FRANCK d.d. Zagreb v Ministarstvo financija Republike Hrvatske Samostalni sektor za drugostupanjski upravni postupak.
Date: 2020-12-17
According to settled case-law, the Court has jurisdiction to interpret EU law only as regards its application in a new Member State with effect from the date of that State’s accession to the European Union (judgment of 3 July 2019, UniCredit Leasing, C‑242/18, EU:C:2019:558, paragraph 30 and the case-law cited).
Since the facts in the main proceedings occurred in part after that date, the Court has jurisdiction to answer the questions referred for a preliminary ruling (see, to that effect, judgment of 3 July 2019, UniCredit Leasing, C‑242/18, EU:C:2019:558, paragraph 32 and the case-law cited).
In that connection, it is clear from settled case-law that a taxable person for VAT purposes in respect of an economic activity which he carries out permanently must be regarded as a ‘taxable person’ in respect of any other economic activity carried out occasionally, provided that that activity constitutes an activity within the meaning of the second subparagraph of Article 9(1) of Directive 2006/112 (see, to that effect, judgment of 17 October 2019, Paulo Nascimento Consulting, C‑692/17, EU:C:2019:867, paragraph 24 and the case-law cited).
In that regard, it is clear from the Court’s case-law that, where a transaction comprises a bundle of elements and acts, regard must be had to all the circumstances in which the transaction in question takes place in order to determine whether that operation gives rise, for the purposes of VAT, to two or more distinct supplies or to one single supply (judgment of 4 September 2019, KPC Herning, C‑71/18, EU:C:2019:660, paragraph 35 and the case-law cited).
Accordingly, in certain circumstances, several formally distinct services, which could be supplied separately and thus give rise, separately, to taxation or exemption, must be considered to be a single transaction when they are not independent (judgment of 4 September 2019, KPC Herning, paragraph 37 and the case-law cited).
A supply must be regarded as a single supply where two or more elements or acts supplied by the taxable person are so closely linked that they form, objectively, a single, indivisible economic supply, which it would be artificial to split. That is also the case where one or more supplies constitute a principal supply and the other supply or supplies constitute one or more ancillary supplies which share the tax treatment of the principal supply. In particular, a supply must be regarded as ancillary to a principal supply if it does not constitute for customers an end in itself but a means of better enjoying the principal service supplied (judgment of 4 September 2019, KPC Herning, C‑71/18, EU:C:2019:66, paragraph 38 and the case-law cited).
In that context, it should be noted, first, that, in determining whether a transaction involving several supplies constitutes a single transaction for VAT purposes, the Court takes into account both the economic objective of that transaction and the interests of the recipients of the supplies (see, to that effect, judgment of 8 December 2016, Stock ‘94, C‑208/15, EU:C:2016:936, paragraph 29 and the case-law cited).
Second, it is important to recall that, in the context of the cooperation established by Article 267 TFEU, it is for the national courts to determine whether the taxable person makes a single supply in a particular case and to make all definitive findings of fact in that regard. However, it is for the Court to provide the national courts with all the guidance as to the interpretation of European Union law which may be of assistance in adjudicating on the case pending before them (judgment of 8 December 2016, Stock ‘94, EU:C:2016:936, paragraph 30 and the case-law cited).
Thirdly, as regards the question whether such a supply falls within one or more of the exemptions referred to in Article 135(1) of the VAT Directive, it should be recalled that, as is settled case-law, these exemptions constitute autonomous concepts of Union law which are intended to avoid divergences in the application of the VAT system of one Member State to another (judgment of 2 July 2020, Blackrock Investment Management (UK), C‑231/19, EU:C:2020:513, paragraph 21  and the case-law cited).
Furthermore, the terms used to specify the exemptions covered by Article 135(1) of the VAT Directive are to be interpreted strictly, since they constitute exceptions to the general principle that VAT is to be levied on all services supplied for consideration by a taxable person (judgment of 2 July 2020, Blackrock Investment Management (UK), C‑231/19, EU:C:2020:513, paragraph 22 and the case-law cited).
Nevertheless, the interpretation of those terms must be consistent with the objectives pursued by those exemptions and comply with the requirements of the principle of fiscal neutrality inherent in the common system of VAT. Thus, the requirement of strict interpretation does not mean that the terms used to specify the exemptions referred to in Article 13 should be construed in such a way as to deprive the exemptions of their intended effect (judgment of 2 July 2020, Veronsaajien oikeudenvalvontayksikkö (Computer Room Service), C‑215/19, EU:C:2020:518, paragraph 39 and the case-law cited).
