Commissioners for Her Majesty's Revenue and Customs v DPAS Limited.
Date: 2018-07-25
28


In accordance with the Court’s settled case-law, the exemptions laid down in Article 135(1) of the VAT Directive constitute independent concepts of EU law whose purpose is to avoid divergences in the application of the VAT system as between one Member State and another (see judgments of 25 February 1999, CPP, C‑349/96, EU:C:1999:93, paragraph 15, and of 26 May 2016, Bookit, C‑607/14, EU:C:2016:355, paragraph 33 and the case-law cited).
29


It is also settled case-law that the terms used to specify those exemptions must 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 (see judgments of 10 March 2011, Skandinaviska Enskilda Banken, C‑540/09, EU:C:2011:137, paragraph 20, and of 26 May 2016, Bookit, C‑607/14, EU:C:2016:355, paragraph 34 and the case-law cited).
31


The transactions exempted under that provision are thus defined according to the nature of the services provided and not in terms of the person supplying or receiving the service. Accordingly, the exemption is subject, not to the condition that the transactions be effected by a certain type of institution or legal person, but to the condition that the transactions in question relate to the sphere of financial transactions (see, to that effect, judgments of 28 October 2010, AXA UK, C‑175/09, EU:C:2010:646, paragraph 26 and the case-law cited, and of 26 May 2016, Bookit, C‑607/14, EU:C:2016:355, paragraph 36).
33


In that regard, the Court has already held that a transfer is a transaction consisting of the execution of an order for the transfer of a sum of money from one bank account to another. It is characterised in particular by the fact that it involves a change in the legal and financial situation existing, on the one hand, between the person giving the order and the recipient and, on the other, between those parties and their respective banks and, in some cases, between the banks. Moreover, the transaction which produces that change is solely the transfer of funds between accounts, irrespective of its cause. Thus, a transfer being only a means of transmitting funds, the functional aspects are decisive for the purpose of determining whether a transaction constitutes a transfer within the meaning of Article 135(1)(d) of the VAT Directive (judgments of 5 June 1997, SDC, C‑2/95, EU:C:1997:278, paragraph 53, and of 26 May 2016, Bookit, C‑607/14, EU:C:2016:355, paragraph 38 and the case-law cited).
34


Moreover, the wording of that provision does not in principle preclude a transfer from being broken down into separate services, which then constitute ‘transactions concerning transfers’ within the meaning of that provision (judgments of 5 June 1997, SDC, C‑2/95, EU:C:1997:278, paragraph 64, and of 26 May 2016, Bookit, C‑607/14, EU:C:2016:355, paragraph 39). The exemption provided for in that provision can, however, relate only to transactions which, viewed broadly, form a distinct whole, fulfilling in effect the specific, essential functions of such transfers, in so far as they have the effect of transferring funds and entail changes in the legal and financial situation resulting from that transfer (see, to that effect, judgments of 5 June 1997, SDC, C‑2/95, EU:C:1997:278, paragraphs 66 to 68, and of 26 May 2016, Bookit, C‑607/14, EU:C:2016:355, paragraph 39).
35


That interpretation does not presuppose any particular method for effecting those transactions, since a transfer may be effected by an actual transfer of funds or by means of accounting entries (see, to that effect, judgment of 13 March 2014, ATP PensionService, C‑464/12, EU:C:2014:139, paragraphs 80 and 81).
36


Services exempted under the VAT Directive must also be distinguished from the supply of mere physical, technical or administrative services. To that end, it is relevant to examine, in particular, the extent of the liability of the supplier of the services in question and, inter alia, whether that liability is restricted to technical aspects or whether it extends to the specific, essential aspects characterising the transactions (see, to that effect, judgments of 5 June 1997, SDC, C‑2/95, EU:C:1997:278, paragraph 66, and of 26 May 2016, Bookit, C‑607/14, EU:C:2016:355, paragraph 40).
37


Furthermore, according to the Court’s settled case-law, transactions concerning transfers and transactions concerning payments are treated equally for the purposes of the exemption under Article 135(1)(d) of the VAT Directive (see, to that effect, judgments of 5 June 1997, SDC, C‑2/95, EU:C:1997:278, paragraph 50, and of 26 May 2016, Bookit, C‑607/14, EU:C:2016:355, paragraph 43 and the case-law cited).
38


