CELEX: 61993CC0468
Language: en
Date: 1995-12-14
Title: Opinion of Mr Advocate General Fennelly delivered on 14 December 1995. # Gemeente Emmen v Belastingdienst Grote Ondernemingen. # Reference for a preliminary ruling: Gerechtshof Leeuwarden - Netherlands. # Sixth VAT Directive - Article 13B(h) and Article 4(3)(b) - Supply of building land. # Case C-468/93.

OPINION OF ADVOCATE GENERALFENNELLY delivered on 14 December 1995  (1)
         Case C-468/93  Gemeente Emmen  v   Belastingdienst Grote Ondernemingen, Groningen  
            ()
            
      
         
      1.  How is  
      building land to be defined for value added tax (hereinafter  
      VAT) purposes?  The Sixth VAT Directive exempts sales of land generally, but building land is an exception.  A flood of claims
      for repayment of VAT charged on the sale of land by local authorities in the Netherlands has given rise to the present reference
      for a preliminary ruling from the Gerechtshof, Leeuwarden.  We are informed that it is a test case. 
      
         			(2)
         		  Because the Dutch courts have had to apply a pre-existing criterion of preparation of land, in the absence of any national
      legislative or other formal definition, the Court is being asked to provide answers to a number of questions regarding the
      interpretation of  
      building land.
       I ─ The relevant legislation
       The Community measures
      
      2.  The bedrock of the Community VAT system is the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the
      laws of the Member States relating to turnover taxes ─ Common system of value added tax:  uniform basis of assessment (hereinafter
       
      the Sixth Directive). 
      
         			(3)
         		  Article 13 is the first article of the Sixth Directive dealing with exemptions.  It concerns exemptions that Member States
      are obliged to apply internally within their territories.  At Article 13B it provides as follows: Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall
      lay down for the purpose of ensuring the correct and straightforward application of the exemptions and of preventing any possible
      evasion, avoidance or abuse:...
      (h) the supply of land which has not been built on other than building land as described in Article 4(3)(b).
      
      
      3.  The primary purpose of Article 4(3) is to permit Member States, at their discretion, to treat as  
      taxable persons those who, though  
      on an occasional basis, engage in the supply of buildings (Article 4(3)(a)) 
      
         			(4)
         		 and  
      the supply of building land (Article 4(3)(b)).  It is only the definition, in the latter provision, of  
      building land, borrowed as it is for the purpose of Article 13B(h), which is relevant to the present case.  It says: Building land shall mean any unimproved or improved land defined as such by the Member States.
       The national measures
      
      4.  Article 11(1)(a)(1) of the Wet op de Omzetbelasting (Turnover Tax Law) 1968 
      
         			(5)
         		 (hereinafter the  
      1968 Law) provides: 
      1.  The following shall be exempt from tax on conditions to be determined by [us] 
      
         			(6)
         		 by general administrative measures: 
      (a) the supply of immovable property, with the exception of: 
      (1) the supply of a prepared immovable which takes place before or no later than two years after the immovable is put into use
      for the first time.
      
      
      
      
      5.  Pursuant to Article 3 of the Uitvoeringsbeschikking omzetbelasting (decision applying the 1968 Law) of 30 August 1968 
      
         			(7)
         		 public law bodies, such as the Gemeente Emmen, are considered to be taxable persons in so far as they are involved in the
      transfer or servicing of plots of land.  In cases where VAT is applicable, no liability to pay transfer taxes will arise pursuant
      to the Wet op Belastingen van Rechtsverkeer (Law on the Taxation of Legal Transactions) 1970. 
      
         			(8)
         		 II ─ Factual circumstances and procedure
      
      6.  In June 1992 the Gemeente Emmen (the Commune of Emmen), the appellant in the main proceedings (hereinafter  
      the appellant), supplied eight plots of unbuilt land at a price which included a charge for VAT.  In its subsequent tax return it included
      and paid a sum of HFL 67 542 VAT in respect of these supplies.  With the written consent of the relevant tax inspector the
      appellant brought an appeal against its liability to pay that sum to the Belastingdienst Grote Ondernemingen, the respondent
      in the main proceedings (hereinafter  
      the respondent).  The lots at issue were all previously designated for agricultural use, but were redesignated for building use prior to
      their transfer and, on the appellant's instructions, the implementation of a re-zoning plan had been commenced involving,
       
       inter alia , the laying of pipes necessary for the provision of services, the excavation of drains, the installation of a sewerage system
      and other operations. 
      
         			(9)
         		
      7.  The dispute was brought before the Gerechtshof, Leeuwarden (Regional Court of Appeal, Leeuwarden, hereinafter the  
      national court), where the essential issue between the appellant and the respondent was whether the eight plots should be treated as  
      land prepared for use (
      vervaardigde onroerende zaken) within the meaning of the 1968 Law.  The appellant argued before the national court that the works carried out did not transform
      the plots into such land and, thus, that VAT was not payable.  The respondent argued that, either because the services had
      been provided for each plot or because preparatory work had been carried out on each plot, they had been properly classified
      as land prepared for use and accordingly subject to VAT.
      
      8.  The national court explains in its order for reference that, for the purposes of implementing the Sixth Directive, the Netherlands
      has opted to adapt the notion of a  
      prepared immovable (
      vervaardigd onroerend goed), already employed in the 1968 Law, and apply it to the supply of land, supposedly in implementation of the Sixth Directive.
       The result was that the VAT exemption on the  
      supply of land under the Sixth Directive was available in the Netherlands unless the property could be regarded as prepared for use within
      the meaning of the 1968 Law.  The national court refers to a judgment of the Hoge Raad (the Supreme Court of the Netherlands)
      of 21 November 1990 
      
         			(10)
         		 (the  
      1990 Decision), deciding that, for that purpose  
      building land (
      bouwterrein) is to be understood as referring exclusively to  
      improved land (
      bouwrijp gemaakte terreinen). 
      
         			(11)
         		  The national court states that the Hoge Raad relied on an earlier judgment of 12 March 1980 (hereinafter the  
      1980 Decision) where a strict interpretation was given. 
      
         			(12)
         		
      9.  The national court considers that the 1980 Decision concerned matters (presumably facts occurring) prior to the adaptation
      by the Netherlands of its system to that prescribed by the Sixth Directive.  Furthermore, it states that, as exceptions to
      tax exemptions permitted by the Sixth Directive are not to be interpreted strictly, assistance can no longer be obtained from
      the 1980 Decision in order to interpret the term  
      improved land. 
      
         			(13)
         		  Its approach is, therefore, that, in the absence of a more precise definition in the Netherlands legislation of the concept
      of  
      building land, one must look to Articles 13B(h) and 4(3)(b) of the Sixth Directive for the meaning of  
      improved land.
      
      10.  As this approach involves the interpretation of Community law, the national court opted to refer the following questions to
      the Court: 
      I(a) Are the words  
      improved land as used in Article 4(3)(b) of the directive to be understood as meaning only land where the soil itself has been prepared
      and/or for which provisions have been made which are of use exclusively for the land itself, or 
      (b) In view of the fact that exceptions to exemptions must be interpreted widely, is there  
      improved land where land has been designated as described in section 2.3 
      
         			(14)
         		 and prior to the supply and first use of that land basic commodities have already been provided for, such as: 
      
      
      
            ─
                excavation of drains and the laying of a sewerage system and streets: 
             
      
      
      
      
            ─
                installation of facilities as described in section 2.3. 
               
               
               
               14
               The facilities which are referred to comprise the supply by the various utility undertakings, such as telecommunications,
               gas, water and electricity, of their central antenna which would normally involve digging ditches, laying pipes, wires, or
               both, and then refilling the said ditches.  It is clear from the order for reference that the national court does not wish
               to emphasize the differing extent of the actual works carried out on each of the eight lots of land at issue in the main proceedings.
             
