Commission of the European Communities v United Kingdom of Great Britain and Northern Ireland.
Date: 2000-09-12
28 The Court observes, first, that while it has held that the rules of Article 169 of the Treaty must be applied with no attendant obligation on the Commission to act within a specific period, in certain situations the excessive duration of the pre-litigation procedure laid down by Article 169 may make it more difficult for the Member State concerned to refute the Commission's arguments and might thus infringe the rights of defence (Case C-96/89 Commission v Netherlands, cited above, paragraphs 15 and 16).
31 Finally, the United Kingdom Government could have avoided the adverse financial consequences to which it refers by making available to the Commission the amount claimed while expressing reservations as to the validity of that institution's arguments (see, to that effect, Case C-96/89 Commission v Netherlands, cited above, paragraph 17).
39 It should be noted that the Sixth Directive attributes to VAT a very wide scope by including amongst the taxable transactions defined in Article 2 not only the importation of goods but also the supply of goods or services effected for consideration within the territory of a country and by defining taxable person in Article 4(1) as any person who independently carries out an economic activity, whatever the purpose or results of that activity (Case 235/85 Commission v Netherlands [1987] ECR 1471, paragraph 6).
41 An analysis of those definitions shows that the scope of the term economic activities is very wide, and that the term is objective in character, in the sense that the activity is considered per se and without regard to its purpose or results (Case 235/85 Commission v Netherlands, cited above, paragraph 8).
43 In view of the objective character of the term economic activities, the fact that the activity in question consists in the performance of duties which are conferred and regulated by law in the public interest is irrelevant. Indeed, Article 6 of the Sixth Directive expressly provides that certain activities carried on in pursuance of the law are to be subject to the system of VAT (Case 235/85 Commission v Netherlands, cited above, paragraph 10).
44 It must also be remembered that according to the case-law of the Court (in particular Case 102/86 Apple and Pear Development Council v Commissioners of Customs and Excise [1988] ECR 1443, paragraph 12, and Case C-258/95 Fillibeck v Finanzamt Neustadt [1997] ECR I-5577, paragraph 12), the concept of the supply of services effected for consideration within the meaning of Article 2(1) of the Sixth Directive requires the existence of a direct link between the service provided and the consideration received.
46 Accordingly, providing access to roads on payment of a toll constitutes a supply of services for consideration within the meaning of Article 2(1) of the Sixth Directive.
49 As the Court has held on numerous occasions, it is clear from that provision, when examined in the light of the aims of the directive, that two conditions must be fulfilled in order for the exemption to apply: the activities must be carried out by a body governed by public law and they must be carried out by that body acting as a public authority (see, in particular, Case C-202/90 Ayuntamiento de Sevilla v Recaudadores de Tributos de las Zonas Primera y Segunda [1991] ECR I-4247, paragraph 18).
50 As regards the latter condition, it is clear from the settled case-law of the Court of Justice (Joined Cases 231/87 and 129/88 Ufficio Distrettuale delle Imposte Dirette di Fiorenzuola and Others v Comune di Carpaneto Piacentino and Others [1989] ECR 3233, paragraph 16; Case C-4/89 Comune di Carpaneto Piacentino and Others v Ufficio Provinciale Imposta sul Valore Aggiunto di Piacenza [1990] ECR I-1869, paragraph 8, and Case C-247/95 Finanzamt Augsburg-Stadt v Marktgemeinde Welden [1997] ECR I-779, paragraph 17) that activities pursued as public authorities within the meaning of the first paragraph of Article 4(5) of the Sixth Directive are those engaged in by bodies governed by public law under the special legal regime applicable to them and do not include activities pursued by them under the same legal conditions as those that apply to private traders.
55 In that regard the Court has held that an activity carried on by a private individual is not excluded from the scope of VAT merely because it consists in the performance of acts falling within the prerogatives of the public authority (Case 235/85 Commission v Netherlands, cited above, paragraph 21, and Ayuntamiento de Sevilla, cited above, paragraph 19). The Court held, in paragraph 20 of the latter judgment, that it follows that if a commune entrusts the activity of collecting taxes to an independent third party the exclusion from VAT provided for by Article 4(5) of the Sixth Directive is not applicable. Similarly, the Court held in paragraph 22 of the judgment in Case 235/85 Commission v Netherlands, cited above, that even assuming that in performing their official services notaries and bailiffs in the Netherlands exercise the powers of a public authority by virtue of their appointment to public office, they cannot enjoy the exemption provided for in Article 4(5) of the Sixth Directive because they pursue those activities, not in the form of a body governed by public law, since they are not part of the public administration, but in the form of an independent economic activity carried out in the exercise of a liberal profession.
56 In the present case it is common ground that, in the United Kingdom, the activity of providing access to roads on payment of a toll is carried out in certain cases not by a body governed by public law but by traders governed by private law. In such cases the exemption provided for by Article 4(5) of the Sixth Directive is not applicable.
