Svenska staten (Swedish State) v Stockholm Lindöpark AB and Stockholm Lindöpark AB v Svenska staten (Swedish State).
Date: 2001-01-18
19 By way of exception to the principle laid down in Article 2, Article 13A(1)(m) of the Sixth Directive provides for an exemption from tax for supplies of services linked to sport or physical education. That exemption is, however, specifically limited to supplies provided by non-profit-making organisations. It follows that, where such services are supplied by profit-making suppliers, they cannot fall within the scope of the exemption. Chapter 3 of the VAT Law, in so far as it provides, in the second paragraph of Article 2, for a general exemption for such supplies without restricting its scope to non-profit-making suppliers, is therefore inconsistent with the wording of the relevant provisions of the Sixth Directive.
22 As regards the national legislation at issue, it is certainly not impossible that in certain circumstances a supply of premises for the practice of sport or physical education may constitute the letting of immovable property and thus fall within the scope of the exemption in Article 13B(b) of the Sixth Directive. However, the national legislation does not refer to a particular case but provides for a general exemption for all services linked to the practice of sport or physical education without making any distinction, among those services, between those that constitute the letting of immovable property and other services. By so doing, it introduces a new category of exemption for which the Sixth Directive does not provide.
24 As regards the application of Article 13B(b) of the Sixth Directive to the case before the national court, the Court of Justice can do no more than provide guidance based on well-established case-law to the national court and it is for that court to determine this point in the dispute before it.
25 First, it has consistently been held 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, Case 348/87 Stichting Uitvoering Financiële Acties v Staatssecretaris van Financiën [1989] ECR 1737, paragraph 13; Case C-358/97 Commission v Ireland [2000] ECR I-6301, paragraph 52; and Case C-359/97 Commission v United Kingdom [2000] ECR I-6355, paragraph 64).
26 Second, services linked to the practice of sport or physical education must, so far as is possible, be considered as a whole. According to the case-law of the Court of Justice, in order to determine the nature of a taxable transaction, regard must be had to all the circumstances in which the transaction in question takes place in order to identify its characteristic features (see Case C-231/94 Faaborg-Gelting Linien v Finanzamt Flensburg [1996] ECR I-2395, paragraph 12). As the Commission has rightly pointed out, the activity of running a golf course generally entails not only the passive activity of making the course available but also a large number of commercial activities, such as supervision, management and continuing maintenance by the service-provider, provision of other facilities and so forth. In the absence of quite exceptional circumstances, letting out a golf course cannot therefore constitute the main service supplied.
27 Finally, account should be taken of the fact that permission to use a golf course will normally be restricted as regards the purpose for which it is used and the period of its use. According to the case-law of the Court, the period of enjoyment of immovable property is an essential element of a lease (judgments cited above in Commission v Ireland, paragraph 56, and Commission v United Kingdom, paragraph 68).
30 In order to answer that question, it is sufficient to refer to the Court's well-established case-law on the circumstances in which a directive may be relied on (see Case 8/81 Becker v Finanzamt Münster-Innenstadt [1982] ECR 53, paragraphs 17 to 25).
31 It follows from that case-law that, despite the relatively wide discretion enjoyed by the Member States in implementing certain provisions of the Sixth Directive, individuals may effectively plead before national courts the provisions of the directive which are sufficiently clear, precise and unconditional (see Case C-10/92 Balocchi v Ministero delle Finanze [1993] ECR I-5105, paragraph 34, and Case C-62/93 BP Soupergaz v Greek State [1995] ECR I-1883, paragraph 34).
32 The Court has already specifically recognised that Article 17(1) and (2) (BP Soupergaz, paragraph 36) and Article 13B(d)(1) (Becker, paragraph 49) of the Sixth Directive have those characteristics. Article 2 and Article 6 (only paragraph 1 of which has any bearing on this case) and Article 13B(b) also satisfy the criteria established by the case-law cited in paragraph 31 above, as the Advocate General observes in paragraphs 45 and 46 of his Opinion.