      
      
      II
         
       If the answer to Question I(a) is yes, must both the conditions set out therein be satisfied?  Does that mean that designated
      land for which the facilities referred to at I(b), above, have been provided by means of one or more of the operations described
      at (a) to (f), below, becomes improved land? 
      (a)  The laying of the abovementioned facilities within the boundaries of the land; 
      
      (b)  The installation of a standpipe and a distributor on the main sewer connected to or situated on the land, or the connection
      of the land to the distributor; 
      
      (c)  The installation for the land of a surface inlet to the main sewer; 
      
      (d)  The raising of the land by adding soil brought in for the purpose; 
      
      (e)  The laying of drainage pipes in accordance with the designation but outside the boundary of the land; 
      
      (f)  The filling-in of a ditch within the boundary of the land by soil brought in.
      
      
      
      
       III ─ Observations submitted to the Court
      
      11.  In accordance with Article 20 of the Statute of the Court, the appellant, the Dutch Government and the Commission submitted
      written observations and also appeared at the hearing.  Their submissions may be summarized as follows.
       The appellant
      
      12.  According to the appellant the problem raised by the national court's questions concerns the conditions under which VAT may
      be levied on the transfer of a plot of land which has not been built upon at the moment of its transfer, but which is nevertheless
      destined for construction.  The appellant maintains that the Netherlands has failed correctly to implement the Sixth Directive
      as a result of its decision not to define, as required by Article 4(3)(b), the notion of  
      building land.  To support this argument, it refers to Article 1, which obliges Member States to modify their pre-existing VAT systems
      so as to ensure their compliance with the system established by the Sixth Directive by 1 January 1979. 
      
         			(16)
         		
      13.  According to the appellant the reference in the 1968 Law to the supply of a  
      prepared immovable does not properly define the concept of  
      building land. 
      
         			(17)
         		  The interpretation of this notion was governed (at least at an administrative level), prior to the entry into force of the
      Sixth Directive, by a ministerial circular pursuant to which the supply of land was subject to VAT whenever it was  
      cleared out or  
      improved (
      ontgonnen or  
      bouwrijp gemaakt). 
      
         			(18)
         		  Improved land was understood to include not only land which had itself been improved, but also land which was prepared (for
      example by the provision of means of access) and rendered suitable for subsequent construction.  This interpretation of the
      land which could be subject to VAT was, according to the appellant, expressly retained following the entry into force of the
      Sixth Directive. 
      
         			(19)
         		
      14.  The appellant maintains that, in the light of the legal uncertainty arising from the lack of a specific implementation of
      Article 4(3)(b) of the Sixth Directive, the national court was correct to consider it necessary to turn to Community law for
      guidance as to what could be considered as building land.  According to the appellant, to be regarded as improved land, the
      site must be designed to serve as a location for one or several buildings.  It claims that the provision calls for a distinctive
      definition of the concept of  
      improved land so as to differentiate it from the concept of  
      unimproved land, which is also contained in the same indent, for the overall purpose of defining the concept of  
      building land.  It, thus, argues that not all unbuilt land which is destined for construction ought to be subject to VAT.  In particular,
      unbuilt land should not be considered to be  
      building land within the meaning of Article 4(3)(b), unless it is designed to serve as a site for the construction of one or several buildings
      and has been improved by the execution of extensive physical work on the land itself.
      
      15.  To support this approach, reliance is placed, by way of analogy, on the definition furnished by the Sixth Directive of the
      concept of  
      supply 
      
         			(20)
         		 (
      levering) which Member States may consider, pursuant to Article 5(5)(b) of the Sixth Directive, to include  
      ... the handing over of certain works of construction. 
      
         			(21)
         		  The appellant maintains that the use, in Article 4(3)(b), of the term  
      improved land alongside the term  
      unimproved land implies that for land to be capable of being classified as  
      building land certain construction works must have been carried out to it by the person supplying the relevant plot(s).  Reference is made
      to the interpretation of Article 5(5)(b) adopted by the Court in its ruling in  
       Van Dijk's Boekhuis  v  
       Staatssecretaris van  Financiën . 
      
         			(22)
         		  In order, therefore, for a transfer of building land to occur, works must have been carried out by the transferor which,
      having regard to the original state of the land, would generally be accepted as having altered its nature.  Accordingly, the
      appellant argues that  
      substantial transformation must have taken place;  the execution of general works in the immediate environment of the relevant land,
      such as the installation of a sewerage scheme, would not constitute a substantial alteration for this purpose.
      
      16.  The appellant acknowledges that, if the Court were to consider the mere alteration of the designation of land as sufficient
      to render it  
      building land for the purposes of the Sixth Directive, then even acts physically remote from the land itself, such as the issuance of building
      permits, might be sufficient to create improved land.  Consequently, it invites the Court to indicate explicitly the extent
      of the works (significant or minimal) necessary for the land to be regarded as  
      building land.  In its view, land should not be so regarded unless:  (a) it is laid out to serve as the site for the construction of a
      building;  (b) it has already been the subject of  
       substantial   alterations (appellant's emphasis).
       The Dutch Government
      
      17.  The principal observation of the Dutch Government is essentially that the determination of the scope of the notion of  
      building land as employed in the Sixth Directive depends exclusively, in conformity with Article 189(3) of the Treaty, obliging the Member
      State only to achieve the result required by the directive, on how it has been interpreted by the Dutch legislature.  Thus,
      according to the Dutch Government, in making its reference, the national court overlooked the express wording of Article 4(3)(b)
      of the Sixth Directive which leaves the realization of the definition of that notion to the discretion of the Member States.
       At the hearing the Government maintained that it was within the discretion afforded by Article 4(3)(b) of the Sixth Directive
      to Member States to decide that the notion of  
      building land could be confined to improved land. 
      
         			(23)
         		
      18.  In the Netherlands, the relevant legislative provision is Article 11(1)(a)(1) of the 1968 Law.  The point of reference for
      the interpretation of that provision is stated to be the 1990 Decision of the Hoge Raad where the notion of a prepared good
      was interpreted, in the light of the Sixth Directive's reference to  
      building land, as encompassing only improved land, in the sense that work has been carried out or infrastructures put in place which exclusively
      serve that land.  The Dutch Government claims that this definition discharges in national law the obligation to define  
      building land imposed on the Netherlands by the Sixth Directive. 
      
         			(24)
         		  According to the Government, the Hoge Raad's definition includes only land upon which the infrastructures necessary to prepare
      that land for construction have been provided.  Accordingly, it maintains that the questions posed should be answered as follows:
       (i) Question I(a), affirmatively and Question I(b), negatively;  (ii) Question II, to the effect that the conditions should
      not be regarded as cumulative, so that once at least one of them is satisfied the relevant land may be classified as  
      improved.
      
      19.  The Dutch Government none the less recognizes that the extent of the discretionary power conferred on Member States regarding
      the definition of  
      building land is not unlimited. 
      
         			(25)
         		  Thus, it accepts that general principles of interpretation, particularly that requiring a broad construction of exceptions
      to exemptions, are applicable and limit the extent of the Member States' discretion.  However, it considers the Hoge Raad's
      interpretation to be wholly in conformity with such a requirement and observes that the national court should find the answers
      to its questions by examining the criteria formulated in the 1990 Decision. 
      
         			(26)
         		 The Commission
      
      20.  The Commission maintains that in order to address the central question of what constitutes  
      building land for VAT purposes, several factors must be borne in mind:  
      
         			(27)
         		(i) the preservation of fiscal neutrality pursuant to which the liability to pay VAT ought to be determined by reference to objective
      criteria capable of affording those affected a sufficient degree of legal certainty regarding their potential liabilities;
      
      
      (ii) the requirement to interpret exemptions from VAT strictly 
      
         			(28)
         		 and the corresponding obligation to ensure a broad interpretation of any exception to such exemptions;  
      
         			(29)
         		
      (iii) the recognition that Member States have the duty to define the notion of  
      building land and that this competence must be exercised in the light of the criteria outlined at points (i) and (ii) above. 
      
