État belge v Oxycure Belgium SA.
Date: 2017-03-09
20


As a preliminary point, it must be recalled that, according to Article 96 of the VAT Directive, the same rate of VAT, that is the standard rate fixed by each Member State, is applicable to supplies of goods and services (judgment of 4 June 2015, Commission v United Kingdom, C‑161/14, not published, EU:C:2015:355, paragraph 22 and the case-law cited).
21


By derogation from that principle, the possibility to apply reduced rates of VAT is provided for by virtue of Article 98 thereof. Annex III to that directive exhaustively lists the categories of supplies of goods and services to which the reduced rates mentioned in Article 98 apply.
22


The purpose of that annex is to make less onerous, and thus more accessible for the final consumer, who ultimately pays the VAT, certain goods regarded as being particularly necessary (judgment of 17 January 2013, Commission v Spain, C‑360/11, EU:C:2013:17, paragraph 48).
23


As regards the specific content of Annex III to the VAT Directive, the Court has held that the Union legislature must be allowed a broad discretion, since it is called upon, when it adopts a fiscal measure, to make political, economic and social choices and to prioritise the diverging interests or make complex assessments (judgment of 7 March 2015, RPO, C‑390/15, EU:C:2017:174, paragraph 54).
25


Thus, it follows from Article 98 of the VAT Directive that the application of either one or two reduced rates is not obligatory. It is an option accorded to the Member States as an exception to the principle that the standard rate applies. It is settled case-law that provisions which are in the nature of exceptions to a principle must be interpreted strictly (judgment of 17 June 2010, Commission v France, C‑492/08, EU:C:2010:348, paragraph 35 and the case-law cited).
26


Therefore, the Member States may, in principle, choose to apply a reduced VAT rate to pharmaceutical products which are mentioned in point 3 of Annex III to the VAT Directive, while applying the standard rate to medical devices mentioned in point 4 thereof. They may also choose to apply a reduced VAT rate to specific pharmaceutical products or medical devices among those mentioned in points 3 and 4, while applying the standard rate to other such products or devices. In any event, the Member States are required to apply the standard rate to products not mentioned in that annex.
28


However, where a Member State chooses to apply selectively the reduced rate of VAT to certain goods or specific services mentioned in Annex III to the VAT Directive, it must comply with the principle of fiscal neutrality (see, to that effect, judgments of 3 April 2008, Zweckverband zur Trinkwasserversorgung und Abwasserbeseitigung Torgau-Westlbien, C‑442/05, EU:C:2008:184, paragraphs 41 and 43; of 6 May 2010, Commission v France, C‑94/09, EU:C:2010:253, paragraph 30, and of 27 February 2014, Pro Med Logistik and Pongratz, C‑454/12 and C‑455/12, EU:C:2014:111, paragraph 45).
30


According to settled case-law, the principle of fiscal neutrality precludes treating similar supplies of services, which are thus in competition with each other, differently for VAT purposes (see judgment of 11 September 2014, K, C‑502/13, EU:C:2014:2207, paragraph 24 and the case-law cited).
31


However, as the Court has repeatedly made clear, that principle cannot extend the scope of a reduced rate in the absence of clear wording to that effect (see, in particular, judgment of 5 March 2015, Commission v Luxembourg, C‑502/13, EU:C:2015:143, paragraph 51, and of 2 July 2015, De Fruytier, C‑334/14, EU:C:2015:437, paragraph 37).
32


That principle is not a rule of primary law which can condition the validity of a reduced rate, but a principle of interpretation, to be applied concurrently with the principle of strict interpretation of reduced rates (see, to that effect, judgment of 19 July 2012, Deutsche Bank, C‑44/11, EU:C:2012:484, paragraph 45).
33


In the present case, the parties which submitted observations to the Court are agreed that the oxygen concentrators at issue in the main proceedings, unlike oxygen cylinders, do not fall within point 3 of Annex III to the VAT Directive, which covers certain pharmaceutical products, namely those normally used for healthcare, prevention of diseases and medical and vetinary treatments. It is clear from the case-law of the Court that the definition of ‘pharmaceutical products’, although it is not limited to medicinal products, does not include all medical devices, material, equipment and appliances (see, to that effect, judgment of 17 January 2013, Commission v Spain, C‑360/11, EU:C:2013:17, paragraphs 61 to 65).
34


That interpretation is supported by point 4 of Annex III, which specifically refers to medical devices for specific uses (judgment of 17 January 2013, Commission v Spain, C‑360/11, EU:C:2013:17, paragraph 64). That provision covers medical equipment, aids and other appliances normally intended to alleviate or treat disability for the exclusive personal use of the disabled.