As the Advocate General also observed in points 35 and 39 of his Opinion, it follows from those factors that a supply of services may be regarded as a ‘transaction concerning transfers’ or as a ‘transaction concerning payments’ within the meaning of Article 135(1)(d) of the VAT Directive only where it has the effect of making the legal and financial changes which are characteristic of the transfer of a sum of money. By contrast, the supply of a mere physical, technical or administrative service not effecting such changes will not come within that concept (see, inter alia, to that effect, judgment of 26 May 2016, Bookit, C‑607/14, EU:C:2016:355, paragraphs 40 and 41).
41


DPAS does not itself carry out the transfers or the materialisation in the relevant bank accounts of the sums of money agreed in the context of the dental plans at issue in the main proceedings, but asks the relevant financial institutions to carry out those transfers. By contrast, as the tax authority contends, a supply of services such as that at issue in the main proceedings is comparable to the card-handling fees which were at issue in the case giving rise to the judgment of 26 May 2016, Bookit (C‑607/14, EU:C:2016:355). That case concerned, in essence, a supply of services which consisted for the taxpayer in submitting to the financial institutions concerned requests for payment which the customers had previously accepted to carry out with a view to purchasing a product and which constituted a preparatory stage to carrying out transactions concerning payments and transfers effected by those establishments (see, to that effect, judgment of 26 May 2016, Bookit, C‑607/14, EU:C:2016:355, paragraphs 44 to 51 and 53).
43


In that regard, it may also be noted that, admittedly, the supply of services at issue in the main proceedings is, in the context of the dental plans concerned, essential to making the payments owed by the patients to their dentists and insurers, since it is through DPAS’s involvement that the patients’ intention to make the payments in question is expressed. However, since Article 135(1)(d) of the VAT Directive must be interpreted strictly, the mere fact that a service is essential for completing an exempt transaction does not warrant the conclusion that that service is to be exempted (judgments of 13 December 2001, CSC Financial Services, C‑235/00, EU:C:2001:696, paragraph 32, and of 26 May 2016, Bookit, C‑607/14, EU:C:2016:355, paragraph 45 and the case-law cited).
45


As regards, moreover, the general scheme and purpose of the VAT Directive, it should be noted, first, that the transactions exempted under Article 135(1)(d) to (f) of that directive, even though they do not necessarily have to be carried out by a bank or a financial institution, are, by their nature, financial transactions (see, inter alia, judgment of 22 October 2015, Hedqvist, C‑264/14, EU:C:2015:718, paragraph 37 and the case-law cited, and, to that effect, judgment of 26 May 2016, Bookit, C‑607/14, EU:C:2016:355, paragraphs 36 and 54). However, as has been established in paragraphs 40 and 41 of the present judgment, a provision of services such as that at issue in the main proceedings is administrative in nature.
46


Second, the exemptions provided for in Article 135(1)(d) to (f) of the VAT Directive seek, inter alia, to alleviate the difficulties connected with determining the taxable amount and the amount of VAT deductible (see, inter alia, judgments of 19 April 2007, Velvet & Steel Immobilien, C‑455/05, EU:C:2007:232, paragraph 24, and of 22 October 2015, Hedqvist, C‑264/14, EU:C:2015:718, paragraph 36). It is, however, apparent from the order for reference that the amount of remuneration due by the patient to DPAS for the supply of services at issue in the main proceedings corresponds to a difference between the amount collected from the account of that patient and the amounts subsequently transferred by DPAS to that patient’s dentist and insurer. In those circumstances, the determination of the taxable amount does not present any particular difficulty.
48


In addition, the national court is unsure as to the relevance, for the purposes of the present case, of the judgment of 28 October 2010, AXA UK (C‑175/09, EU:C:2010:646). In that regard, it should be noted, as did the Advocate General in points 59 to 63 of his Opinion, that, in that judgment, the Court did not examine whether the supply of services at issue in the case which gave rise to it met the criterion established by the Court’s previous case-law for the purpose of identifying a transaction concerning payments and transfers, from which it was already clear that the relevant criterion in that regard was whether the supply of services at issue had the effect of making the legal and financial changes which are characteristic of the transfer of a sum of money (see judgments of 5 June 1997, SDC, C‑2/95, EU:C:1997:278, paragraphs 53 and 66, and of 13 December 2001, CSC Financial Services, C‑235/00, EU:C:2001:696, paragraphs 26 to 28), but focused its analysis on the question of whether that supply of services was covered by the concept of ‘debt collection’ within the meaning of Article 13B(d)(3) of the Sixth Directive, now Article 135(1)(d) of the VAT Directive.