         			(30)
         		
      The principle underlying the Sixth Directive is that every economic transaction conducted by a taxable person within a Member
      State should be subject to VAT.  Thus, while the Member States are at liberty to define the concept of  
      building land, that liberty is not unlimited.  The Commission, therefore, argues that it is necessary to develop an objective approach
      to the definition of  
      building land.
      
      21.  From this point of reference, the Commission submits that the decisive criterion is the designation of land for building purposes.
       It is not possible to regard its physical improvement as the decisive factor because the wording of Article 4(3)(b) refers
      to both improved and unimproved land. 
      
         			(31)
         		  The crucial issue is whether a plot of land is designated as building land.  The intention of the parties, being subjective,
      at the time of the transaction cannot be decisive.  The Commission considers the decisive factor to be the acquisition of
      the right to build on the land, whether by way of zoning or obtaining individual building permits. 
      
         			(32)
         		  Conversely, a plot of land which has been furnished with the infrastructures required for building is not necessarily building
      land, particularly where, for whatever reason, building permission is withheld.
      
      22.  The Commission observes penultimately that it is only the adoption of this objective approach which avoids pointless arguments
      regarding which particular works should be regarded as sufficient to transform land into building land. 
      
         			(33)
         		  It cites the list of operations set out in the national court's second question to demonstrate this point.  It is for each
      Member State to determine in detail, in accordance with the discretion conferred by Article 4(3)(b) of the Sixth Directive,
      the public law acts which determine whether a buyer has a right to build on a particular site and, thus, whether it is building
      land.
      
      23.  Finally, the Commission gives its opinion on the potential effects of this approach.  Given the absence of harmonization of
      the notion of  
      building land, it acknowledges that they would not be uniform throughout the Community.  In the Netherlands, for example, the effect would
      be to broaden the categories of taxed transactions.  For the parties involved in particular transactions, the Commission anticipates
      negative consequences only for individual (non-taxable) purchasers who, not being registered VAT payers, are not, thus, in
      a position to deduct the amount of VAT included in the price paid for the supply of the land from VAT payable in respect of
      their own supplies of goods or services. 
      
         			(34)
         		 IV ─ Consideration of the questions referred to the Court
       Preliminary issues
      
      24.  The legal and factual circumstances surrounding this reference raise, in my opinion, a number of important legal issues, some
      of which have led me to go outside the observations presented to the Court.  In particular, I believe that I must consider
      the consequences of the unusual situation created by the interpretation by the national courts in the Netherlands of a pre-existing
      legal concept, poorly adapted to give effect to the dividing line envisaged by the Sixth Directive between exempt land and
      non-exempt building land.
      
      (i) The transitional derogation 
      
      25.  The Netherlands has, according to the appellant, not implemented the Sixth Directive correctly as a result of its failure
      to establish a definition of building land.  A similar accusation presumably underlies the formal complaint which has already
      been lodged by numerous Dutch communes with the Commission. 
      
         			(35)
         		  Certainly, the Netherlands has passed no new law defining  
      building land for the purpose of the Sixth Directive.  Moreover, the adaptation by the Dutch courts of pre-existing law has had the effect
      of excluding the imposition of VAT on the sale of unimproved building land.  In my opinion, before considering that point,
      it is necessary to ascertain whether the Netherlands is actually under any obligation to lay down such a definition.
      
      26.  I digress briefly to draw attention to one significant qualification on any such obligation, though not involved in the present
      case.  Article 28 is the sole article of Title XVI of the Sixth Directive dealing with  
      [T]ransitional [P]rovisions.  It is provided at paragraph (3) that: During the transitional period referred to in paragraph 4, the Member States may:...
      (b) continue to exempt the activities set out in Annex F under the conditions existing in the Member State concerned.
      Annex F(16) of the Sixth Directive refers to  
      [S]upplies of those buildings and land described in Article 4(3).  While Article 28(4) clearly envisaged that the transitional period would initially last from 1 January 1978 until 31 December
      1983 for the then nine Member States, it none the less gave the Council the duty both of reviewing its continued operation
      and terminating any or all of the relevant derogations, acting unanimously on a proposal from the Commission. 
      
         			(36)
         		  In so far as the transactions covered by Annex F(16) are concerned, it appears that the Council's current policy is to await
      the expiry, at the end of 1996, of the current arrangements 
      
         			(37)
         		 designed to advance the achievement of a definitive system of VAT for the internal market. 
      
         			(38)
         		
      27.  In principle Member States are consequently entitled under Article 28(3)(b) to maintain any exemption of Annex F(16) transactions
      which predated the Sixth Directive. 
      
         			(39)
         		  The continued existence of these Article 28(3) derogations reflects the ongoing effects of the Council's inability to agree
      a common list of exemptions at the time of the adoption of the Sixth Directive. 
      
         			(40)
         		  The scope of any exemption thereunder must be construed narrowly, in the light of the overriding objective of the Sixth
      Directive to create a uniform basis of assessment for a common, integrated system of VAT.  The first condition of such an
      exemption is that it should be a mere continuation of a pre-existing tax exemption granted by national law.  As the Court
      ruled in  
       Kerrutt ,  
      
         			(41)
         		 the wording of Article 28(3)(b)  
      precludes the introduction of new exemptions or the extension of the scope of existing exemptions after the date of entry
      into force of the directive whether by legislative, administrative or judicial means.
      
      28.  The exemption from VAT of the supply of land in effect, pursuant to the 1968 Law, when the Sixth Directive entered into force
      in the Netherlands, was qualified.  Once a plot of land was classified as a  
      prepared immovable for the purposes of the 1968 Law, its supply was subject to turnover tax.  The agent for the Commission stated at the hearing
      that the Netherlands has never applied or sought to apply any Article 28(3)(b) derogation.  Nor has any such claim been advanced
      on behalf of the Netherlands at any stage of these proceedings.  In these circumstances, the Netherlands has been under an
      obligation since 1 January 1979 to ensure the availability of the exemption provided in Article 13B(h) for the supply of land
      other than building land and under a corresponding duty to subject all supplies of building land to VAT.
      
      (ii) The Sixth Directive in national law 
      
      29.  The absence of any formal Dutch implementation, whether by way of normative or regulatory measures, of the obligation under
      Article 13B(h) to define  
      building land, so as to exclude it from the exemption, coupled with the rather unusual nature of the dispute between the parties to the
      main proceedings in the present case, raises a possible issue concerning direct effect.  That issue has normally arisen either
      in the context of disputes between Member States, or their public authorities, and private natural or legal persons (the so-called
       
      vertical direct effect of directives), or in disputes arising between such private persons themselves (
      horizontal direct effect).
      
      30.  In this case, certain provisions of the Sixth Directive, though not the principle of direct effect, have been invoked by a
      municipal authority against national revenue authorities.  It is not at all clear that this principle can be invoked by one
      State authority against another.  In any event this issue would only have to be addressed if the appellant could simply be
       
      assimilated to individuals, 
      
         			(42)
         		 in other words, treated as acting as, or on behalf of, private individuals.  In my opinion, in the present circumstances,
      it cannot, for reasons explained in paragraph 32 below.
      
      31.  It is settled case-law that individuals may rely directly as against a Member State, subject to certain conditions, on the
      unimplemented or incorrectly implemented provisions of a directive.  
      
         			(43)
         		  In  
       Becker  
      
         			(44)
         		 the Court held that  Article 13B(d)(1) of the Sixth Directive concerning the exemption for the granting and negotiation of
      credit was directly effective notwithstanding the conditions set out in the opening words of Article 13B. 
      
