CELEX: 62015CC0274
Language: en
Date: 2016-10-06
Title: Opinion of Advocate General Kokott delivered on 6 October 2016.#European Commission v Grand Duchy of Luxembourg.#Failure of a Member State to fulfil obligations — Taxation — Value added tax — Directive 2006/112/EC — Article 132(1)(f) — Exemption from VAT of supplies of services by independent groups of persons to their members — Article 168(a) and Article 178(a) — Right of deduction for the members of the group — Article 14(2)(c) and Article 28 — Actions of a member in his own name and on behalf of the group.#Case C-274/15.

OPINION OF ADVOCATE GENERAL
      KOKOTT
      delivered on 6 October 2016 (
            1
         )
      
         Case C‑274/15
      
      
         European Commission
      
      
         v
      
      
         Grand Duchy of Luxembourg
      
      ‛Tax law — Value added tax — Article 132(1)(f) of Directive 2006/112/EC — Exemption for the supply of services by certain groups for their members — Rendering of services directly necessary for an exempt or untaxed activity — Deduction of input tax by members of the group — Action by a member in its own name on behalf of the group’
      
         I – Introduction
      
      
               1.
            
            
               The present action brought by the European Commission against the Grand Duchy of Luxembourg is directed against various VAT provisions of Luxembourg law that are connected with the exemption under Article 132(1)(f) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (
                     2
                  ) (‘the VAT Directive’). (
                     3
                  ) The action stems from the decision by the Union legislature that traders rendering exempt services, such as hospitals, physicians, schools and banks, are generally not permitted to deduct input tax. As a result, while the services these traders provide are not taxed, the services they receive remain subject to VAT. This ultimately results in a mere partial exemption for services provided to final consumers, since the non-deductible VAT is, as a rule, taken into account when calculating prices, such that recipients indirectly bear it.
            
         
               2.
            
            
               The inability of these traders to claim a deduction means that the purchase of the (taxable) parts of services that they could also render themselves can negatively influence pricing in the amount of the non-deductible VAT. Consequently, these traders normally have an economic interest in rendering such services themselves and not purchasing them from another trader with VAT being charged. As a result, under the current VAT system, through the creation of an exemption without an input tax deduction, a trader providing exempt services is treated like a final consumer, who likewise owes no VAT but also cannot claim a deduction, even where he provides services for consideration or sells goods.
            
         
               3.
            
            
               But since, even for traders providing exempt services, there may be situations in which it is economically sensible or even essential for them to provide individual parts of services not on their own but instead together with other exempt traders (e.g. several physicians share a receptionist), Article 132(1)(f) of the VAT Directive also exempts these services supplied by the group to its members. Accordingly, the exclusion of the deduction has to that extent no effect on pricing, which leaves the extent of the exemption intact for final consumers, irrespective of whether the service as a whole was rendered by an exempt trader alone or jointly with other exempt traders.
            
         
               4.
            
            
               The present action now must clarify whether in implementing this exemption and other relevant provisions of EU VAT law, the Grand Duchy of Luxembourg has gone too far, in an anticompetitive manner, in order to accommodate the economic interests of its traders.
            
         
         II – Legal context
      
      
         A – EU law
      
      
               5.
            
            
               The second subparagraph of Article 1(2) of the VAT Directive describes the concept of VAT taxation as follows:
               ‘On each transaction, VAT, calculated on the price of the goods or services at the rate applicable to such goods or services, shall be chargeable after deduction of the amount of VAT borne directly by the various cost components.’
            
         
               6.
            
            
               Article 2(1)(c) of the VAT Directive makes ‘the supply of services for consideration within the territory of a Member State by a taxable person acting as such’ subject to VAT. Under Article 2(1)(a), the same also applies to the ‘supply of goods’.
            
         
               7.
            
            
               Under Article 132(1)(f) of the VAT Directive, Member States are to exempt the following transactions from VAT:
               ‘the supply of services by independent groups of persons, who are carrying on an activity which is exempt from VAT or in relation to which they are not taxable persons, for the purpose of rendering their members the services directly necessary for the exercise of that activity, where those groups merely claim from their members exact reimbursement of their share of the joint expenses, provided that such exemption is not likely to cause distortion of competition’.
            
         
               8.
            
            
               Concerning the deduction of VAT imposed on the cost components of a transaction (input tax deduction), Article 168 of the VAT Directive provides as follows:
               ‘In so far as the goods and services are used for the purposes of the taxed transactions of a taxable person, the taxable person shall be entitled, in the Member State in which he carries out these transactions, to deduct the following from the VAT which he is liable to pay:
               
                        (a)
                     
                     
                        the VAT due or paid in that Member State in respect of supplies to him of goods or services, carried out or to be carried out by another taxable person;
                        ...’
                     
                  
         
               9.
            
