Case C-154/08: Action brought on 15 April 2008 — Commission of the European Communities v Kingdom of Spain
Date: 2008-04-15
Institutions: Court of Justice
Subjects: European Commission, Spain, VAT, action for failure to fulfil an obligation, civil service, interpretation of the law, management, ownership, provision of services, tax exemption

5.7.2008

EN

Official Journal of the European Union

C 171/17

Action brought on 15 April 2008 — Commission of the
European Communities v Kingdom of Spain

(Case C-154/08)

(2008/C 171/29)

Language of the case: Spanish

Parties

Applicant(s): Commission of
European Communities
(represented by: M. Afonso and F. Jimeno Fernández, acting as
Agent(s))

the

Defendant(s): Kingdom of Spain

Form of order sought

— declare that by considering that the services supplied to an
Autonomous Community by land registrars acting as settle-
ment agents in charge of a settlement office of a mortgage
district are not subject to VAT, the Kingdom of Spain has
failed to fulfil its obligations under Article 2 and Article 4(1)
and (2) of the Sixth VAT Directive (1).

— order Kingdom of Spain to pay the costs.

Pleas in law and main arguments

1. Land registrars are professionals appointed by the Spanish
State and charged by it with the management of the land
registers. They work on their own account, are free to orga-
nise their work, select
the
payments which constitute their income themselves. Several
Autonomous Communities have entrusted various tasks to
them in relation to the settlement of certain taxes. For such
services the land registrars receive a certain percentage of the
taxes collected.

their own staff and collect

2. The Spanish administration has

traditionally taken the
view that, for the purposes of VAT, when they carry out
such tasks for the Autonomous Communities, the land regis-
trars must be considered to be contractors or professionals
supplying services subject to VAT. The arguments relied on
Spanish administration were
in that
essentially based on the judgments of the Court of Justice in
Case C-235/85 Commission v Netherlands (2)
and Case
C-202/90 Ayuntamiento de Sevilla (3).

regard by

the

3. In its judgment of 12 July 2003, the Tribunal Supremo
(Supreme Court) of Spain held that land registrars, as regards
the specific activities entrusted to them by the Autonomous
Communities, consisting in the settlement and collection of
certain taxes, are simply public officials and form part of the
public administration. Since that judgment, delivered in an
appeal on a point of
law, the Spanish administration has
taken the view that such services are not subject to VAT.

4. However,

the

that

the Commission considers

services
supplied to the Autonomous Communities by land registrars
must be subject to VAT in accordance with the general rule
contained in Article 2 of the Sixth Directive. That position is
derived from the fact that registrars/settlement agents act as
professionals who organise autonomously and independently
the human and material resources needed to supply the
service, as required by Article 4(1) of that Directive, and, that
being so, do not have the characteristics of subordination
and dependence which are a prerequisitite if the services in
question are to be considered to have been supplied by an
official to the administration to which he belongs and, there-
is
fore, not subject
neither an administrative body of the Autonomous Com-
munity, nor an intrinsic element, incorporated into that body
or internal to it, but an independent and distinct party with
which the Autonomous Community has
concluded a
contract for the supply of services for consideration.

to VAT. A registrar/settlement agent

the case-law are fulfilled for

5. Similarly, the Commission considers that in the present case
the requirements of
the
Kingdom of Spain to be declared liable for a failure to fulfil
obligations through an interpretation of Community law
which is not consistent with its spirit or purpose or with the
case-law of the Court of Justice. First, the Tribunal Supremo
has the status of a higher judicial body in all orders, subject
to the provisions as
constitutional guarantees.
Second, the ruling has significance and implications which
are, in principle, contrary to the interpretation handed down
by the Court of Justice, and which entail an absolute turn-
around in the case-law of the lower courts and the practice
of the Spanish administration to date, given its binding char-
acter. Third, there are damaging effects in the VAT sector
which may affect the Community's own resources. Conse-
quently, the Spanish administration may not seek protection
from the judgment of the Tribunal Supremo to justify its
failure to fulfil its obligations under Community law.

regards

(1) Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmo-
nization 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).

(2) [1987] ECR 1471.
(3) [1991] ECR I-4247.

Reference for a preliminary ruling from the Hoge Raad
der Nederlanden lodged on 16 April 2008 — E.H.A.
Passenheim-van Schoot v Staatssecretaris van Financiën

(Case C-157/08)

(2008/C 171/30)

Language of the case: Dutch

Referring court

Hoge Raad der Nederlanden