         			(45)
         		  According to the Court: The  
      conditions referred to are intended to ensure the correct and straightforward application of the exemptions.  A Member State may not
      rely, as against a taxpayer who is able to show that his tax position actually falls within one of the categories of the exemption
      laid down in the directive, upon its failure to adopt the very provisions which are intended to facilitate the application
      of that exemption.  Moreover [they] refer to measures intended to prevent any possible evasion, avoidance or abuse.  A Member
      State which has failed to take the precautions necessary for that purpose may not plead its own omission in order to refuse
      to a taxpayer an exemption which he may legitimately claim under the directive .... 
      
         			(46)
         		
      32.  The principle of direct effect cannot, however, have any bearing on this case.  The appellant asks the Court to interpret
      the term,  
      building land, in the absence of a clear legislative definition.  The position is clearly distinguishable from  
       Becker , since the 1968 Law, unlike the German law at issue in that case, gives legal effect to the exemption mandated by Article 13B(h).
       We are, in this case, concerned rather with an exception to the exemption, a provision which awaits definition by the Member
      State.  A definition, for that purpose, will specify, by reference to national law, the legal or administrative acts which
      qualify land as  
      building land.  Choices will have to be made, for example, between the varying types of zoning criteria and building permissions and provision
      made for uncertain situations such as the effect of conditions attached to these and of appeal procedures in so far as they
      may be relevant.  None of this has been done in the Netherlands.  The Court has consistently held that, even where the implementation
      period has expired, an unimplemented or incorrectly implemented directive must be both sufficiently precise and unconditional,
      before its provisions can be directly invoked by an individual before the courts of a Member State.  
      
         			(47)
         		  In my opinion, the second of these conditions is not met in the present case.  The range of Member State discretion in the
      choice of criteria of definition is such that the existence of such a definition is a condition of the application of the
      Sixth Directive in this respect, although I could envisage cases so clearly outside the scope of possible definition as to
      leave no room for doubt.  There is, however, another reason closely connected with this last point which decisively excludes
      direct effect in this case.  An obvious deduction from the direct effect of an exemption, decided in  
       Becker , is that an individual could challenge an unduly broad national definition of an exception to that exemption.  In that way,
      a definition of  
      building land, so widely drawn as to include agricultural land, might be challenged by an adversely affected individual, who, in the absence
      of a national-law exemption, would seek to rely on the direct effect of Article 13B(h) of the Sixth Directive.  No individual
      presents such an argument in this case.  More importantly, even if the appellant can be regarded as one, the facts as described
      in the order for reference would not appear to admit of such a claim.  For reasons I suggest later in this Opinion, the plots
      of land sold by the appellant are clearly  
      building land for the purposes of Article 4(3)(b) and, therefore, of the exception in Article 13B(h).  The individuals who should benefit
      from direct effect of an unimplemented provision cannot include those who would  
       not   benefit from that provision if properly implemented.
      
      33.  That conclusion does not affect the obligation of the national court to endeavour, when applying national law, to construe
      the 1968 Law in the light of the relevant provisions of the Sixth Directive as interpreted by the Court.  In  
       Von Colson and Kamann   v  
       Land Nordrhein-Westfalen,  the Court held that the relevant directive did  
      not include any unconditional and sufficiently precise obligation as regards sanctions for discrimination which, in the absence
      of implementing measures adopted in good time may be relied on by individuals in order to obtain specific compensation under
      the directive, where that is not provided for or permitted under national law.  
      
         			(48)
         		  However, it also stated that: 
      
         			(49)
         		... the Member States' obligation ... arising from a directive to achieve the result envisaged by the directive and their
      duty under Article 5 of the Treaty to take all appropriate measures, whether general or particular, to ensure the fulfilment
      of that obligation, is binding on all the authorities of Member States including, for matters within their jurisdiction, the
      courts.  It follows that, in applying the national law and in particular the provisions of a national law specifically introduced
      in order to implement [the directive], national courts are required to interpret their national law in the light of the wording
      and purpose of the directive ....
      
      34.  While the  
       Von Colson and Kamann   case concerned a directive which had been implemented by the Member State in question, the Court has since ruled in  
       Marleasing  that the obligation is equally applicable even where the directive has not been implemented. 
      
         			(50)
         		  Advocate General Van Gerven in his Opinion in  
       Marleasing   considered that the reasoning underlying the  
       Von Colson   principle, whereby the national courts are obliged  
      to seek to achieve the result pursued by the directive by  
       all   appropriate measures within their power ... is true in particular in the case of national provisions which ... relate to the
      branch of the law covered by the directive, even though they predate the directive and were not thus enacted for its implementation. 
      
         			(51)
         		  In my opinion, however, this interpretative obligation cannot go so far as to require a national court to do violence to
      or expressly contradict the terms of national law.  The interpretation and application of national law remains the function
      of the national court.  Its obligation is, thus, as stated by the Court,  
      limited by the general principles of law which form part of Community law and in particular the principles of legal certainty
      and non-retroactivity. 
      
         			(52)
         		  As stated in  
       Von Colson  it is so obliged  
      in so far as it is given discretion to do so under national law.  
      
         			(53)
         		
      35.  The 1968 Law predated and, thus, was not introduced in implementation of the Sixth Directive.  However, the Court is invited
      to consider that a deliberate decision was made to retain it on the statute book but allow it to be adapted by the courts
      to the purposes of the Sixth Directive.  I regard this situation as falling between  
       Von Colson and Kamann   and  
       Marleasing   and, in any event, as calling for an interpretation of the 1968 Law in harmony with the Sixth Directive.  The appellant is,
      in effect, seeking a definition of  
      building land which will allow it to rely on the exemption from VAT on the supply of land.  Without the exemption, such supply would be
      subject to tax.  To rephrase the point I have made at paragraph 32 above, if  
       Becker   had concerned the supply of land rather than the granting and negotiation of credit, as it did, but it had been shown that
      the land was building land, it would clearly have been impossible for the plaintiff to rely on direct effect.  Here we are
      in the presence of a Dutch law being interpreted by Dutch courts so as to give effect to the discretion conferred on Member
      States to define  
      building land.  It is inescapable, in my view, that such a law must be approached with a view to reconciling it with the letter and spirit
      of the Sixth Directive.  In simple terms, given the absence of any other Dutch law definition, a  
      prepared immovable must be interpreted as if it excluded  
      building land from the exemption from VAT, and as if the excluded building land were then defined within the limits permitted by the Sixth
      Directive.  In fact, of course, the existing Dutch definition, whether we regard it as express or implied, excludes unimproved
      building land entirely from the scope of VAT.
       The substance of the questions
      
      36.  Building land, whatever it is, does not enjoy the obligatory exemption conferred by Article 13B(h) of the Sixth Directive.
       But what is it?  To find out we must look at Article 4(3)(b), which acts as a definition section.  Its accidental location
      in Article 4 cannot influence the content of the definition.  Article 4(3)(b) is simply expressed:   
      building land shall mean  any unimproved or improved land defined as such by the Member States (emphasis added).  The Court has consistently held that
      the scope of the uniform Community system of VAT is very wide and comprises all economic activities of  
      producers, traders and persons supplying services. 
      
         			(54)
         		  In so far as exemptions provided by the Sixth Directive from that system are concerned, the Court has taken the view that
       
      it is evident from the eleventh recital in its preamble that [they] constitute independent concepts of Community law which
      ... should be placed in the general context of the Community system of VAT introduced by the Sixth Directive. 
      
         			(55)
         		  In other words the mandatory exemptions are a Community-law concept and any exception to them must be construed accordingly.
      
      37.  The Court has also consistently held that  
      the terms used to specify the exemptions envisaged by Article 13 of the Sixth Directive are to be interpreted strictly, since
      they constitute exceptions to the general principle that turnover tax is levied on all services supplied for consideration
      by a taxable person. 
      
         			(56)
         		  Acceptance of this principle and its natural corollary, namely that any exception to such an exemption must itself be construed
       
       broadly , 
      
         			(57)
         		 represents the only point of general consensus among the observations submitted to the Court in this case.  In my opinion,
      these general principles equally govern the interpretation of the provisions here at issue.
      