            
               Concerning the procedure for claiming the deduction, Article 178 of the VAT Directive (
                     4
                  ) provides:
               ‘In order to exercise the right of deduction, a taxable person must meet the following conditions:
               
                        (a)
                     
                     
                        for the purposes of deductions pursuant to Article 168(a), in respect of the supply of goods or services, he must hold an invoice drawn up in accordance with Articles 220 to 236 and Articles 238, 239 and 240;
                     
                  ...’
            
         
               10.
            
            
               Finally, the VAT Directive also contains special provisions concerning commission transactions, which are relevant in the present proceedings. These provisions consist, first, of Article 14(2), which provides as follows for the supply of goods:
               ‘(2)   In addition to the transaction referred to in paragraph 1, each of the following shall be regarded as a supply of goods:
               ...
               
                        (c)
                     
                     
                        the transfer of goods pursuant to a contract under which commission is payable on purchase or sale.’
                     
                  
         
               11.
            
            
               Second, Article 28 of the VAT Directive specifies as follows in respect of services:
               ‘Where a taxable person acting in his own name but on behalf of another person takes part in a supply of services, he shall be deemed to have received and supplied those services himself.’
            
         
               12.
            
            
               All material provisions were already contained in the 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 (
                     5
                  ) (‘the Sixth Directive’), which was codified through the VAT Directive. The case-law of the Court of Justice concerning that directive must therefore also be taken into account in the present proceedings.
            
         
         B – Luxembourg legislation
      
      
               13.
            
            
               Article 44(1)(y) of the Law of 12 February 1979 on value added tax (‘the Luxembourg VAT Law’) contains an exemption that is identical to the French version of Article 132(1)(f) of the VAT Directive.
            
         
               14.
            
            
               How this exemption is to be applied is specified in the Grand-Ducal Order of 21 January 2004 on the exemption from VAT of supplies of services to their members by independent groups of persons (‘the Luxembourg Order’).
            
         
               15.
            
            
               Under Article 1 of the Luxembourg Order, an independent group of persons within the meaning of Article 44(1)(y) of the Luxembourg VAT Law must either have separate legal personality (letter (a)) or act in its own name when dealing with its members and third parties (letter (b)). A Grand-Ducal Order of 7 August 2012 amended this provision by adding a second subsection, which provides that the order does not apply to independent groups that supply services to one or more members that primarily serve the carrying out of taxable transactions.
            
         
               16.
            
            
               Article 2 of the Luxembourg Order sets conditions for the exemption under Article 44(1)(y) of the Luxembourg VAT Law. The first sentence, under (a), specifies that the activity of the group must consist solely of the supply of services that are for the direct purposes of carrying out the activity of the members. Moreover, either the activity of the members must be exempt from tax or the members themselves must not be taxable persons. Under the second sentence, under (a), this requirement is also satisfied by persons who in connection with their exempt or untaxed activity also render taxable transactions, provided that these do not exceed 30% of all turnover. Article 3 of the Luxembourg Order sets forth certain circumstances under which this threshold may be exceeded by up to 50%.
            
         
               17.
            
            
               Article 4 of the Luxembourg Order moreover grants these persons a deduction in respect of VAT that is charged to the group for the services it uses. Under Administrative Circular No 707 of 29 January 2004 (‘the Luxembourg Administrative Circular’), which in particular specifies the supporting documentation to be provided by members, such transfer of the right of deduction is undertaken in order to ensure fiscal neutrality.
            
         
               18.
            
            
               Finally, a note of 18 December 2008 by the working group on VAT within the Comité d’Observation des Marchés (the Financial Market Observation Committee; ‘CObMa’), which states that it was written in agreement with the Administration de l’Enregistrement et des Domaines (‘the Luxembourg Tax Authority’), likewise refers to the exemption for independent groups of persons (‘the CObMa Note’). The CObMa Note deals, inter alia, with who is to appear on an invoice which a third party has issued and relates to joint expenses, where the group lacks separate legal personality. It explains that when a member purchases third-party services in its own name on behalf of the group, the joint expenses to be charged to the group fall outside of the scope of VAT.
            
         
         III – Background to the dispute
      
      
               19.
            
            
               By letter of 7 April 2011, the Commission notified the Grand Duchy of Luxembourg that it had doubts as to whether various Luxembourg provisions in connection with the implementation of the exemption in Article 132(1)(f) of the VAT Directive were in conformity with Union law.
            
         
               20.
            
            
               In its reasoned opinion of 27 January 2012, the Commission determined that its concerns had not been addressed, and it called upon the Grand Duchy of Luxembourg to undertake within two months the necessary steps to modify its legislation to meet the requirements of Union law.
            
         
               21.
            
            
               It stated, first, that the Grand Duchy of Luxembourg infringed Article 132(1)(f) of the VAT Directive to the extent that the Luxembourg exemption also applies in cases where the group does not directly render a service for the exempt or untaxed activity of a member. Second, it is inconsistent with Article 168(a) and Article 178(a) of the VAT Directive to grant members of the group a right of deduction for services that are supplied and charged to the group and not to the members. Third, under Article 14(2)(c) and Article 28 of the VAT Directive, when a member obtains supplies on behalf of the group, this must be deemed two consecutive supplies and may not be viewed as irrelevant for the purposes of VAT.
            
         
         IV – Proceedings before the Court of Justice
      
      
               22.
            
            
               After the Grand Duchy of Luxembourg failed to comply with the Commission’s demand within the specified period, the Commission brought an action before the Court of Justice pursuant to Article 258(2) TFEU on 8 June 2015 and asks that it:
               
                        —
                     
                     
                        declare that on account of the way the VAT regime applicable to independent groups of persons is structured through Article 44(1)(y) of the Luxembourg VAT Law, through Articles 1 to 4 of the Luxembourg Order, through the Luxembourg Administrative Circular in so far as it concerns Articles 1 to 4 of the Luxembourg Order, and through the CObMa Note, the Grand Duchy of Luxembourg has failed to fulfil its obligations under the VAT Directive and, specifically, under Article 2(1)(c), Article 132(1)(f), the second subparagraph of Article 1(2), Article 168(a), Article 178(a), Article 14(2)(c) and Article 28 of that directive;
                     
                  
                        —
                     
                     
                        order the Grand Duchy of Luxembourg to pay the costs.
                     
                  
         
               23.
            
            
               The Grand Duchy of Luxembourg asks that the Court of Justice:
               
                        —
                     
                     
                        dismiss the Commission’s action as inadmissible in part and otherwise unsubstantiated or, in the alternative, as unsubstantiated in its entirety;
                     
                  
                        —
                     
                     
                        order the Commission to pay the costs.
                     
                  
         
               24.
            
            
               The parties set out their positions in writing before the Court and presented oral arguments at the hearing on 30 June 2016.
            
         
         V – Assessment
      
      A – The first plea: utilisation of services by members of the group
      
      
               25.
            
            
               By its first plea, the Commission relies on an infringement of Article 2(1)(c) and Article 132(1)(f) of the VAT Directive.
            
         
               26.
            
            
               Under Article 2(1)(c) of the VAT Directive, all services supplied by taxable persons are generally subject to VAT. Although Article 132(1)(f) of the VAT Directive provides an exemption for services supplied by independent groups to their members, this is applicable, inter alia, only where the services rendered are directly necessary for the exercise of an activity of the members that is either exempt from VAT or outside of the scope of VAT.
            
         
               27.
            
            
               In the Commission’s view, under Article 2(a) and Article 3 of the Luxembourg Order, the exemption in Article 44(1)(y) of the Luxembourg VAT Law also applies where the services supplied by the group are used for the taxable activity of a member, provided only that transactions related to the taxable activity do not make up more than 30% or, in certain cases, 45% of total turnover.
            
         1. Admissibility of the first plea
      
               28.
            
            
               The Grand Duchy of Luxembourg considers the first plea to be inadmissible.
            
         
               29.
            
            
               It submits that, by its first plea, the Commission has expanded the subject of the proceedings in comparison to the reasoned opinion. Whereas the latter found fault only with a tax exemption being given to services supplied by a group that primarily or exclusively benefit the carrying out of the members’ taxable transactions, the action is not limited to this accusation. The Commission now generally challenges that services supplied by the group that are related to a member’s taxable transactions may be exempt from tax.
            
         
               30.
            
            
               It follows from settled case-law that, under Article 258 TFEU, the subject matter of an action is determined by the Commission’s reasoned opinion, with the result that the action must be based on the same grounds and pleas as that opinion. (
                     6
                  ) However, the Commission may clarify its initial complaints, provided that this does not expand the subject matter of the proceedings. (
                     7
                  )
            
         
               31.
            
            
               It is clear from the Commission’s reasoned opinion that it finds that the Luxembourg legislation does not observe the condition in Article 132(1)(f) of the VAT Directive, which specifies that the group must supply services that are directly necessary for a member’s activity that is exempt from VAT or in relation to which the member is not a taxable person. (
                     8
                  ) To the extent that, on this subject matter of the proceedings, the Commission explicitly states in its pleadings that the Luxembourg provisions constitute an infringement in all cases in which the services are for the benefit of a taxable transaction of a member, it therefore permissibly specifies the objections which it had earlier formulated.
            
         
               32.
            
            
               In addition, the Grand Duchy of Luxembourg considers the conduct of the Commission in the pre-litigation procedure to constitute an infringement of the principle of sincere cooperation, which it is obligated to provide under Article 4(3) TEU. After expiry of the period laid down by the Commission in its reasoned opinion, the Grand Duchy of Luxembourg notified the Commission about an amendment made to Article 1 of the Luxembourg Order (
                     9
                  ) in response to the first complaint in the reasoned opinion. Nevertheless, for 18 months, the Commission did not express any reservations about this amendment prior to announcing that it was bringing an action.
            
         
               33.
            
            
               According to settled case-law, the Commission generally has discretion in choosing when it will bring an action for failure to fulfil obligations. (
                     10
                  ) In the present case, there is also no discernible exceptional case in which the Commission might have interfered with the rights of defence of the Grand Duchy of Luxembourg by its conduct in the pre-litigation procedure. In particular, the Commission is not obliged to comment, prior to bringing an action, on the suitability of remedial measures that are taken by a Member State only after the end of the period laid down in the reasoned opinion. It is only the situation prevailing in the Member State at the end of such period which determines the question whether a Member State has failed to fulfil its obligations (
                     11
                  ) and thus the substance of an action.
            
         
               34.
            
            
               The first plea is therefore admissible.
            
         2. Substance of the first plea
      
               35.
            
            
               In the alternative, the Grand Duchy of Luxembourg asserts that the first plea should not be upheld on its merits.
            
         
               36.
            
            
               It argues that the exemption in Article 132(1)(f) of the VAT Directive is applicable to groups whose members carry out a taxable activity in addition to an activity that is exempt from tax or the scope of the tax. But by their very nature, the services supplied by a group involve the joint expenses of a member, which cannot be allocated to any specific activity of the member. In light of this, if only services were exempt that are related solely to activities that are exempt from tax or the scope of the tax, then the exemption would have virtually no practical scope.
            
         
               37.
            
            
               To the extent that the Grand Duchy of Luxembourg in addition makes reference to the amendment of the Luxembourg Order through Article 1(2), (
                     12
                  ) those submissions are not relevant to the present action. The situation prevailing in Luxembourg at the end of March 2012 upon the expiry of the period laid down in the reasoned opinion is alone decisive for its evaluation. (
                     13
                  ) However, the aforementioned provision was not enacted until later, on 7 August 2012.
            
         
               38.
            
            
               Accordingly, in evaluating the first plea, it is necessary to distinguish between two different requirements in Article 132(1)(f) of the VAT Directive, which clearly result from its wording.
            
         
               39.
            
            
               First, this exemption requires that the members of the group carry out an exempt activity or one in relation to which they are not taxable persons.
            
         
               40.
            
            
               But second, in order to be exempt from tax, each service must in addition be directly necessary for the exercise of the exempt activity or the member’s activity in relation to which it is not a taxable person. If, in addition to an exempt activity, a member of a group also carries out a taxable activity, services supplied by the group to that member may also be exempt from tax, but this requires that they be directly necessary for the exercise of its exempt activity and not its taxable activity.
            
         
               41.
            
            
               With respect to this second, additional requirement, there is no reason to depart from the clear wording of Article 132(1)(f) of the VAT Directive when interpreting it. With regard to that provision, the Court has in essence already held that, in light of the required strict interpretation of exemptions in VAT legislation, an interpretation of Article 132(1)(f) of the VAT Directive that goes beyond its precise wording would be incompatible with the objective of that provision. (
                     14
                  )
            
         
               42.
            
            
               Although a strict interpretation of the exemption must not deprive the exemptions of their intended effect and essentially make them incapable of being used, (
                     15
                  ) such a situation does not arise in the present case. Contrary to the assertion by the Grand Duchy of Luxembourg, the services supplied by a group to its members are not necessarily joint expenses and thus to be allocated to the totality of all of their activities. In fact, this is the case only if a member has the group take care of tasks that are part of the member’s general administrative activities, such as bookkeeping. But a member can also transfer to the group other activities with a direct connection solely to the member’s exempt activity, such as the operation of complex medical equipment.
            
         
               43.
            
            
               Since Article 2(a) of the Luxembourg Order also provides an exemption where the service is not directly necessary for the exercise of a member’s exempt or non-taxable activity, it infringes Article 2(1)(c) and Article 132(1)(f) of the VAT Directive.
            
         
               44.
            
            
               The Commission’s first plea must therefore be upheld.
            
         B – The second plea: deduction for members of the group
      
      
               45.
            
            
               By its second plea, the Commission relies on an infringement of the second subparagraph of Article 1(2), Article 168(a) and Article 178(a) of the VAT Directive.
            
         
               46.
            
            
               Under Article 4 of the Luxembourg Order, members of a group who carry out a taxable activity are entitled to claim a deduction in respect of the services that are received not by the member but instead by the group for the purpose of carrying out the member’s activity. However, in accordance with the provisions of the VAT Directive and the Court’s case-law, only the group is entitled to a right of deduction, and this right may not be transferred to the members of the group. In addition, under Article 178(a) of the VAT Directive, exercise of the right of deduction requires that the taxable person hold an invoice addressed to that person and not to another person, like the group in this case.
            
         
               47.
            
