CELEX: C1997/387/11
Language: en
Date: 1997-12-20 00:00:00
Title: Action brought on 21 October 1997 by the Commission of the European Communities against Ireland (Case C-358/97)

C 387/6                                        Official Journal of the European Communities                                         20 . 12 . 97
               JUDGMENT OF THE COURT                                      by the Commission of the European Communities,
                           ( First Chamber)                               represented by Helene Michard and Barry Doherty,
                                                                          members of its Legal Service, acting as Agents, with an
                        of 6 November 1997                                address for service in Luxembourg at the office of Carlos
                                                                          Gomez de la Cruz, also a member of its Legal Service,
in Case C-261/96 ( reference for a preliminary ruling from                Centre Wagner.
the Corte d'Appello di Venezia): Conserchimica Srl v.
        Amministrazione delle Finanze dello Stato (')
(Customs duty — Post-clearance recovery of import duties                  The Applicant claims that the Court should:
                        — Limitation period)
                             ( 97/C 387/ 10 )                             — declare that in not subjecting tolls for the use of
                                                                                existing toll-roads and toll-bridges in Ireland to value­
                                                                                added tax contrary to the provisions of Articles 2,
                 (Language of the case: Italian)                                4 ( 1 ), ( 2 ) and ( 5 ) of the Sixth VAT Directive (') and by
                                                                                failing to make available to the Commission the
                                                                                amounts         of own      resources  and  interest   on    late
   (Provisional translation; the definitive translation will be                 payment as a consequence of this infringement Ireland
          published in the European Court Reports)                              has failed to fulfil its obligations under the EC Treaty,
In the Case C-261 /96 : reference to the Court under                      — order Ireland to bear the costs of these proceedings .
Article 177 of the EC Treaty by the Corte d'Appello di
Venezia ( Italy) for a preliminary ruling in the proceedings              Pleas in law and main arguments adduced in support:
pending before that court between Conserchimica Sri and
Amministrazione delle Finanze dello Stato — on the
interpretation of Article 2 of Council Regulation ( EEC )                 Value Added Tax
No 1697/79 of 24 July 1979 on the post-clearance
recovery of import duties or export duties which have not
                                                                          Taxable transactions
been required of the person liable for payment on goods
entered for a customs procedure involving the obligation
to pay such duties ( OJ 1979 L 197, p. 1 ) — the Court                    The heart of the present case is whether certain
( First Chamber ), composed of: D. A. O. Edward                           transactions are subject to VAT. As a result, it is necessary
( Rapporteur) acting as President of Chamber, R Jann and                  to establish the exact scope of the tax . Article 2
L. Sevon, Judges, B. Elmer, Advocate General; R. Grass,                   paragraph 1 of the Sixth VAT Directive provides that
Registrar, has given a judgment on 6 November 1997, in                    value added tax shall be levied on 'the supply of goods or
which it has ruled :
                                                                          services effected for consideration within the territory of
                                                                          the country by a taxable person acting as such'. Article 4
the second subparagraph of Article 2 (1 ) of Council                      of the same Directive provides some definitions :
Regulation (EEC) No 1697/79 of 24 July 1979 on the
post-clearance recovery of import duties or export duties                 ' 1 . 'Taxable person' shall mean any person who
which have not been required of the person liable for                           independently carries out in any place any economic
payment on goods entered for a customs procedure                                activity specified in paragraph 2 whatever the purpose
involving the obligation to pay such duties does not apply                      or results of that activity.
 to duties not collected in respect of goods entered for a
 customs procedure where the obligation to pay those
duties was incurred on a date prior to the entry into force                 2 . The economic activities referred to in paragraph 1
 of that regulation.                                                            shall comprise all activities of producers, traders and
                                                                                persons supplying services (. . .). The exploitation of
 (') OJ C 269, 14 . 9 . 1996 .                                                  tangible or intangible property for the purpose of
                                                                                obtaining income therefrom on a continuing basis
                                                                                shall also be considered an economic activity '.
                                                                                (Emphasis added)
                                                                          The Commission submits that one example of 'the
                                                                          exploitation of tangible or intangible property for the
 Action brought on 21 October 1997 by the Commission                      purpose of obtaining income therefrom on a continuing
         of the European Communities against Ireland                       basis' is operating a road and charging a toll for its use .