      (i) The discretion of the Member States 
      
      38.  In order to determine the meaning of  
      building land, it is necessary, in the light of the submissions of the appellant and the Netherlands, in particular, to determine the ambit
      of the Member States' discretion.  Article 13 of the Sixth Directive lists two categories of obligatory exemptions from VAT.
       While both Article 13A and 13B oblige Member States to lay down clear conditions for their  
      correct and straightforward application, it is clear from  
       Becker   that the exemption must be sufficiently precise and unconditional as to be capable of conferring rights on individuals.  However,
      a significant number of the exceptions listed in both Articles 13A and 13B envisage some form of Member State recognition
      of a body involved.  In some cases, the text uses the expression,  
      as defined by the Member State concerned or  
      as defined by the Member States.  In the case of exclusions for  
      the leasing or letting of immovable property (Article 13B(b)), Member States  
      may apply further exclusions to the scope of this exemption.  Article 13B(f) provides an exemption for  
      betting, lotteries and other forms of gambling, subject to conditions and limitations laid down by each Member State.  With such provisions the role of the Member State is unambiguously to limit the scope of the exemption in accordance with
      the general provisions of the Sixth Directive. 
      
         			(58)
         		  The power to define found in Article 4(3)(b) is merely a power to define the subject-matter of the  
       exception  to the exemption.  I see no reason to treat it differently from the other powers to define found in Article 13.  Its nature
      suggests, as does its wording, that it should be construed so as to give a broad effect to the definition of  
      building land and, in particular, that it cannot leave out unimproved land.
      
      39.  The specificity of the questions referred by the national court, particularly the detail of Question II, suggests that the
      use of the notion of a prepared immovable to determine the application of VAT to land transactions in the Netherlands inevitably
      engenders debate as to the nature and extent of particular improvement works which will bring land within its scope.  I find
      this approach prima facie difficult to reconcile with the simple wording of Article 4(3)(b) which states that building land
       
      shall mean  
       any  unimproved  
       or  improved land defined  
       as such  by the Member States (emphasis added).  Nevertheless, the emphasis on preparatory works pervades the appellant's contention that only the transfer
      of improved land can come within Article 4(3)(b) and that unbuilt land is exempt except where it can be shown to be improved;
       in other words, that it must be designed to serve as a site for the construction of one or several buildings and have been
      so improved by the execution of extensive physical work on the land itself.  In response to a question at the hearing, counsel
      for the Netherlands maintained that the Member States' discretion to define  
      building land allows the exclusion from the definition of all unimproved building land.  This disjunctive interpretation of Article 4(3)(b)
      means that unimproved building land will always be exempt from VAT.
      
      40.  I do not believe that Member States can exclude, by definition, one category of building land which is included in the definition
      of that term in the Sixth Directive.  Member States are obliged to define as  
      building land both unimproved and improved land. 
      
         			(59)
         		  Six linguistic versions of the text were authentic at the time of the adoption of the Sixth Directive.  Nothing, in my opinion,
      in those various versions supports the disjunctive interpretation. 
      
         			(60)
         		  I am, therefore, satisfied that the only interpretation of Article 4(3)(b) which is consonant with the ordinary sense of
      the words employed, the prerequisite of a broad construction and, thus, the achievement of its underlying Community objective
      is that the Member States are obliged to define both the notions of unimproved and improved building land so as to include
      them within  
      building land.
      
      (ii) The definition of  
      building land
      
      41.  The appellant and the Dutch Government disagree with the Commission's approach to the criteria for defining  
      building land.  The Dutch Government claims that the Commission unduly emphasizes the intention of the parties at the time of the sale
      and that this could result in technically improved land being excluded from the notion of  
      building land;  that is to say land upon which various specific improvement works have been carried out but which is not zoned for building
      purposes.  I feel that these concerns are unfounded.  As I understand it, the Commission proposed, as a guiding principle,
      that the land should be destined for building.  It would remain necessary to adopt objective criteria for the application
      of this principle.  Hence, the defining role is left to the Member States.
      
      42.  I find the Commission's approach more satisfactory in the search for a definition of  
      building land.  The Dutch Government claims that it has exercised the discretion to give such a definition, paradoxically, by not giving
      one, but by allowing the Dutch courts to interpret a pre-existing concept which does not purport to define  
      building land.  Any definition of the scope of the exemption which complied with the requirements of Article 13B should, at least, have
      the merit of clarity.  However, this is a quality which quite obviously does not exist at present in Dutch law.  One of the
      effects of a satisfactory and clear definition would be to avoid the necessity for preliminary references such as the present
      one.  I find it particularly revealing that the Hoge Raad, in the most recent of its judgments to which the Court has been
      referred, seems to have expressed serious doubts as to the compatibility with the Sixth Directive of the 1968 Law. 
      
         			(61)
         		  I share these doubts.  As already stated, the prevailing definition of  
      building land in Dutch law entirely and, I think, unacceptably excludes all unimproved building land.  A further consequence of accepting
      the argument of the Dutch Government would, in my view, be that, as has happened in this case, Dutch courts in more and more
      cases would find it necessary to refer to this Court questions of interpretation of the concept of  
      improved building land by reference, in each case, to potentially limitless permutations of the nature and extent of development works.
      
      43.  If I am right in suggesting that unimproved building land must be included in any definition, a ready solution emerges for
      the problem described in the preceding paragraph.  If land can be described as  
      building land when unimproved, the extent of any particular development works or provision of services, i.e. of  
      improvements is of no consequence.  Once it has become building land even though unimproved, it will so remain through all the stages
      of improvement.  This does not, of course, mean that improvement alone can transform land into building land.  It is not unknown
      for developers innocently or intentionally to carry out development works on land without any lawful planning or development
      permission, sometimes in anticipation of a change of classification of the land or of a planning permission and sometimes
      even in the hope of pre-empting the decision of a public authority.  In my view, such action, in contravention of national
      laws or regulatory provisions could not, of itself, transform land into building land.
      
      44.  This leaves us the problem of providing material for a satisfactory definition of  
      building land, in the absence of a definition by a Member State.  Before doing so, I would like to digress briefly to explore the implications
      and feasibility of the alternative view proposed by the Dutch Government.
      
      45.  Firstly, as I have already said, this opens up the prospect of further, repeated and more refined references for preliminary
      rulings to the Court.  The tacit Dutch definition of  
      building land as improved land does not, nevertheless, make any attempt to address the substantive question of what is improved land.
      
      46.  Secondly, it would be very difficult to lay down criteria, such as are sought here, which would permit an objective judgment
      to be made on the basis of the nature or extent of particular works or on the distinction, if any, to be drawn between works
      which exclusively prepare specific land for subsequent construction and works which merely endow land with the basic commodities
      which might facilitate future construction.  In so far as it may be relevant, I cannot see that it makes any difference whether
      services such as roads, sewers or drains merely reach the neighbourhood of the land or are physically on it, so long as they
      are apt to advance its usefulness as building land.  It would be absurd to treat it as building land if a drain encroached
      by one metre on to it, but not so if it stopped at the boundary.  The Dutch Government, while apparently seeing but, nevertheless,
      not defining such a distinction, prefers to conclude that the Court may pick and choose from the list annexed to the national
      court's second question.  The appellant submits that the works must be substantial before the land is considered to be improved
      but does not supply the Court with any criteria for defining this vague notion.  It refers to  
       Dijk's Boekhuis  
      
         			(62)
         		 to support the view that works clearly altering the nature of the land ought to have been effected in order for the land
      to be classified as  
      building land.  The relevance of this case is questionable.  It was concerned with whether the execution of substantial repairs to damaged
      books could be regarded as making or assembling movable property for the purposes of Article 5(5)(a) of the Sixth Directive,
      or whether it could only be regarded as falling within the concept of the  
      supply of services.  The Court dealt with the case as one demanding an interpretation permitting the maintenance of a uniform basis of assessment
      in applying the Sixth Directive.  It, thus, felt that the meaning attributed to  
      make in common usage could be employed.  According to the Court,  
      ... the concept of making an article implies the creation of an article that did not previously exist ... [and the] conclusion
      may therefore be drawn that the production of goods from customers' material only takes place where a contractor produces
      a new article from the materials entrusted to him by his customer. 
      