            
               The Grand Duchy of Luxembourg bases its defence on the wording of the exemption in Article 132(1)(f) of the VAT Directive. Under that reading, expenses incurred by the group are not its own but rather the ‘joint expenses’ of the members. According to the judgment in PPG Holdings, (
                     16
                  ) the right of deduction ultimately depends on who is required to bear the corresponding expenses. In the present case, that would be the members. In addition, it would violate the principle of fiscal neutrality if the members were not entitled to a right of deduction, since the group itself is not able to claim the input tax.
            
         
               48.
            
            
               Furthermore, the Grand Duchy of Luxembourg draws an analogy to co-ownership of buildings. There too, individual co-owners are entitled to a right of deduction in respect of the input services that have been supplied to the co-owners as a whole.
            
         
               49.
            
            
               The Grand Duchy of Luxembourg’s defence is based on the argument that a group is not a taxable person but is ‘transparent’. Accordingly, the input services supplied to the group are, for the purposes of VAT, supplied directly to its members. A group within the meaning of Article 132(1)(f) of the VAT Directive — the only type of group concerned by the contested rule on deductions — is, however, necessarily a taxable person within the meaning of Article 9 of the VAT Directive.
            
         
               50.
            
            
               The Court has already held, analogously, in relation to Article 132(1)(f) of the VAT Directive, that an interpretation that went beyond that provision’s precise wording would be incompatible with the objective of the provision. (
                     17
                  ) It is, however, clear from that wording that the ‘independent’ group as such supplies the services and is therefore to be distinguished from its members for the purposes of VAT. Since the exemption is therefore applicable only to services which are supplied by the group itself, the group must be a taxable person within the meaning of Article 9 of the VAT Directive. Otherwise there would, according to Article 2(1)(c) of the VAT Directive, be no taxable service at all supplied by the group which could be exempt. In accordance with that article, taxable services are namely only those which a ‘taxable person acting as such’ supplies.
            
         
               51.
            
            
               To take a different view would mean that the exemption under Article 132(1)(f) of the VAT Directive would also cover services which the members of a group — not independent for the purposes of VAT — supply to one another. That would, however, significantly broaden the scope of that exemption and, depending on the definition of a group, would also be capable of exempting from VAT, for example, services supplied between groups of companies. It is true that that may still be compatible with the aim of Article 132(1)(f) of the VAT Directive which, according to the case-law, should avoid ‘an entity offering certain services from being required to pay that tax when it has found it necessary to cooperate with other entities by means of a common structure set up to undertake activities essential to the provision of those services’. (
                     18
                  ) However, such an interpretation would run counter not only to the wording of the exemption, as mentioned, but also to Article 11 of the VAT Directive, which provides for a separate rule for groups of companies, subject to different conditions, and to the general principle that the VAT exemption be interpreted narrowly, now established in settled case-law. (
                     19
                  )
            
         
               52.
            
            
               As a result, independent groups, within the meaning of Article 132(1)(f) of the VAT Directive, which as such qualify as taxable persons, must be distinguished from mere common action of several persons in which the group is not a separate taxable person. That may be the case of a co-ownership syndicate, the analogy drawn by the Grand Duchy of Luxembourg. That situation would then be characterised merely as common action of its members. (
                     20
                  )
            
         
               53.
            
            
               However, if a group concerned by the contested rule constitutes a taxable person that is separate from its members, then it alone is entitled to a right of deduction in respect of the input services supplied to it. Under Article 168(a) of the VAT Directive, a taxable person is entitled to a right of deduction only ‘in respect of supplies to him of goods or services …’. (
                     21
                  )
            
         
               54.
            
            
               It is true that, as follows, inter alia, from the judgment in PPG Holdings cited by the Grand Duchy of Luxembourg, input services supplied to a taxable person may also be deducted where they benefit a third party. (
                     22
                  ) But that in no case gives a right of deduction to a person who did not order these services, and to whom they were therefore not supplied within the meaning of Article 168(a) of the VAT Directive.
            
         
               55.
            
            
               Finally, the challenged rule in Article 4 of the Luxembourg Order is also unnecessary in order to safeguard the principle of fiscal neutrality. In its sense of a neutral tax burden, (
                     23
                  ) this principle is in fact intended to ensure only that taxable persons whose activities themselves are subject to VAT are fully relieved of the burden of the VAT payable or paid in the course of their economic activities. (
                     24
                  ) Accordingly, the group is not entitled to a right of deduction in so far as it supplies tax-free services to its members under Article 132(1)(f) of the VAT Directive. If the group supplies services for the taxable activities of its members, the latter are not exempt from tax under Article 132(1)(f) of the VAT Directive. (
                     25
                  ) Thus, in the latter circumstances, the group is entitled, under Article 168(a) of the VAT Directive, to deduct supplies to it, as are the members in respect of the services supplied to them by the group.
            
         
               56.
            
            
               Aside from Article 168(a), which should accordingly be found to have been infringed, the second subparagraph of Article 1(2) of the VAT Directive, also relied on by the Commission, has no independent meaning, since it is merely programmatic in nature.
            
