and medium-sized enterprises — the Court (Fifth Chamber),
composed of: C. W. A. Timmermans, acting for the President

of the Fifth Chamber, A. Rosas and S. von Bahr (Rapporteur),
Judges; Advocate General: F. G. Jacobs; Registrar: M. Múgica
Arzamendi, Principal Administrator, has given a judgment on
29 April 2004, in which it:

1) Dismisses the action;

2) Orders the Italian Republic to pay the costs

(1) OJ C 118, 21.4.2001.

JUDGMENT OF THE COURT

(Sixth Chamber)

of 29 April 2004

in Case C-106/01 (reference for a preliminary ruling from
the Court of Appeal (Civil Division) (England and Wales)):
The Queen, on the application of Novartis Pharmaceuticals
UK Ltd v The Licensing Authority established by the
Medicines Act 1968 (acting by the Medicines Control
Agency), and SangStat UK Ltd, and Imtix-SangStat UK
Ltd (1)

(Medicinal products — Marketing authorisation — Procedure
relating to essentially similar products)

(2004/C 118/13)

(Language of the case: English)

(Provisional translation; the definitive translation will be published in
the European Court Reports)

In Case C-106/01: reference to the Court under Article 234 EC
from the Court of Appeal (Civil Division) (England and Wales)
for a preliminary ruling in the proceedings pending before that
court between The Queen on the application of Novartis Phar-
maceuticals UK Ltd andThe Licensing Authority established by
the Medicines Act 1968 (acting by the Medicines Control
Agency), and SangStat UK Ltd, and Imtix-SangStat UK Ltd —
on the interpretation of Article 4.8(a) of Council Directive
65/65/EEC of 26 January 1965 on the approximation of provi-
sions laid down by law, regulation or administrative action
relating to medicinal products (OJ, English Special Edition
1965-1966, p. 20),
amended by Council Directives
87/21/EEC of 22 December 1986 (OJ 1987 L 15, p. 36),
89/341/EEC of 3 May 1989 (OJ 1989 L 142, p. 11) and
93/39/EEC of 14 June 1993 (OJ 1993 L 214, p. 22) — the
Court (Sixth Chamber), composed of: V. Skouris, acting for the
President of the Sixth Chamber, C. Gulmann (Rapporteur), J.-N.
Cunha Rodrigues, J.-P. Puissochet and R. Schintgen, Judges; F.G.
Jacobs, Advocate General; M.-F. Contet, Principal Adminis-
trator, for the Registrar, has given a judgment on 29 April
2004, in which it has ruled:

as