         			(63)
         		  Unless, as the appellant maintains, the requirement of the creation of something new is to be viewed as a principle of general
      import, it is difficult to see what direct relevance, other than as a mere illustration, this ruling can have for the interpretation
      of the concept of  
      improved building land.
      
      47.  I believe that only the adoption as a starting point of the approach formulated by the Commission in its observations is capable
      of permitting a definition of  
      building land which encompasses adequately the notion of unimproved building land.  The Commission, in my opinion, has rightly observed
      that the subjective and private intentions of the parties to a transaction at the moment of the supply of land cannot be decisive,
      but, rather, that the crucial criterion should be whether, objectively, in accordance with the system of public law in force
      in the Member State concerned, it can be said that the land supplied can, in principle, be built upon.  I accept the Commission's
      observation that in many cases the zoning of land for building in an official and publicly available development plan would
      be sufficient to render it  
      building land for the purposes of the Sixth Directive.  To require the possession of an individual permit for the erection of specific
      buildings in all cases, would, in my opinion, represent an unduly strict threshold for the attainment of building land status.
       However, there may be Member States or areas of Member States where such a system of zoning does not exist, in which case
      an individual building permit would be the only means of discerning the publicly recognized status of building land.
      
      48.  It is for each Member State to set out clearly the nature and extent of the public law acts which will determine the process
      whereby land, which was previously not designated as building land, attains that status.  Such a procedure is also required,
      to draw attention to but one example, in the definition by Member States of the  
      medical and paramedical professions for the purpose of Article 13A(1)(c).  Furthermore, the discretion of the Member States is not confined to such an enumeration
      but, in accordance with the introductory words to Article 13B, also includes an obligation to lay down rules designed to ensure
      that the exemption is applied in a straightforward manner and to prevent  
      any possible evasion, avoidance or abuse.  All of this remains within the discretion of the national authorities.  The exercise of that discretion should, consistent
      with the objective underlying the exemption, be left entirely to the Member State, subject only to judicial review.
      
      49.  It is, of course, the absence of any Member State action of the kind described in the preceding paragraph which requires the
      Court to provide the national court with an interpretation of Articles 13B(h) and 4(3)(b) which will enable it to decide whether
      the plots in question in this case are  
      building land for the purposes of the Sixth Directive.  The duty of the Court is to assist the national court to decide the case before
      it.  The national court must take into account the requirements of the Sixth Directive, the facts of the case, including any
      relevant aspects of national law, such as, for example, the requirement of legal certainty. 
      
         			(64)
         		
      50.  The following facts, described in the order for reference, are, in my view, sufficient to furnish a clear basis for a decision
      in the present case:
      (i) the appellant supplied parcels of land, not built on but designated as building land (
      the lots); 
      
      (ii)  the lots are all part of land which was previously for agriculture but has now been designated in a zoning plan.  Prior to
      the supply of each lot, and on the appellant's instructions, implementation of the zoning plan applicable to the lot was commenced
      and, on the instructions of the various utility undertakings, mains were laid for the central antenna, telecommunications
      lines and the gas, water and electricity supply (utilities).  In that context  
      implementation of the zoning plan means the excavation of drains and the laying of a sewerage system and (residential) streets, as well as (other) operations.
       The laying of utility systems entails digging a ditch and placing pipes in it, and refilling the ditch with the original
      soil; 
      (iii) all the lots are on streets which only exist on the plan. 
      
      
      
      
      
      51.  It is clear that, not only has the land in question been  
      designated as building land in a zoning plan, a fact sufficient on its own to bring it within the definition of  
      building land, but extensive work has been done in the laying on of services either in or adjacent to the land.
      
      52.  In my opinion the Court should answer the questions posed by the national judge by providing the following essential elements
      of guidance:
      (a) if land is designated as  
      building land in an official zoning plan, that is sufficient to bring it within the definition in Article 4(3)(b) of the Sixth Directive,
      whether it is improved or not; 
      
      (b) services, suitable to assist the development of the land need not be physically upon the land in order to be relevant to its
      transformation into improved building land; 
      
      (c) whether any one or more of the particular listed improvements have been carried out is not relevant;  the judgement as to
      whether land is to be regarded as  
      improved building land is to be made in the light of its purpose. 
      
      
        V ─ Conclusion
      
      53.  Accordingly, I am of the opinion that the questions referred by the Gerechtshof, Leeuwarden should be answered as follows:
      (1) The term  
      building land, in Article 4(3)(b) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member
      States relating to turnover taxes ─ Common system of value added tax:  uniform basis of assessment, must be interpreted as
      including unimproved and improved building land.  Building land must not be understood as referring only to land for which
      services have been provided which exclusively serve that land; 
      
      (2) Building land means land which has been officially designated or zoned for building purposes or, alternatively, where such building has
      been legally authorized pursuant to a permission granted in accordance with the laws of the Member States; 
      
      (3) The national court must, in so far as it is reasonably possible, interpret its national legislation in the light of the wording
      and purpose of the definition of  
      building land as prescribed by Articles 4(3)(b) and 13B(h) of the Sixth Directive; 
      
      (4) In interpreting the term  
      building land, national courts do not need to make a choice between improvement works, such as those listed in Question II referred by
      the national court. 
      
      
      
       1 –
         
            Original language: English.
      
      2 –
         
         So described by counsel for the Gemeente Emmen at the hearing, who pointed out that 1 700 claims have been brought against
            his client alone in respect of VAT charged on the supply of building land.  This reference does not arise from one of those
            cases but from an attempt by Gemeente Emmen, in the light of those claims, to have the VAT position clarified through an appeal
            procedure.  
         
      
      3 –
         
         OJ 1977 L 145, p. 1.
      
      4 –
         
         A building is defined by Article 4(3)(a) as  
            any structure fixed to or in the ground;  see Case 73/85  
             Kerrutt  v  
             Finanzamt Mönchengladbach-Mitte   [1986] ECR 2219.
         
      
      5 –
         
         . Staatsblad  1968, p. 329.
         
      
      6 –
         
         This is a reference to the Secretary of State for Finance.
      
      7 –
         
         . Staatscourant  1968, p. 169.  Such an inclusion is permitted by Article 4(3) of the Sixth Directive;  the Gemeente Emmen is not, therefore,
            excluded by virtue of Article 4(5) .
         
      
      8 –
         
         . Staatsblad  1970, p. 611.  The level of transfer tax, which is fixed at 6%, would be more advantageous than VAT for non-taxable persons
            purchasing such land because, unlike taxable persons, they are unable to write off that VAT as an input against VAT due by
            them on other taxable transactions.
         
      
      9 –
         
         See paragraph 50 below for details.
      
      10 –
         
         . Sint-Oedenrode ;  21 November 1990, BNB 1991/19.
         
      
      11 –
         
         It appears from the order for reference that both the Dutch authorities and the courts in interpreting the 1968 Law in the
            light of the Sixth Directive have felt entitled to exclude unimproved land from the definition of  
            building land.
         
      
      12 –
         
         . Gemeente Loon op Land ;  12 March 1980, BNB 1980/128 where, the Court is informed, the Hoge Raad ruled that the notion of prepared land ought to
            be understood as referring only to land where works had been carried out exclusively serving that particular land.  In its
            written observations the Commission refers to Resolution No 280-19 756 adopted in 1981 (BTW-51) by the Secretary of State
            for Finance of the Netherlands wherein the relevant Dutch authorities were directed to employ a wide notion of the concept
            of prepared land, pursuant to which the provision of amenities in the vicinity of the land would be sufficient for the land
            to be regarded as coming within the VAT regime.  The more restricted view of the land which could be subject to VAT, confirmed
            by the Hoge Raad in the 1990 Decision, led to the withdrawal of that resolution and to the institution of various claims for
            repayments of VAT by purchasers affected by the application of the approach specified in the resolution.
         