63 It should be observed at the outset that according to settled case-law the exemptions provided for in Article 13 of the Sixth Directive have their own independent meaning in Community law (see Case 348/87 Stichting Uitvoering Financiële Acties v Staatssecretaris van Financiën [1989] ECR 1737, paragraph 11, Case C-453/93 Bulthuis-Griffioen v Inspecteur der Omzetbelasting [1995] ECR I-2341, paragraph 18, and Case C-2/95 SDC v Skatteministeriet [1997] ECR I-3017, paragraph 21). They must therefore be given a Community definition.
64 It is also settled case-law that the terms used to specify the exemptions provided for by Article 13 of the Sixth 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 (see, inter alia, Stichting Uitvoering Financiële Acties, cited above, paragraph 13, Bulthuis-Griffioen, cited above, paragraph 19, SDC, cited above, paragraph 20, and Case C-216/97 Gregg v Commissioners of Customs and Excise [1999] ECR I-4947, paragraph 12).
65 In that regard, it must be observed that the wording of Article 13B(b) of the Sixth Directive does not shed any light on the scope of the terms leasing or letting of immovable property.
66 The definition of letting of immovable property under that provision is certainly wider in some respects than that enshrined in various national laws. For instance the article lists, in order to exclude it from the exemption, a contract for a hotel room (the provision of accommodation ... in the hotel sector), which, in view of the overriding importance of the services provided by the hotelier and the control he retains over the use of the premises by patrons, is not considered, in some national laws, to be a contract to let.
67 Leaving aside the specific cases expressly listed in Article 13B(b) of the Sixth Directive, however, the term letting of immovable property must be construed strictly. As pointed out in paragraph 64 of this judgment, it constitutes an exception to the general VAT rules contained in that directive.
68 Accordingly, that term cannot be considered to cover contracts where, as here, the parties have not agreed on any duration for the right of enjoyment of the immovable property, which is an essential element of a contract to let.
69 Where access to roads is provided, what interests the user is the possibility offered to him of making a particular journey rapidly and more safely. The duration of the use of the road is not a factor taken into account by the parties, in particular in determining the price.
70 In the light of all the foregoing considerations, it must be held that by failing to subject to VAT tolls collected for the use of toll roads and toll bridges as consideration for the service supplied to users, where that service is not provided by a body governed by public law within the meaning of Article 4(5) of the Sixth Directive, the United Kingdom has failed to fulfil its obligations under Articles 2 and 4 of that directive.
The second claim
77 Since VAT was not levied on the tolls collected as consideration for the use of certain roads in the United Kingdom, the corresponding amounts were not taken into account in determining the VAT own resources base, with the result that the United Kingdom has thereby also breached the rules relating to the system of the Community's own resources.
78 Moreover, the interest for late payment claimed by the Commission has its basis in Article 11 of Regulation No 1552/89. As the Commission rightly pointed out, the default interest is payable regardless of the reason for the delay in making the entry in the Commission's account (see, in particular, Commission v Italy, cited above, paragraph 12).
80 Despite the absence of a limitation period for the recovery of VAT in either the Sixth Directive (Case C-85/97 SFI v Belgian State [1998] ECR I-7447, paragraph 25) or in the legislation relating to the Communities' own resources, the fundamental requirement of legal certainty may have the effect of preventing the Commission from indefinitely delaying, in the course of a procedure for failure to fulfil obligations seeking the retrospective payment of own resources, the decision to bring proceedings (see, mutatis mutandis, Case 57/69 ACNA v Commission [1972] ECR 933, paragraph 32).
87 Having regard to all the foregoing considerations, it must be held that by failing to make available to the Commission as VAT own resources the amounts corresponding to the VAT which should have been levied on tolls collected for the use of toll roads and toll bridges, together with interest for late payment, the United Kingdom has failed to fulfil its obligations under Regulations Nos 1553/89 and 1552/89.
Limitation of the effects of the judgment
91 It must be observed that limiting the effects of a judgment ruling on a matter of interpretation appears to be quite exceptional. The Court has taken such a step only in certain specific circumstances, where there was a risk of serious economic repercussions owing in particular to the large number of legal relationships entered into in good faith on the basis of rules considered to be validly in force, and where it appeared that both individuals and national authorities had been led to adopt practices which did not comply with Community law by reason of objective, significant uncertainty regarding the implications of Community provisions, to which the conduct of other Member States or the Commission may even have contributed (Joined Cases C-367/93 to C-377/93 Roders and Others v Inspecteur der Invoerrechten en Accijnzen [1995] ECR I-2229, paragraph 43).
92 Even if such considerations may serve to justify a limitation in time of the effects of a judgment under Article 169 of the Treaty, it is sufficient to note that, in the present case, the United Kingdom authorities cannot reasonably argue that they were led to adopt conduct contrary to Community legislation because of objective, significant uncertainty regarding the implications of Community provisions.
95 Finally, the United Kingdom could have avoided the consequences of the delays attributable to the Commission by calculating and making available to the Commission the amounts claimed (see inter alia, to that effect, Case C-96/89 Commission v Netherlands, cited above, paragraph 39).