         
               57.
            
            
               The Grand Duchy of Luxembourg has also not additionally infringed Article 178(a) of the VAT Directive.
            
         
               58.
            
            
               Admittedly, under Article 178(a), a taxable person must hold an invoice drawn up in accordance with Articles 220 to 236 and Articles 238, 239 and 240 in order to exercise a right of deduction under Article 168(a) of the VAT Directive. Nevertheless, contrary to the Commission’s position, it may not be inferred from these provisions that the invoice must be addressed to the taxable person who is claiming the deduction from the tax authorities. Article 226(5) of the VAT Directive requires only that the name of the customer be indicated on the invoice.
            
         
               59.
            
            
               The Luxembourg legislation does not depart from this by granting members of a group a right of deduction to which they are not entitled under Article 168(a) of the VAT Directive. In other words, an invoice issued to the group as the customer is not made out to the wrong person. Rather, the name on the invoice indicates that the relevant member of the group is not entitled to a right of deduction because it is not the recipient of the supply. If, on the other hand, the Grand Duchy of Luxembourg were to require that the invoice be addressed to the respective member as the incorrect recipient, that would infringe Article 226(5) of the VAT Directive.
            
         
               60.
            
            
               The second plea is thus justified only to the extent that it relies on an infringement of Article 168(a) of the VAT Directive.
            
         C – The third plea: No taxation of services supplied by members to the group
      
      
               61.
            
            
               Finally, by its third plea, the Commission relies on an infringement of Article 14(2)(c) and Article 28 of the VAT Directive.
            
         
               62.
            
            
               According to the Commission, under these provisions, where a taxable person, acting as an agent, supplies services in its own name on behalf of a third party or a third party supplies services to the taxable person, there are two identical, consecutive services for the purposes of VAT, first, between the principal and the taxable person and, second, between the taxable person and the third party. By contrast, the CObMa Note provides that where a member receives services in its own name but on behalf of the group, allocation of the corresponding expenses to the group has no effect for the purposes of VAT.
            
         1. Admissibility of the third plea
      
               63.
            
            
               The Grand Duchy of Luxembourg objects that the third plea is also inadmissible.
            
         
               64.
            
            
               It submits that the CObMa Note cannot be imputed to the Grand Duchy of Luxembourg. CObMa is an informal body that is organised under private law and not recognised by the State. This is also not altered by the fact that the website of the Luxembourg Tax Authority refers to the CObMa Note. This is merely found under the heading ‘News’, which, inter alia, provides information about press articles.
            
         
               65.
            
            
               The Commission contends that the Luxembourg Tax Authority is the co-author of the CObMa Note, as is apparent from its wording. The content of that note thus reflects the legal view and practice of the Luxembourg Tax Authority.
            
         
               66.
            
            
               Given that the Grand Duchy of Luxembourg has not challenged the Commission’s argument that the contested content of the CObMa Note corresponds to the practice of the Luxembourg Tax Authority, there is no need to address the question of whether the note itself can be attributed to the Grand Duchy of Luxembourg. This is because a Member State can infringe EU legislation not only through the enactment of legislation but also through its administrative practice.
            
         
               67.
            
            
               Similarly, it may be left unaddressed whether the objection of lack of imputability, were it to be upheld, would affect the admissibility or substance of the third plea. The third plea is thus also admissible.
            
         2. Substance of the third plea
      
               68.
            
            
               The Grand Duchy of Luxembourg maintains that the third plea is devoid of substance in that the Commission’s argumentation would be properly founded only if the group itself and all of its members were independent of one another. But that is precisely not the case of a group which lacks separate legal personality but is instead based on contracts between its members and, contrary to the Commission’s assertion, the contested passage in the CObMa Note relates only to such groups. Indeed, such groups act solely through their managing members and are not necessarily taxable persons distinct from their members. The Court of Justice also ruled similarly in EDM. (
                     26
                  )
            
         
               69.
            
            
               This submission by the Grand Duchy of Luxembourg should be rejected in its entirety. As set out above, Article 132(1)(f) of the VAT Directive, to which the CObMa Note exclusively relates, presupposes that the group is a taxable person separate from its members. (
                     27
                  )
            
         
               70.
            
            
               Under Article 14(2)(c), the supply of goods means, inter alia, the transfer of goods pursuant to a contract under which commission is payable on purchase. According to Article 28 of the VAT Directive, where a taxable person acting in his own name but on behalf of another person takes part in a supply of services, he is to be deemed to have received and supplied those services himself. As the Court of Justice held in Henfling and Others in connection with commission payable upon sale, Article 28 of the VAT Directive creates the fiction of two similar transactions which are, one after another, supplied by the principal to the agent and from the agent to the customer. (
                     28
                  ) The same applies, in reverse, to the commission payable upon purchase, which relates to the CObMa Note.
            
         
               71.
            
