Case C-401/06: Action brought on 26 September 2006 — Commission of the European Communities v Bundesrepublik Deutschland
Date: 2006-12-02
Institutions: Court of Justice
Subjects: European Commission, Germany, VAT, action for failure to fulfil an obligation, basis of tax assessment, consultancy, provision of services, tax exemption

2.12.2006

EN

Official Journal of the European Union

C 294/31

5) Order the Council to pay the costs incurred by the applicant

in the present proceedings;

Action brought on 26 September 2006 — Commission of
the European Communities v Bundesrepublik Deutschland

6) Order the Council to pay damages.

Pleas in law and main arguments

(Case C-401/06)

(2006/C 294/55)

Language of the case: German

The appellant maintains that the Council and Commission are
the rights protected by the European
obliged to respect
Convention on Human Rights (‘the Convention’) and cannot
abrogate that obligation, unless ‘at least equivalent protection’
is offered as a result of that abrogation.

Applicant: Commission of the European Communities (repre-
sented by: D. Triantafyllou, acting as Agent)

Defendant: Bundesrepublik Deutschland

Parties

It is further maintained that the protections offered by the
operation of the United Nations Security Council (‘UNSC’) are
not equivalent to that offered by the Convention.

Form of order sought

The appellant submits that the Court of First Instance erred in
law when it:

i) failed to directly assess whether the UNSC offered equivalent
protection to that of the Convention, specifically in relation
to Articles 6, 8, 13 and Article 1 of Protocol 1 of the
Convention; and

— declare that, by failing to determine the place where the
service is supplied in respect of the activity of an executor
in accordance with Article 9(2)(e) of the Sixth VAT Direc-
tive when the service is performed for customers estab-
lished outside the Community or for taxable persons estab-
lished in the Community but not in the same country as
the supplier, the Bundesrepublik Deutschland has failed to
fulfil its obligations under Article 9(2)(e) of Sixth Council
Directive 77/388/EEC of 17 May 1977 on turnover
taxes (1);

— order the Bundesrepublik Deutschland to pay the costs.

ii) scrutinized the operation of the UNSC indirectly by virtue
of the principle of jus cogens rather than by virtue of and by
reference to the protection offered by Articles 6, 8, 13 and
Article 1 of Protocol 1 of the Convention.

Pleas in law and main arguments

It is further submitted that the Court of First Instance erred
when it found that the restriction on the usage of property was
not a relevant one as to the substance of the right to property.

(1) Council Regulation (EC) No 881/2002 of 27 May 2002 imposing
certain specific restrictive measures directed against certain persons
and entities associated with Usama bin Laden, the Al-Qaida network
and the Taliban, and repealing Council Regulation (EC) No
467/2001 prohibiting the export of certain goods and services to
Afghanistan, strengthening the flight ban and extending the freeze
of funds and other financial resources in respect of the Taliban of
Afghanistan. (OJ L 139, p. 9)

(2) Commission Regulation (EC) No 2049/2003 of 20 November 2003
amending for the 25th time Council Regulation (EC) No 881/2002
imposing certain specific restrictive measures directed against
certain persons and entities associated with Usama bin Laden, the
Al-Qaida network and the Taliban, and repealing Council Regu-
lation (EC) No 467/2001. (OJ L 303, p. 20)

Under the third indent of Article 9(2)(e) of the Sixth VAT
Directive the place of supply of certain services which are
performed for customers established outside the Community or
for taxable persons established in the Community but not in
the same country as the supplier is the place where the
customer has established his business or has a fixed establish-
ment to which the service is supplied or, in the absence of
such a place, the place where he has his permanent address or
usually resides. Those services are the services of consultants,
engineers, consultancy bureaux, lawyers, accountants and other
similar services. That provision of the directive is a rule of
conflict which determines the place of taxation of the services
and the jurisdiction of the Member States.

Under the provisions of German law and the administrative
practice of the tax authorities based thereon, the place where
the services of an executor are supplied is the place from
which the operator provides its services. The place of supply in
respect of those services is therefore not determined under
Article 9(2)(e) of the directive when they are performed for
customers established outside the Community or for taxable
persons established in the Community but not in the same
country as the supplier.

