Finanzamt Oschatz v Zweckverband zur Trinkwasserversorgung und Abwasserbeseitigung Torgau-Westelbien.
Date: 2008-04-03
21. In that regard, it should be borne in mind that, according to settled case-law, the Court may refuse to rule on a question referred for a preliminary ruling by a national court only where it is quite obvious that the interpretation of Community law that is sought bears no relation to the facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (see, inter alia, Case C‑35/99 Arduino  [2002] ECR I‑1529, paragraph 25, and Case C‑13/05 Chacón Navas  [2006] ECR I‑6467, paragraph 33).
30. In the absence of a definition in the Sixth Directive, it should be borne in mind that in interpreting a provision of Community law, such as point 2 of Annex D to that directive, it is necessary to consider not only its wording, but also the context in which it occurs and the objective pursued by the rules of which it is part (see inter alia, to this effect, Case C‑156/98 Germany  v Commission  [2000] ECR I‑6857, paragraph 50, and Case C‑53/05 Commission  v Portugal  [2006] ECR I‑6215, paragraph 20).
31. It is clear from the third subparagraph of Article 4(5) of the Sixth Directive that, by providing that bodies governed by public law are in any case to be regarded as taxable persons in respect of the activities listed in Annex D provided they are not on such a small scale as to be negligible, that provision makes the rule that such bodies are not to be regarded as taxable persons subject to a limitation which must be added to those resulting from the condition laid down in the first subparagraph, namely that they must engage in activities as public authorities, and from the derogation laid down in the second subparagraph in cases where treatment as non-taxable persons would lead to significant distortions of competition. The third subparagraph of Article 4(5) thus seeks to ensure that certain categories of economic activity the importance of which derives from their subject-matter are not exempted from VAT on the ground that they are carried out by bodies governed by public law as public authorities (see Joined Cases 231/87 and 129/88 Comune di Carpaneto Piacentino and Others  [1989] ECR 3233, paragraph 26).
38. By its question, the national court also asks whether laying a mains connection forms part of the water supplies covered by Category 2 of Annex H to the Sixth Directive.
41. However, it should also be pointed out that there is nothing in the text of Article 12(3)(a) of the Sixth Directive which requires that provision to be interpreted as meaning that the reduced rate can be charged only if it is applied to all aspects of the water supplies covered by Annex H to that directive, so that a selective application of the reduced rate cannot be excluded provided that no risk of distortion of competition results (see, by analogy, Case C‑384/01 Commission  v France  [2003] ECR I‑4395, paragraph 27).
42. The introduction and maintenance of reduced rates of VAT lower than the standard rate fixed in Article 12(3)(a) of the Sixth Directive are permissible only if they do not infringe the principle of fiscal neutrality, inherent in the common system of VAT, which precludes treating similar goods and supplies of services, which are thus in competition with each other, differently for VAT purposes (see, inter alia, Case C‑481/98 Commission  v France  [2001] ECR I‑3369, paragraphs 21 and 22, and Case C­‑109/02 Commission  v Germany  [2003] ECR I‑12691, paragraph 20).
43. Accordingly, subject to compliance with the principle of fiscal neutrality inherent in the common system of VAT, Member States may apply a reduced rate of VAT to concrete and specific aspects of water supplies covered by Category 2 of Annex H of the Sixth Directive, such as mains connections.
44. In those circumstances, the answer to the question referred for a preliminary ruling must also be that Article 12(3)(a) of the Sixth Directive and Category 2 of Annex H thereto must be interpreted as meaning that the laying of a mains connection which consists, as in the main proceedings, in the installation of piping permitting the connection of a building’s water system to the fixed water supply network forms part of water supplies. Furthermore, Member States may apply a reduced rate of VAT to concrete and specific aspects of water supplies, such as the laying of mains connections at issue in the main proceedings, provided that they comply with the principle of fiscal neutrality inherent in the common system of VAT.
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