            
               It thus follows from the provisions cited above that, for the purposes of VAT, in the case of a commission payable on purchase, that is an order made to a purchaser to obtain goods or services in its own name but on behalf of the principal, is a supply of such goods or additional services supplied by the purchaser to the principal. It is therefore not consistent with this for the Luxembourg Tax Authority to treat the relationship between the group and a member as irrelevant for the purposes of VAT under the CObMa Note. If the group is required to reimburse the member for expenses incurred in connection with the purchase, that is a commission agreement, which is to be treated in accordance with Article 14(2)(c) and Article 28 of the VAT Directive.
            
         
               72.
            
            
               The practice adopted by the Luxembourg Tax Authority under the rule in the CObMa Note challenged by the Commission thus infringes Article 14(2)(c) and Article 28 of the VAT Directive. This is the case irrespective of whether this arrangement applies to all groups or, as maintained by the Grand Duchy of Luxembourg, only to groups that lack separate legal personality. The dispute in question between the parties concerning the scope of the Luxembourg rule therefore has no bearing on the decision in the present action.
            
         
               73.
            
            
               The third plea is consequently also justified.
            
         D – Conclusion and costs
      
      
               74.
            
            
               The action must therefore be upheld in its entirety with respect to the first and third pleas and in part with respect to the second plea.
            
         
               75.
            
            
               The costs should be decided under Article 138(3) of the Rules of Procedure, which specifies that where each party succeeds on some and fails on other heads, the parties are generally to bear their own costs. However, in view of the circumstances of the case, the Court should, pursuant to the second sentence of that provision, order the Grand Duchy of Luxembourg to pay all of the costs, since the partial failure of the Commission to prevail with its submission of an additional infringement of Article 178(a) of the VAT Directive (
                     29
                  ) has no bearing on the case.
            
         
         VI – Conclusion
      
      
               76.
            
            
               I accordingly propose that, in the action brought by the Commission against the Grand Duchy of Luxembourg, the Court should:
               
                        (1)
                     
                     
                        declare that, by enacting and maintaining legislation that also exempts from VAT services supplied by independent groups of persons to their members that were not directly necessary for the exercise of an activity of the members that is exempt from VAT or in relation to which they were not taxable persons, the Grand Duchy of Luxembourg has failed to fulfil its obligations under Article 2(1)(c) and Article 132(1)(f) of Directive 2006/112/EC;
                     
                  
                        (2)
                     
                     
                        declare that, by enacting and maintaining legislation that permits a member within the meaning of Article 132(1)(f) of that directive to claim a right of deduction in respect of services that were not supplied to the member itself but instead to the group, the Grand Duchy of Luxembourg has failed to fulfil its obligations under Article 168(a) of Directive 2006/112/EC;
                     
                  
                        (3)
                     
                     
                        declare that, by adopting an administrative practice that regards costs charged to a group where a member purchases goods and services within the meaning of Article 132(1)(f) of that directive in its own name but on behalf of the group as irrelevant for the purposes of VAT, the Grand Duchy of Luxembourg has failed to fulfil its obligations under Article 14(2)(c) and Article 28 of Directive 2006/112/EC;
                     
                  
                        (4)
                     
                     
                        dismiss the action as to the remainder;
                     
                  
                        (5)
                     
                     
                        order the Grand Duchy of Luxembourg to pay the costs.
                     