C 294/32

EN

Official Journal of the European Union

2.12.2006

That legislation and administrative practice does not comply
with the provisions of Article 9 of the Sixth VAT Directive.
Services which are performed in the capacity of executor for
customers established outside the Community or for taxable
persons established in the Community but not in the same
country as the supplier are services of which the place of
supply must be determined in accordance with Article 9(2)(e)
of the Sixth VAT Directive.

The Commission takes the view, contrary to the arguments of
the German Government, that the activities of an executor are
also among those activities which a lawyer performs principally
and habitually. The activity as such rather than the professional
title should be taken as a basis for the evaluation:
it is the
nature of the service which is relevant.

Form of order sought

The applicant claims that the Court should order that:

— the decision of the Court of First Instance is set aside, in

whole;

— it is declared that Articles 2 and 4 and Annex 1 of Council
Regulation (EC) No 881/2002 (1) are invalid insofar as they
are of direct and individual concern to the Appellant;

— the Council pay the Appellant's costs of this appeal and of

the proceedings before the Court of First Instance.

The term ‘other similar services’ does not refer to a feature
common to the activities named in the third indent of Article
It is sufficient that the
9(2)(e) of the Sixth VAT Directive.
service to be evaluated is similar to any of
the activities
expressly listed in that provision. That is the case when both
activities serve the same purpose. According to the determin-
ation of the European Court of Justice, the principal and habi-
tual activities of a lawyer include those of representing and
defending the interests of a client. In so far as the Court of
Justice refers to ‘representing or defending the interests of a
person’, that requirement is also present in the activities of an
executor: he represents and defends the interests of the testator.
His
an independently
appointed representative and advisor. The fact that executor-
ship is not an activity reserved to the legal profession does not
preclude the two activities from serving the same purpose.

correspond to those of

activities

(1) OJ L 145 of 13.6.1977, p. 1.

Appeal brought on 27 September 2006 by Chafiq Ayadi
against
Instance
(Second Chamber) delivered on 12 July 2006 in Case T-
253/02: Chafiq Ayadi v Council of the European Union

the Court of First

the judgment of

(Case C-403/06 P)

(2006/C 294/56)

Language of the case: English

Parties

Appellant: Chafiq Ayadi (represented by: H. Miller, Solicitor and
S. Cox, Barrister)

Other parties to the proceedings: Council of the European Union,
United Kingdom of Great Britain and Northern Ireland,
Commission of the European Communities

Pleas in law and main arguments

The appellant submits that the Court of First Instance erred in
law in:

a) failing to hold that Article 308 EC, in conjunction with Arti-
cles 60 EC and 301 EC, did not confer power on the
Council to make the impugned provisions;

b) failing to hold that the making of the impugned powers
infringed the fundamental principle of subsidiarity and/or
Article 5 EC second paragraph;

c) failing to hold that an essential procedureal requirement has
been infringed in the making of the impugned provisions,
namely the requirement
the Council state adequate
reasons why the measures considered necessary cannot be
determined by individual Member States.

that

d) holding that decisions of the Security Council of the United
Nations ('UNSC') which call upon Member States of the
United Nations are binding on the Member States and/or
upon the Community;

e) holding that the Community courts can only annul a Com-
munity measure implementing a UNSC decision by refer-
ence to the standard of ius cogens and in failing to hold that
it can annul such a measure in order to protect human
rights recognised in the legal order of the United Nations;

f) failing to hold that

the impugned parts of Regulation

881/2002 infringe the Appellant's human rights.

(1) Council Regulation (EC) No 881/2002 of 27 May 2002 imposing
certain specific restrictive measures directed against certain persons
and entities associated with Usama bin Laden, the Al-Qaida network
and the Taliban, and repealing Council Regulation (EC) No
467/2001 prohibiting the export of certain goods and services to
Afghanistan, strengthening the flight ban and extending the freeze
of funds and other financial resources in respect of the Taliban of
Afghanistan
OJ L 139, p. 9