      
      13 –
         
         It ought to be noted that the national court also employs the term  
            bouwrijp gemaakte grond, although there does not appear to be any significance in the alternate reference to the words  
            terrein and  
            grond as both appear to refer to the idea of a site (or plot) of land or ground.  
         
      
      14 –
         
         Quoted at paragraph 50 below.
      
      15 –
         
         The facilities which are referred to comprise the supply by the various utility undertakings, such as telecommunications,
            gas, water and electricity, of their central antenna which would normally involve digging ditches, laying pipes, wires, or
            both, and then refilling the said ditches.  It is clear from the order for reference that the national court does not wish
            to emphasize the differing extent of the actual works carried out on each of the eight lots of land at issue in the main proceedings.
         
      
      16 –
         
         Article 28(4) of the Sixth Directive originally specified (for the then nine Member States) 1 January 1978 as the date from
            which the new regime was, at least, transitionally in place.  This was postponed for all those Member States, save Belgium
            and the United Kingdom, until 1 January 1979 by the adoption on 26 June 1978 of the Ninth Council Directive 78/583/EEC, on
            the harmonization of the laws of the Member States relating to turnover taxes;  OJ 1978 L 194, p. 16.
         
      
      17 –
         
         At the hearing the appellant, reiterating its view that the Netherlands had failed to implement the exemption for land other
            than building land required by Article 13B(h), contended expressly that the adaptation of the concept of prepared land could
            not be regarded as a proper implementation of the relevant exemption.  The notion of  
            building land should have been defined by the Netherlands in order to achieve the Community objective underlying the exemption.  
         
      
      18 –
         
         Although not specified, this is presumably a reference to Resolution No 280-19 756, loc. cit., footnote 11 above.
      
      19 –
         
         Reference is made to a note of the proceeding of the Second Chamber of the Dutch Parliament during its Session 1977/78, 14
            887, pp. 20 and 21, where the freedom left to the Member States to interpret the notion of  
            building land was apparently viewed as permitting the maintenance of the subsisting Dutch system.
         
      
      20 –
         
         Under Article 5(1) of the Sixth Directive the  
             supply of goods shall mean the transfer of the right to dispose of tangible property as owner.
         
      
      21 –
         
         Article 5 is the first of two provisions in the Sixth Directive dealing with  
            Taxable Transactions and it concerns the taxation of the  
            supply of goods.  
         
      
      22 –
         
         Case 139/84 [1985] ECR 1405.  See paragraph 46 below.
      
      23 –
         
         In answer to a question posed at the hearing, the Dutch Government confirmed that all unimproved or unbuilt building land
            is exempt from VAT in the Netherlands.
         
      
      24 –
         
         This assertion is supported by reference to the terms of the judgment whereby the Hoge Raad apparently intimated that its
            interpretation was in conformity with the Sixth Directive, and because the factual situation at issue concerned events occurring
            in 1985 after the Sixth Directive's entry into force.
         
      
      25 –
         
         At the hearing, the Dutch Government acknowledged that the policy of exempting land other than building land from liability
            to VAT was a Community objective which resulted in a Community interest in the definition of  
            building land pursuant to Article 4(3)(b).
         
      
      26 –
         
         The interpretation of the same national provision gave rise to reference at the hearing by counsel for the appellant and the
            Commission's agent to the more recent judgment concerning  
            flower bulbs (
            bloembollenarrest) of the Hoge Raad of 7 December 1994, BNB 1995/87.  This case apparently concerned the transfer of what had been pasture
            land prior to its subsequent development for the new purpose of growing tulips.  The Court is informed that the Hoge Raad
            considered that such a development rendered the land a prepared immovable for the purpose of the 1968 Law.  Counsel for the
            appellant, quoting from paragraph 54 of the judgment, contended that the Hoge Raad considered Article 11(1)(a)(1) of the 1968
            Law not to be in conformity with Articles 4(3)(b) and 13B(h) of the Sixth Directive.
         
      
      27 –
         
         At the hearing the Dutch Government expressly endorsed the first two factors identified by the Commission.
      
      28 –
         
         The Commission cites, as an example of the applicability of this principle within the context of Articles 13A and 13B of the
            Sixth Directive, Case 348/87  
             Stichting Uitvoering Financiële Acties v  
             Staatssecretaris van Financiën  [1989] ECR 1737, paragraphs 12 and 13 of the judgment and Case C-281/91  
             Muys' en De Winter's Bouw-en Aannemingsbedrijf  [1993] ECR I-5405, paragraph 13.
         
      
      29 –
         
         The Commission cites Case 173/88  
             Skatteministeriet   v  
             Morten Henriksen  [1989] ECR 2763, paragraph 12 of the judgment.
         
      
      30 –
         
         The Commission expressly states that its observations in this case are submitted without prejudice to whatever position it
            might ultimately adopt concerning the two complaints brought in the name of 169 Dutch communes and lodged with the Commission
            on 26 March 1994, regarding the failure of the Netherlands formally to define in national law the meaning of the term  
            building land.
         
      
      31 –
         
         Responding to a question posed at the hearing, the Commission contended that Member States are not entitled, through exercising
            the discretion conferred upon them by Article 4(3)(b) of the Sixth Directive, entirely to exclude unimproved land from the
            scope of their definition of  
            building land.
         
      
      32 –
         
         In response to a question at the hearing, the Commission declined to commit itself exclusively to zoning as the decisive criterion
            for fear that there might be Member States where certain permits are required prior to the re-zoning of land for building
            purposes.
         
      
      33 –
         
         At the hearing the Commission contended that a further advantage of this approach was that it more accurately reflected economic
            realities.  The zoning or designation of land for building purposes increases the market value of the land precisely because
            of the economic potential which it brings to the land.
         
      
      34 –
         
         The Commission points out, however, that the vendors of such building land are normally public bodies or private companies
            while the purchasers are normally developers, all of whom are taxable persons and, therefore, capable either of writing off
            VAT received on supplying such land against their own VAT liabilities or, in the case of purchasers, passing on VAT paid on
            acquisition to their customers on reselling the land.
         
      
      35 –
         
         See footnote 29 above.
      
      36 –
         
         The Council exercises these duties on the basis of reports from the Commission.  The Commission presented its first report
            on 17 January 1983 which led ultimately to the adoption of Council Directive 89/465/EEC of 18 July 1989 on the harmonization
            of the laws of the Member States relating to turnover taxes ─ Abolition of certain derogations provided for in Article 28(3)
            of the Sixth Directive, 77/388/EEC (the  
            Eighteenth Directive);  OJ 1989 L 226, p. 21.  The Eighteenth Directive abolished a number, but not all, of the Article 28(3) derogations with
            effect from 1 January 1991.  Thus, for example, the number of derogations enumerated in Annex F was reduced from 27 to 14.
             Furthermore, Article 3 of the Eighteenth Directive provided for another review by 1 January 1991 of the possible distorting
            competitive effects of the continuing derogations.  A further report was actually presented on 2 July 1992, together with
            a proposal for a directive which was designed to reduce significantly the number of remaining derogations.  This did not include
            for elimination that contained in Annex F(16).  See, van Thiel, S.  
            Transitional Derogations under the Sixth and Eighteenth VAT Directives,  
             International VAT Monitor , April 1993, p. 2.
         
      
      37 –
         
         See Council Directive 91/680/EEC of 16 December 1991 supplementing the common system of value added tax and amending Directive
            77/388/EEC with a view to the abolition of fiscal frontiers;  OJ 1991 L 376, p. 1.
         
      
      38 –
         
         See van Thiel, cited in footnote 35, p. 7.
      
