Criminal proceedings against Virgil Mailat and Others.
Date: 2018-12-19
13


In order to answer that question, it must be noted that the wording of the first paragraph of Article 19 of the VAT Directive is identical to that of Article 5(8) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1) and the Court’s case-law relating to that provision can be transposed mutatis mutandis to the first paragraph of Article 19 of the VAT Directive. In accordance with that case-law, the purpose of that provision is to facilitate transfers of undertakings by making such transfers simpler and by preventing the cash resources of the recipient from being overburdened by a disproportionate charge to tax which, in any event, would ultimately be recovered through deduction of the input VAT paid (see, to that effect, judgments of 27 November 2003, Zita Modes, C‑497/01, EU:C:2003:644, paragraph 39, and of 10 November 2011, Schriever, C‑444/10, EU:C:2011:724, paragraph 23).
14


As regards the concept of a ‘transfer of a totality of assets or part thereof’, the Court has held that it must be interpreted as covering the transfer of a business or an independent part of an undertaking, including tangible elements and, as the case may be, intangible elements which, together, constitute an undertaking or a part of an undertaking capable of carrying on an independent economic activity, but that it does not cover the simple transfer of assets, such as the sale of a stock of products (see, to that effect, judgments of 27 November 2003, Zita Modes, C‑497/01, EU:C:2003:644, paragraph 40, and of 10 November 2011, Schriever, C‑444/10, EU:C:2011:724, paragraph 24).
15


It is apparent from the same case-law that, in order to find that there has been a transfer of a business, or of an independent part of an undertaking, all of the elements transferred must, together, be sufficient to allow an independent economic activity to be carried on and the question whether there must be both movable and immovable assets among those elements must be assessed in the light of the nature of the economic activity at issue (see, to that effect, judgment of 10 November 2011, Schriever, C‑444/10, EU:C:2011:724, paragraphs 25 and 26).
16


The Court has also held that particular importance must be attached to the nature of the economic activity which it is sought to continue in the context of an overall assessment of the factual circumstances of the transaction at issue that it is necessary to carry out in order to determine whether it is covered by the concept of the ‘transfer of a totality of assets’ within the meaning of the VAT Directive (see, to that effect, judgment of 10 November 2011, Schriever, C‑444/10, EU:C:2011:724, paragraph 32).
17


Thus, where an economic activity does not require the use of particular premises or of premises equipped with fixtures necessary for the pursuit of the economic activity, there may be a transfer of a totality of assets within the meaning of the first paragraph of Article 19 of the VAT Directive even without the transfer of ownership of an immovable asset (see, to that effect, judgment of 10 November 2011, Schriever, C‑444/10, EU:C:2011:724, paragraph 27).
18


Regarding economic activity that entails the use of an inseparable bundle of movable and immovable property, the Court has, in addition, considered that there is no transfer of a totality of assets within the meaning of the first paragraph of Article 19 of the VAT Directive if the transferee has not taken possession of the business premises. In particular, if the business premises are equipped with fixtures necessary for the pursuit of the economic activity, these items of immovable property must form part of the elements transferred in order for the transaction to qualify as the transfer of a totality of assets, or of a part thereof, within the meaning of the VAT Directive (see, to that effect, judgment of 10 November 2011, Schriever, C‑444/10, EU:C:2011:724, paragraph 28).
20


It should be borne in mind that, even if the economic activity at issue is one which cannot be carried out without business premises, it is not necessary, in order to ensure the continuation of some business activities transferred, for the owner of that business also to be the owner of the building within which it is operated (see, to that effect, judgment of 10 November 2011, Schriever, C‑444/10, EU:C:2011:724, paragraph 34). Thus, the Court has held that, where the continuation of the economic activity in question requires that the transferee use the same premises as were used by the transferor, there is no reason in principle why possession of those premises may not be transferred by means of a lease contract (judgment of 10 November 2011, Schriever, C‑444/10, EU:C:2011:724, paragraph 36).
22


By contrast, in the present case, it is apparent from the request for a preliminary ruling that all the items necessary to pursue the economic activity at issue in the main proceedings were merely let and no related property rights were transferred.
23


However, making all of these items available does not constitute a transfer of a totality of assets or part thereof within the meaning of the first paragraph of Article 19 of the VAT Directive.
25


In addition, it is necessary to add, first, that, in order to be covered by the concept of ‘transfer of a totality of assets or part thereof’ within the meaning of the first paragraph of Article 19 of the VAT Directive, the transferee must have had the intention to operate the business or the part of the undertaking transferred and not simply to immediately liquidate the activity concerned and sell the stock, if any (see, to that effect, judgment of 27 November 2003, Zita Modes, C‑497/01, EU:C:2003:644, paragraph 44).
26


In that regard, it is apparent from the Court’s case-law that the buyer’s intentions can or, in some circumstances, must be taken into account in the overall assessment of the circumstances of a transaction, provided that they are supported by objective evidence (judgment of 10 November 2011, Schriever, C‑444/10, EU:C:2011:724, paragraph 38).
28


