Source: https://www.howtocrackanut.com/blog/tag/other+bodies+governed+by+public+law
Timestamp: 2019-07-15 21:05:00
Document Index: 654691421

Matched Legal Cases: ['Art 2', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ']

In its Judgment of 29 October 2015 in Saudaçor, C-174/14, EU:C:2015:733, the Court of Justice of the European Union (CJEU) followed the Opinion of Advocate General Jääskinen (of 25 June 2015, C-174/14, EU:C:2015:430, paras 59-67) and ruled that the concept of ‘other bodies governed by public law’ within the meaning of Article 13(1) of Directive 2006/112 on the common system of value added tax (VAT) must not be interpreted by reference to the definition of ‘body governed by public law’ in Article 1(9) of Directive 2004/18 on public procurement (now substituted by Art 2(4) of Directive 2014/24).
This is an important Judgment because it consolidates the atomisation of concepts that are increasingly relevant for the application of EU economic law in a scenario of ever growing recourse to private law institutions by the public sector in the organisation of its activities. Thus, it is worth looking closely at the reasons that led to this disconnect between concepts of 'body governed by public law' for the purposes of different branches of EU economic law (namely, taxation and public procurement).
In the Saudaçor case, the dispute concerned the VAT treatment of Sociedade Gestora de Recursos e Equipamentos da Saúde dos Açores SA (Saudaçor). This entity was created by Regional Legislative Decree No 41/2003/A of the Autonomous Region of the Azores (RAA) transforming the Institute of Financial Management of the Health Service of the RAA into a limited company with exclusively public capital, that company being wholly owned by that region.
Saudaçor has the task of providing services of general economic interest in the field of health and, particular, the planning and management of the regional health system and associated information systems, infrastructure and facilities and the completion of construction, conservation, rehabilitation and reconstruction work on health establishments and services, in particular in areas covered by natural disasters and in areas regarded as risk areas.
Saudaçor had not been charging VAT to the RAA for the provision of these services. It relied on the exemption as a non-taxable person under Article 13(1) of Directive 2006/112, according to which
The appeals of the case went all the way up to the Supreme Administrative Court of Portugal, who harboured doubts as to the interpretation of the concept 'other bodies governed by public law' used by the judge of instance, which had decided that
for the purpose of interpreting the rule laid down in the first subparagraph of Article 13(1) of Directive 2006/112, under which bodies governed by public law are not regarded as taxable persons for VAT purposes, there is no need to refer to the concept of ‘body governed by public law’ defined, in the context of public procurement law, in Article 1(9) of Directive 2004/18 since the latter concept is understood in a broad sense, whereas the concept of ‘body governed by public law’ within the meaning of the first subparagraph of Article 13(1) of Directive 2006/112 must be interpreted strictly when applying the rule of treatment as a non-taxable person for VAT purposes because that rule constitutes an exception to the general rule of taxation of any economic activity (C-174/14, para 24).
Moreover, when the CJEU engages in the determination of whether Saudaçor meets the requirements to be considered within the category of ‘other bodies governed by public law’ for the purposes of Article 13(1) of Directive 2006/112 (paras 55 and ff), the CJEU uses criteria that are fundamentally aimed at determining if: 1) it has powers that traditionally would belong to the public sector (paras 58-59), 2) the region that owns it can exercise decisive control over it (paras 60-65), and 3) it engages in any competition with private providers (para 66). Implicitly, the CJEU also considers whether more than 50% of its funding comes from the public sector (para 63), and it stresses that the activity carried out by Saudaçor is a service of general economic interest (para 67), to the effect of (implicitly) determining that it is not of a purely commercial nature.
Thus, in my view, these are fundamentally the same criteria and considerations that would apply under the test designed to determine whether an entity is a body governed by public law under the applicable public procurement rules. Functionally, then, the analysis actually carried out by the CJEU is convergent in the fields of taxation and procurement. I consequently struggle to see what was there to be won in the position that "the concept of ‘other bodies governed by public law’ within the meaning of Article 13(1) of [Directive 2006/112] must not be interpreted by reference to the definition of ‘body governed by public law’ in Article 1(9) of Directive 2004/18".
It seems that the CJEU is only willing to engage in functionalism in the application of the rules, but not in the formulation of the concepts that underpin them. This creates significant confusion and threatens legal certainty. Specially when it is impossible to know in which situations where it is confronted with (almost) identically drafted provisions of EU economic law the CJEU will adopt a single 'EU law' autonomous concept or more than one... Nothing is what it seems under EU economic law...