      39 –
         
         The Commission's agent admitted at the hearing that a number of Member States could be using this derogation to justify exempting
            the supply of all land from VAT.  However, he rightly emphasized that the Netherlands has not sought, at any stage, to do
            so.  Van Thiel, loc. cit. above, contends that eight (of the then twelve) Member States were (in 1993 at least) wholly or
            partly exempting from VAT the supply before first occupation of buildings and of building land.  Furthermore, under the Act
            of Accession of the three new Member States, each of them is permitted also to maintain exemptions for such supplies:  see
            Article 151 of and Annex XV, Chapter IX, paragraphs 2(i), (n) and (aa) to the Act of Accession of the Austrian Republic, the
            Finnish Republic and the Kingdom of Sweden and the adjustments to the Treaties on which the European Union is founded;  OJ
            1994 C 241, p. 21, as amended by Article 2 of Council Decision 95/1/EC, EURATOM, ECSC of 1 January 1995;  OJ 1995 L 1, p. 1.
             It should, however, be noted that these Article 28(3) derogations do not adversely affect the calculation of the Community's
            own resources as a result of Council Regulation (EEC/EURATOM) No 1553/89 of 29 May 1989 on the definitive uniform arrangements
            for the collection of own resources accruing from VAT;  OJ 1989 L 155, p. 9.  Article 2 provides that transactions which Member
            States continue to exempt under Article 28(3)(a) and (b) shall be taken into account for determining the VAT resources base.
            
         
      
      40 –
         
         See Farmer and Lyal,  
             EC Tax Law  (Oxford 1994), p. 174.
         
      
      41 –
         
         Loc. cit., footnote 3 above, paragraph 17 of the judgment.
      
      42 –
         
         See Joined Cases 231/87 and 129/88  
             Ufficio Distrettuale delle Imposte Dirette di Fiorenzuola d'Arda and Others   v  
             Comune di Carpaneto Piacentino and Others  [1989] ECR 3233, paragraph 31 of the judgment.
         
      
      43 –
         
         See, initially, Case 41/74  
             Van Duyn   v  
             Home Office   [1974] ECR 1337 as confirmed in Case 148/78
             Pubblico Ministero   v  
             Ratti  [1979] ECR 1629 and on various subsequent occasions, including Case C-91/92  
             Faccini Dori   [1994] ECR I-3325.  This right may be exercised  
            regardless of the capacity in which the latter is acting;  see Case 152/84  
             Marshall   v  
             Southampton and South-West Hampshire Area Health Authority   [1986] ECR 723, paragraph 49 of the judgment.  A tax authority is clearly an emanation of the State for the direct effect
            of directives;  see Case 8/81  
             Becker  v  
             Finanzamt Münster Innenstadt  [1982] ECR 53.
         
      
      44 –
         
         Loc. cit., ibid.
      
      45 –
         
         See the text of Article 13B set out in paragraph 2 above of this Opinion.
      
      46 –
         
         Loc. cit., footnote 42 above, paragraphs 33 and 34 of the judgment.
      
      47 –
         
         See, for example, Case 148/78  
             Ratti , loc. cit., footnote 42 above, paragraph 23 of the judgment;   
             Becker , loc. cit., footnote 42 above and, more recently, Joined Cases C-6/90 and C-9/90  
             Francovich and Others  [1991] ECR I-5357, paragraph 11.
         
      
      48 –
         
         Case 14/83 [1984] ECR 1891, paragraph 27 of the judgment.
      
      49 –
         
         Ibid., paragraph 26 of the judgment.
      
      50 –
         
         See Case C-106/89  
             Marleasing  [1990] ECR I-4135. 
         
      
      51 –
         
         Ibid., paragraph 9 of the Opinion (emphasis in original).
      
      52 –
         
         See Case 80/86  
             Kolpinghuis Nijmegen  [1987] ECR 3969;  paragraph 13 of the judgment.  The Court, referring to Case 14/86  
             Pretore di Salò   v  
             X  [1987] ECR 2545, pointed out that this interpretative obligation would not have the effect of requiring a national court
            to interpret its national law in a manner capable of aggravating the potential criminal liability of those acting in contravention
            of the relevant directive.  It may be that a similar limitation would restrict the retroactive application of a national court's
            interpretation of a domestic tax law permitting a VAT exemption in harmony with the corresponding exemption prescribed by
            the Sixth Directive, where such a harmonious application would increase the potential liabilities of affected taxpayers.
         
      
      53 –
         
         Loc. cit., footnote 47 above, paragraph 28 of the judgment.
      
      54 –
         
         See Case 235/85  
             Commission   v  
             Netherlands  [1987] ECR 1471, paragraph 7 of the judgment and Case 348/87  
             SUFA , loc. cit., footnote 27 above, paragraph 10 of the judgment.
         
      
      55 –
         
         See,  
             SUFA , loc. cit., ibid., paragraph 11 of the judgment.
         
      
      56 –
         
         See  
             SUFA , paragraph 13 of the judgment.  See, for example, the recent confirmation of this principle in Case C-453/93  
             Bulthuis-Griffioen   v  
             Inspector der Omzetbelasting  [1995] ECR I-2341, paragraph 19 of the judgment.
         
      
      57 –
         
         See, for example, Case 173/88
             Skatteministeriet   v  
             Henriksen  [1989] ECR 2763 where the Court held that the phrase  
             excluding ... the letting of premises and sites for parking vehicles in Article 13B(b) of the directive introduces an exception to the exemption laid down in that provision in regard to the
            leasing or letting of immovable property.  It thus places the transactions which it encompasses under the general rules of
            the directive, which make all taxable transactions subject to tax, except where exemptions are expressly provided for.  That
            provision thus cannot be interpreted restrictively as meaning that only open parking places, to the exclusion of closed garages,
            come within its scope (paragraph 12 of the judgment).
         
      
      58 –
         
         See Case C-38/93  
             Glawe   v  
             Finanzamt Hamburg-Barmbek-Uhlenhorst  [1994] ECR I-1679 and, in particular, the Opinion of Advocate General Jacobs, paragraphs 8 to 13.
         
      
      59 –
         
         To justify a contrary (and thus narrower) interpretation, the text would, in my opinion, have to have indicated the existence
            of the additional choice such as:   
             Building land shall mean any improved  
             other than  unimproved land defined as such by the Member States.  The wording contains no indication that the reference to both unimproved and improved land should be interpreted other
            than conjunctively.
         
      
      60 –
         
         The wordings are as follows (emphasis added):  (French)
            Sont considérés comme terrains à bâtir, les terrains  
             nus ou aménagés  définis comme tels par les États Membres;  (German)
            Als Baugrundstücke gelten  
             erschlossene oder unerschlossene   Grundstücke entsprechend den Begriffsbestimmungen der Mitgliedstaaten;  (Italian)
            Si considerano terreni edificabili i terreni,  
             attrezzati o no , definiti tali dagli Stati membri;  (Danish)
             ved  
            byggegrunde forstås grunde,  
             hvad enten  de er byggemodnet eller ikke, når de af medlemsstaterne betragtes som sådanne (emphasis added).  They appear clearly to encompass all aspects of the notion of  
            building land to be defined by the Member States.  Only the Dutch text is possibly elliptical on this point.  It is worded as follows:
             
            Als bouwterrein worden beschouwd de door de Lid-Staten als zodanig omschreven  
             al dan niet  bouwrijp gemaakte terreinen.  It appears that the reference to  
            al dan niet may carry the implication of a  
            whether or not or  
            one or the other type of choice in English, but I do not believe such a possibility in one language version should affect the adoption of
            a common Community notion of  
            building land in conformity with the objective of the Sixth Directive and, indeed, with the other language versions. 
         
      
      61 –
         
         See footnote 25 above.
      
      62 –
         
         See footnote 21 above.
      
      63 –
         
         Ibid., paragraphs 20 and 21 of the judgment.
      
      64 –
         
         See the discussion at paragraph 34 above.