Secondly, even though matters such as the duration of the lease granted and the procedure agreed for terminating it must be taken into account in the overall assessment of the transfer of the assets for the purposes of the first paragraph of Article 19 of the VAT Directive, the fact remains that neither the length of the lease nor the possibility of terminating it on short notice decisively support of themselves the inference that the transferee intended immediately to liquidate the business, or the part of the undertaking, transferred (see, to that effect, judgment of 10 November 2011, Schriever, C‑444/10, EU:C:2011:724, paragraphs 42 and 43). However, since, in the present case, as is apparent from the previous paragraph, the lessee of Apcom Select could not in any event liquidate the economic activity concerned, the fact that the application of the first paragraph of Article 19 of the VAT Directive cannot be refused solely on the basis of one of those grounds (see, to that effect, judgment of 10 November 2011, Schriever, C‑444/10, EU:C:2011:724, paragraphs 42 to 44) is irrelevant for the classification of the transaction at issue in the main proceedings in the light of that provision.
29


Moreover, it should be borne in mind that the fact that the first paragraph of Article 19 of the VAT Directive provides that the transferee is to be treated as the successor to the transferor does not mean that the succession is a condition for the application of that provision (see, to that effect, judgment of 27 November 2003, Zita Modes, C‑497/01, EU:C:2003:644, paragraph 43). Consequently, the fact that, in the present case, the transferee continued to pursue the activity under the same name as the transferor is also irrelevant for the purpose of determining whether the transaction at issue in the main proceedings comes within the scope of the first paragraph of Article 19 of the VAT Directive.
32


In order to answer that question, it should be borne in mind that, according to the Court’s case-law, 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 (judgment of 27 June 2013, RR Donnelley Global Turnkey Solutions Poland, C‑155/12, EU:C:2013:434, paragraph 20 and the case-law cited).
33


In this context, the Court has held that a supply must be regarded as a single supply where two or more elements or acts supplied by the taxable person are so closely linked that they form, objectively, a single, indivisible economic supply, which it would be artificial to split (judgment of 27 June 2013, RR Donnelley Global Turnkey Solutions Poland, C‑155/12, EU:C:2013:434, paragraph 21 and the case-law cited).
34


That is also the case where one or more supplies constitute a principal supply and the other supply or supplies constitute one or more ancillary supplies which share the tax treatment of the principal supply. In particular, a supply must be regarded as ancillary to a principal supply if it does not constitute for customers an end in itself but a means of better enjoying the principal service supplied (judgment of 27 June 2013, RR Donnelley Global Turnkey Solutions Poland, C‑155/12, EU:C:2013:434, paragraph 22 and the case-law cited).
35


Although it is for the national court to determine whether the taxable person supplies a single service in a particular case and to make all definitive findings of fact in that regard, the Court may, however, provide it with any guidance as to interpretation that will be helpful to it in disposing of the case (judgment of 27 June 2013, RR Donnelley Global Turnkey Solutions Poland, C‑155/12, EU:C:2013:434, paragraph 23).
36


Thus, as regards the concepts of ‘leasing’ and ‘letting’ in Article 135(1) of the VAT Directive, it should be borne in mind that, failing any definition of those concepts in that provision, the Court has defined the ‘letting of immovable property’, within the meaning of that provision, as an arrangement whereby the lessor assigns to the lessee, in return for rent and for an agreed period, the right to occupy his property and to exclude any other person from it (see, inter alia, judgments of 4 October 2001, ‘Goed Wonen’, C‑326/99, EU:C:2001:506, paragraph 55, and of 6 December 2007, Walderdorff, C‑451/06, EU:C:2007:761, paragraph 17).
37


Furthermore, according to the Court’s case-law, the terms used to describe the exemptions envisaged by Article 135(1) of the VAT Directive, including the concepts of ‘leasing’ and ‘letting of immovable property’, are to be interpreted strictly since these exemptions constitute exceptions to the general principle that VAT is to be levied on all services supplied for consideration by a taxable person (judgment of 6 December 2007, Walderdorff, C‑451/06, EU:C:2007:761, paragraph 18 and the case-law cited).
39


In that regard, it is apparent from the case file before the Court that the letting of the movable property included in the lease contract does not appear to be dissociable from the letting of the immovable property in question in the main proceedings. Moreover, it is not disputed that some of the movable property, such as the equipment and kitchen appliances, are incorporated in that immovable property and must, at this stage, be considered to be an integral part of that property. In so far as the movable property that was let, or, as regards some of it, transferred, at the same time as the immovable property, was also used for the operation of the restaurant in the same way as that immovable property, that letting/transfer cannot be regarded as having its own purpose either, but must be treated as a means of better enjoying the principal service supplied, that is, the letting of the immovable property.
40


Accordingly, the letting of the immovable property must be regarded as constituting the principal service supplied to which the other services, that is, the letting of capital equipment and inventory items, are merely ancillary.
41


Having regard to those considerations, the answer to the second question is that Article 135(1)(l) of the VAT Directive must be interpreted as meaning that a lease contract for an immovable property which was used for commercial purposes and for all capital equipment and inventory items necessary for that use constitutes a single supply in which the letting of the immovable property is the principal supply.