                  
         (
            1
         )	Original language: German.
      (
            2
         )	OJ 2006 L 347, p. 1.
      (
            3
         )	The Court of Justice has addressed this exemption and the numerous conditions only three times in the past several decades (judgments of 15 June 1989, Stichting Uitvoering Financiële Acties, C‑348/87, EU:C:1989:246; of 20 November 2003, Taksatorringen, C‑8/01, EU:C:2003:621; and of 11 December 2008, Stichting Centraal Begeleidingsorgaan voor de Intercollegiale Toetsing, C‑407/07, EU:C:2008:713). Currently, however, there are four cases pending before the Court. In addition to the present proceedings, these are DNB Banka, C‑326/15; Aviva, C‑605/15; and Commission v Germany, C‑616/15.
      (
            4
         )	In the version prior to the amendment by Council Directive 2010/45/EU of 13 July 2010 amending Directive 2006/112/EC on the common system of value added tax as regards the rules on invoicing (OJ 2010 L 189, p. 1), which pursuant to the second subparagraph of Article 2(1) became applicable on 1 January 2013 and is therefore not relevant to the present case.
      (
            5
         )	OJ 1977 L 145, p. 1.
      (
            6
         )	Cf., inter alia, judgments of 15 December 1982, Commission v Denmark (C‑211/81, EU:C:1982:437, paragraph 14); of 26 April 2015, Commission v Ireland (C‑494/01, EU:C:2005:250, paragraph 35); and of 16 April 2015, Commission v Germany (Case C‑591/13, EU:C:2015:230, paragraph 19).
      (
            7
         )	Judgments of 11 September 2001, Commission v Ireland (C‑67/99, EU:C:2001:432, paragraph 23); of 19 December 2013, Commission v Poland (C‑281/11, EU:C:2013:855, paragraph 88); and of 16 April 2015Commission v Germany (C‑591/13, EU:C:2015:230, paragraph 19).
      (
            8
         )	See paragraphs 20 and 21 and also 68 and 69 of the reasoned opinion.
      (
            9
         )	See point 15 above.
      (
            10
         )	Cf., inter alia, judgments of 10 December 1968, Commission v Italy (C‑7/68, EU:C:1968:51, p. 642); of 1 June 1994, Commission v Germany (C‑317/92, EU:C:1994:212, paragraph 4); and of 16 April 2005, Commission v Germany (C‑591/13
         EU:C:2015:230, paragraph 14).
      (
            11
         )	Cf., inter alia, judgments of 10 September 1996, Commission v Germany (C‑61/94, EU:C:1996:313, paragraph 42); of 26 April 2005, Commission v Ireland (C‑494/01, EU:C:2005:250, paragraph 29); and of 26 May 2016, Commission v Greece (C‑244/15, EU:C:2016:359, paragraph 47).
      (
            12
         )	See point 15 above.
      (
            13
         )	Cf. point 33 above.
      (
            14
         )	Judgment of 15 June 1989, Stichting Uitvoering Financiële Acties (C‑348/87, EU:C:1989:246, paragraphs 13 and 14) on Article 13A(1)(f) of the Sixth Directive.
      (
            15
         )	Judgments of 20 November 2003, Taksatorringen (C‑8/01, EU:C:2003:621, paragraph 62), and of 11 December 2008, Stichting Centraal Begeleidingsorgaan voor de Intercollegiale Toetsing (C‑407/07, EU:C:2008:713, paragraph 30), both on Article 13A(1)(f) of the Sixth Directive). Concerning other exemptions, see also judgments of 14 June 2007, Horizon College (C‑434/05, EU:C:2007:343, paragraph 16), and of 9 December 2015, Fiscale Eenheid X (C‑595/13, EU:C:2015:801, paragraph 68).
      (
            16
         )	Judgment of 18 July 2013, PPG Holdings (C‑26/12, EU:C:2013:526).
      (
            17
         )	Judgment of 15 June 1989, Stichting Uitvoering Financiële Acties (C‑348/87, EU:C:1989:246, paragraphs 13 and 14), on Article 13A(1)(f) of the Sixth Directive.
      (
            18
         )	Judgment of 11 December 2008, Stichting Centraal Begeleidingsorgaan voor de Intercollegiale Toetsing (C‑407/07, EU:C:2008:713, paragraph 37).
      (
            19
         )	Cf. inter alia, judgments of 26 June 1990, Velker International Oil Company (C‑185/89, EU:C:1990:262, paragraph 19); of 16 September 2004, Cimber Air (C‑382/02, EU:C:2004:534, paragraph 25); and of 2 July 2015, De Fruytier (C‑334/14, EU:C:2015:437, paragraph 18).
      (
            20
         )	Cf. on this, the judgment of 21 April 2005, HE (C‑25/03, EU:C:2005:241, paragraphs 54 to 56); cf., moreover, generally on the relationship, for VAT purposes, between a company and its members with regard to status as a taxable person, the judgments of 27 January 2000, Heerma (C‑23/98, EU:C:2000:46), and of 18 October 2007, van der Steen (C‑355/06, EU:C:2007:615).
      (
            21
         )	Emphasis added.
      (
            22
         )	Cf. judgment of 18 July 2013, PPG Holdings (C‑26/12, EU:C:2013:526, paragraphs 19 to 29.
      (
            23
         )	On the various meanings of this principle, cf. judgment of 15 November 2012, Zimmermann (C‑174/11, EU:C:2012:716, paragraphs 46 to 48), and further, judgments of 17 May 2001, Fischer and Brandenstein (C‑322/99 and C‑323/99, EU:C:2001:280, paragraph 76), and of 2 July 2015, NLB Leasing (C‑209/14, EU:C:2015:440, paragraph 40).
      (
            24
         )	Cf., inter alia, judgments of 14 February, 1985Rompelman (C‑268/83, EU:C:1985:74, paragraph 19); of 15 November 2012, Zimmermann (C‑174/11, EU:C:2012:716, paragraph 47); and of 28 July 2016, Astone (C‑332/15, EU:C:2016:614, paragraph 29).
      (
            25
         )	See points 40 to 42 above.
      (
            26
         )	Judgment of 29 April 2004, EDM (C‑77/01, EU:C:2004:243).
      (
            27
         )	See points 49 to 52 above.
      (
            28
         )	Judgment of 14 July 2011, Henfling and Others (C‑464/10, EU:C:2011:489, paragraph 35).
      (
            29
         )	See points 57 to 59 above.