As regards Article 135(1)(b) of the VAT Directive, it should be borne in mind that the transactions exempted under that provision are defined in terms of the nature of the services provided and not in terms of the person supplying or receiving the service, so that the application of those exemptions is not dependent on the status of the entity providing those services  (judgment of 15 May 2019, Vega International Car Transport and Logistic, C‑235/18, EU:C:2019:412, paragraph 43 and the case-law cited).
In particular, the expression ‘granting and negotiating credit’ in the said provision must be interpreted broadly so that its scope cannot be limited to loans and credits granted by banking and financial institutions only. Such an interpretation is borne out by the objective of the common system introduced by the VAT Directive, which aims, in particular, to secure equal treatment for taxable persons (see, in particular, judgment of 15 May 2019, Vega International Car Transport and Logistic, C‑235/18, EU:C:2019:412, paragraphs 44 and 45).
On the other hand, it follows from the case-law of the Court that the granting of credit, within the meaning of Article 135(1)(b) of the VAT Directive, consists, inter alia, in the provision of capital against remuneration (see, to that effect, judgment of 17 October 2019, Paulo Nascimento Consulting, C‑692/17, EU:C:2019:867, paragraph 38).
If such remuneration is secured, inter alia, by the payment of interest, other forms of consideration cannot be excluded. Thus, the Court has already had occasion to consider as constituting a financial transaction similar to the granting of a credit and therefore exempt from VAT under that provision, the advance financing of the purchase of goods in return for an increase in the amount reimbursed by the recipient of that financing (see, to that effect, judgment of 15 May 2019, Vega International Car Transport and Logistic, C‑235/18, EU:C:2019:412, paragraphs 47 and 48).
As the Court has ruled, such transactions, including those involving ‘other negotiable instruments’, fall within the field of financial transactions and concern, in particular, payment instruments whose mode of operation involves a transfer of money (see, to that effect, judgments of 12 June 2014, Granton Advertising, C‑461/12, EU:C:2014:1745, paragraphs 36 to 38, and of 22 October 2015, Hedqvist, C‑264/14, EU:C:2015:718, paragraph 40).
It must be recalled that, contrary to the formal consideration of the parties to the contract, economic and commercial realities is a fundamental criterion for the application of the common system of VAT (see, to that effect, judgment of 22 November 2018, MEO – Serviços de Comunicações e Multimedia, C‑295/17, EU:C:2018:942, paragraph 43 and the case-law cited).
In order for a supply, such as the one carried out by Franck, to be regarded as a transaction concerning other negotiable instruments, exempt under Article 135(1)(d) of the VAT Directive, that supply must form a distinct whole, assessed as a whole, which has the effect of fulfilling the specific and essential functions of such a transaction. In that regard, a service exempted under the VAT Directive must be distinguished from the supply of a mere physical or technical service (see, to that effect,  judgments of 22 October 2015, Hedqvist, C‑264/14, EU:C:2015:718, paragraph 39, and of 26 May 2016, Bookit, C‑607/14, EU:C:2016:355, paragraph 40).
Although the transaction by which a business purchases debts, assuming the risk of the debtor’s default, in return for remuneration, constitutes debt collection and factoring excluded from the exemption laid down by that provision (see, to that effect, judgment of 26 June 2003, MKG-Kraftfahrzeuge-Factoring, C‑305/01, EU:C:2003:377, paragraph 80) it appears, however, subject to verification by the referring court, that, in the present case, Franck has neither carried out such a transaction nor acted as an intermediary for the factoring companies in that context. On the contrary, it is apparent from the decision to refer that the remuneration it received was paid by Konzum in return for the provision of funds. In addition, Franck paid interest and costs to the factoring companies, which were subsequently reimbursed by Konzum.
According to settled case-law, the principle of fiscal neutrality precludes, as regards the levying of VAT, a generalised differentiation between unlawful and lawful transactions (judgment of 10 November 2011, The Rank Group, C‑259/10 and C‑260/10, EU:C:2011:719, paragraph 45 and the case-law cited). The possible unlawful nature of the transaction at issue in the main proceedings cannot therefore be taken into account for the purposes of the exemption under Article 135(1)(b) and (d) of the VAT Directive.