                           ( Case C-358/97 )                              As a result, such operations are an economic activity and
                                                                           hence the person carrying them out is a taxable person for
                              ( 97/C 387/ 11 )
                                                                           the purposes of the Sixth VAT Directive.
 An action against Ireland was brought before the Court of                The Commission submits that a transaction which falls
Justice of the European Communities on 21 October 1997                     under the scope of the Sixth VAT Directive is subject to
 ---pagebreak--- 20 . 12 . 97         EN                 Official Journal of the European Communities                                           C 387/7
VAT \vhatever the purpose or results of that activity' as          should have been taken into account as part of Ireland's
stated in Article 4 paragraph 1 of the Directive .                 contribution to the own resources of the Communities .
                                                                   (') Council Directive 77/388/EEC of 17 May 1977 on the
In particular, the Commission submits that operating                   harmonization of the laws of the Member States relating to
motorways, inland waterways and port facilities is an                  turnover taxes — Common system of value added tax :
economic activity.                                                     uniform basis of assessment ( OJ L 145, 13 . 6 . 1977, p. 1 ).
The case-law of the Court makes it clear that a supply of
services is subject to VAT when the service in question is
provided in return for payment, the taxable base being
everything which makes up the consideration given in
return for that service . As the Court has pointed out there       Action brought on 21 October 1997 by the Commission
must be 'a direct link between the service rendered and            of the European Communities against the United
the consideration received '.                                              Kingdom of Great Britain and Northern Ireland
                                                                                            Case C-359/97 )
With regard to tolls paid for the use of a road there is                                     ( 97/C 387/ 12 )
incontestably a direct link between the service rendered
and the consideration received in exchange, if payment is
levied each time a vehicle is allowed to use the road .            An action against the United Kingdom of Great Britain
                                                                   and Northern Ireland was brought before the Court of
                                                                   Justice of the European Communities on 21 October 1997
The fact that a private operator carries out activities            by the Commission of the European Communities,
which contribute to the general good does not prevent              represented by Helene Michard and Barry Doherty,
those activities being subject to VAT.                             members of its Legal Service, acting as Agents, with an
                                                                   address for service in Luxembourg at the office of Carlos
                                                                   Gomez de la Cruz, also a member of its Legal Service,
Community definition                                               Centre Wagner.
                                                                   The Applicant claims that the Court should :
The Sixth VAT Directive imposes VAT on any 'economic
activity' of which 'supplying services' is one category. In
this context the concepts of 'supplying services' and              — declare that in not subjecting tolls for the use of
'economic activity' for the purposes of the Sixth VAT                   existing toll-roads and toll-bridges in the United
Directive must be interpreted objectively on the basis of               Kingdom to value-added tax contrary to the provisions
the economic reality of the transaction and irrespective of             of Articles 2, 4 ( 1 ), ( 2 ) and ( 5 ) of the Sixth VAT
the manner in which the transaction may be classified                   Directive (') and by failing to make available to the
under the various national legal systems . Any other                    Commission      the    amounts   of   own      resources      and
interpretation would encroach upon the uniform                          interest on late payment as a consequence of this
application of Community law.                                           infringement the United Kingdom has failed to fulfil
                                                                        its obligations under the EC Treaty,
Interpreted objectively, the concept of ' supplying services'
encompasses services supplied to users by the operators of         — order the United Kingdom to bear the costs of these
a road or other element of infrastructure used for the                  proceedings.
transport of goods or persons. This interpretation has
always been accepted by a number of Member States
notably Spain and Italy which levy VAT on all tolls paid           Pleas in law and main arguments adduced in support:
for the use of motorways and other elements of road
infrastructure . The exemption from VAT granted by
                                                                   Value Added Tax
certain Member States including Ireland therefore throws
out of balance not only the operation of the common
system of value added tax but also the contributions to            Taxable transactions
the Communities' own resources by the Member States .
                                                                   The heart of the present case is whether certain
The absence of VAT on road tolls is incompatible with              transactions are subject to VAT. As a result, it is necessary
Community rules on the collection of the Communities'              to establish the exact scope of the tax. Article 2
own resources .                                                    paragraph 1 of the Sixth VAT Directive provides that
                                                                   value added tax shall be levied on 'the supply of goods or
                                                                   services effected for consideration within the territory of
The Commission submits that if road tolls are subject to           the country by a taxable person acting as such'. Article 4
VAT, it follows that a proportion of the VAT concerned             of the same Directive provides some definitions: