Everything Everywhere Ltd v Commissioners for Her Majesty’s Revenue and Customs.
Date: 2010-12-02
19. Since, if such a supply of services is not separate from the supply of mobile telephone services, the SPHC would receive the same tax treatment as the sums payable for the latter services (see, to that effect, Case C‑349/96 CPP [1999] ECR I‑973, paragraph 32, and Case C‑453/05 Ludwig [2007] ECR I‑5083, paragraph 20), it is appropriate to consider the eighth question first of all.
The eighth question
21. It follows from Article 2 of the Sixth Directive that every transaction must normally be regarded as distinct and independent (see, inter alia, CPP , paragraph 29; Case C‑111/05 Aktiebolaget NN  [2007] ECR I‑2697, paragraph 22; and Case C‑461/08 Don Bosco Onroerend Goed  [2009] ECR I‑11079, paragraph 35).
22. However, a transaction which comprises a single supply from an economic point of view should not be artificially split, so as not to distort the functioning of the VAT system (see, inter alia, CPP , paragraph 29; Aktiebolaget NN , paragraph 22; and Case C‑242/08 Swiss Re Germany Holding  [2009] ECR I‑10099, paragraph 51).
23. Moreover, in certain circumstances, several formally distinct services, which could be supplied separately and thus give rise, in turn, to taxation or exemption, must be considered to be a single transaction when they are not independent (see Case C‑425/06 Part Service [2008] ECR I‑897, paragraph 51; Case C‑572/07 RLRE Tellmer Property  [2009] ECR I‑4983, paragraph 18; and Don Bosco Onroerend Goed , paragraph 36).
24. That is so in particular in cases where one or more elements are to be regarded as constituting the principal service, whilst one or more elements are to be regarded, by contrast, as ancillary services which share the tax treatment of the principal service (see, inter alia, CPP , paragraph 30; Case C‑34/99 Primback  [2001] ECR I‑3833, paragraph 45; RLRE Tellmer Property , paragraph 18; and order of 14 May 2008 in Joined Cases C‑231/07 and C‑232/07 Tiercé Ladbroke and Derby , paragraph 21).
25. In particular, a service must be regarded as ancillary to a principal service if it does not constitute for customers an aim in itself, but a means of better enjoying the principal service supplied (see, inter alia, CPP , paragraph 30; Primback , paragraph 45; RLRE Tellmer Property , paragraph 18; and order in Tiercé Ladbroke and Derby , paragraph 21).
26. In order to determine whether the taxable person is supplying the customer – envisaged as being a typical consumer – with several distinct principal services or with a single service, the essential features of the transaction must be ascertained and regard must be had to all the circumstances in which that transaction takes place (see, to that effect, CPP , paragraphs 28 and 29; Aktiebolaget NN , paragraphs 21 and 22; Ludwig , paragraph 17; and order in Tiercé Ladbroke and Derby , paragraphs 19 and 20).
27. With regard to the main proceedings, it is to be noted that the principal service supplied to its customers by a provider such as Everything Everywhere is a mobile telephone service. The activity engaged in by that undertaking in invoicing for that service, in particular making available to customers an infrastructure enabling them to pay bills not only by Direct Debit or by BACS transfer, but also by credit card, cheque or cash does not constitute for those customers an aim in itself. The supposed supply of services, which those customers are unable to access separately from the use of the mobile telephone service, can offer such consumers nothing that is independent of that service. It offers them only the opportunity to pay mobile telephone bills using the method of payment that appears to them to be most convenient and, moreover, enables the provider of the services to increase the volume of the service it supplies as its main service (see, to that effect, Primback , paragraph 47).
28. Moreover, the receipt of a payment and the handling of that payment are intrinsically linked to any supply of services provided for consideration. It is inherent in such a supply that the provider should seek payment and make appropriate efforts to ensure that the customer can make effective payment in consideration for the service supplied. In principle, any method of payment for a supply of services involves the provider taking certain steps in the handling of the payment, even if the extent of those steps may vary from one method of payment to another. According to the description of the different payment methods given in the order for reference, even payment by Direct Debit requires, in order for payment actually to be made, that the payee should take a particular step, namely that it should use the mandate given to it and request the bank of the customer concerned to transfer the sum owing to it (see, to that effect, Case C‑175/09 AXA UK  [2010] ECR I‑0000, paragraphs 9, 10 and 33).
29. The fact, highlighted in the eighth question, that a separate price for the alleged financial service is identified as such in the contract document and itemised separately in the invoices issued to customers is not of itself decisive. According to the case-law of the Court, the fact that a single price is invoiced, or that separate prices were contractually stipulated, has no decisive significance for the purposes of determining whether it is necessary to find that there are two or more distinct and independent transactions or only a single economic transaction (see, to that effect, CPP , paragraph 31, and Case C-41/04 Levob Verzekeringen and OV Bank  [2005] ECR I‑9433, paragraph 25).
30. It follows that Everything Everywhere’s customers who pay their mobile telephone bills using one of the payment methods which incur the SPHC do not intend to purchase two distinct supplies, namely a supply of a mobile telephone service and a supply whose purpose is to handle their payments. From the customer’s point of view, the supply of payment handling services supposedly provided by the telecommunications services provider to its customers at the time those services are paid for using certain payment methods must, in the circumstances such as those of the main proceedings, be regarded for VAT purposes, as being ancillary to the principal supply of those telecommunications services (see, by analogy, Joined Cases C‑308/96 and C‑94/97 Madgett and Baldwin  [1998] ECR I‑6229, paragraphs 24 and 25).
31. That conclusion cannot be undermined by the principle of fiscal neutrality inherent in the common system of VAT, which precludes treating similar supplies of services, which are thus in competition with each other, differently for VAT purposes (see, inter alia, Case C‑94/09 Commission  v France  [2010] ECR I‑0000, paragraph 40, and Case C‑58/09 Leo-Libera [2010] ECR I‑0000, paragraph 34), since Everything Everywhere’s situation is entirely different from that of an economic operator which provides financial services to its clients as the principle supply.
32. Consequently, the answer to the eighth question is that, for the purposes of collecting VAT, the additional charges invoiced by a provider of telecommunications services to its customers, where the latter pay for those services not by Direct Debit or by BACS transfer but by credit card, debit card, cheque or cash over the counter at a bank or authorised payment agent acting on behalf of that service provider, do not constitute consideration for a supply of services distinct and independent from the principal supply of services consisting in the supply of telecommunications services.
The first to seventh questions