33 The answer to the second question must therefore be that the provisions of Article 17(1) and (2) of the Sixth Directive, read together with those of Articles 2, 6(1) and 13B(b), are sufficiently clear, precise and unconditional for an individual to rely on them as against a Member State before a national court.
The third question
35 As a preliminary point, it should be kept in view that in its answer to the second question the Court has found that the provisions of Article 17(1) and (2) of the Sixth Directive, read together with Articles 2, 6(1) and 13B(b), confer on individuals rights on which they may rely as against the Member State concerned before a national court. It follows that Lindöpark may properly pursue the debts which it claims to be owed by the Swedish State and may do so retroactively, basing its claim directly on the provisions of the Sixth Directive which are in its favour. At first sight, therefore, an action for damages founded on the Court's case-law relating to the liability of Member States for breaches of Community law does not seem necessary.
36 Further, in answer to the question, it should be borne in mind that it has also consistently been held that the principle that a Member State may incur liability for loss and damage caused to individuals as a result of breaches of Community law for which it can be held responsible is inherent in the system of the Treaty (see, in particular, Joined Cases C-46/93 and C-48/93 Brasserie du Pêcheur and Factortame [1996] ECR I-1029, paragraph 31; Joined Cases C-178/94, C-179/94 and C-188/94 to C-190/94 Dillenkofer and Others v Germany [1996] ECR I-4845, paragraph 20; Joined Cases C-283/94, C-291/94 and C-292/94 Denkavit International and Others v Bundesamt für Finanzen [1996] ECR I-5063, paragraph 47; and Case C-319/96 Brinkmann Tabakfabriken v Skatteministeriet [1998] ECR I-5255, paragraph 24).
37 Likewise, the Court, having regard to the circumstances of the case, held that Community law confers a right to reparation where three conditions are met: the rule of law infringed must be intended to confer rights on individuals; the breach must be sufficiently serious; and there must be a direct causal link between the breach of the obligation resting on the State and the damage sustained by the injured parties (Brasserie du Pêcheur and Factortame, paragraph 51; Dillenkofer, paragraphs 21 and 23; Denkavit, paragraph 48; Brinkmann, paragraph 25; see also Case C-140/97 Rechberger and Others v Austria [1999] ECR I-3499, paragraph 21; and Case C-424/97 Haim v Kassenzahnärztliche Vereinigung Nordrhein [2000] ECR I-5123, paragraph 36).
38 Although, in principle, it is for the national courts to determine whether the conditions for State liability for breach of Community law are met, the Court of Justice may nevertheless indicate certain circumstances which the national courts may take into account in their evaluation. In the present case, the national court inquires about the conditions for there to be a sufficiently serious breach of Community law.
40 As the Court found in answering the first two questions, it is evident from the provisions of the VAT Law at issue in the main proceedings that the general exemption enacted by the Swedish legislature has no basis in the Sixth Directive and therefore became clearly incompatible with the directive as from the date of the Kingdom of Sweden's accession to the European Union. Given the clear wording of the Sixth Directive, the Member State concerned was not in a position to make any legislative choices and had only a considerably reduced, or even no, discretion. In those circumstances, the mere infringement of Community law may be sufficient to establish the existence of a sufficiently serious breach (see Case C-5/94 The Queen v Ministry of Agriculture, Fisheries and Food, ex parte Hedley Lomas (Ireland) [1996] ECR 1-2553, paragraph 28; and Dillenkofer, paragraph 25). Furthermore, the fact that the national legislation at issue in the main proceedings was repealed with effect from 1 January 1997, two years after Sweden's accession, indicates that the Swedish legislature had become aware that it was incompatible with Community law.
42 The answer to the third question must therefore be that the implementation of a general exemption from VAT for the supply of premises and other facilities and for the related supply of accessories or other arrangements for the purposes of the practice of sport or physical education, where no such exemption is to be found in Article 13 of the Sixth Directive, constitutes a serious breach of Community law that can render a Member State liable in damages.