Commissioners for Her Majesty's Revenue & Customs v Brockenhurst College.
Date: 2017-05-04
22


Article 132 of Directive 2006/112 provides for exemptions which, as indicated by the title of the chapter in which that provision is contained, are intended to encourage certain activities in the public interest. However, those exemptions do not cover every activity performed in the public interest, but only those listed in that provision and described in great detail (judgment of 25 February 2016, Commission v Netherlands, C‑22/15, not published, EU:C:2016:118, paragraph 19 and the case-law cited).
23


The terms used to specify those exemptions are to be interpreted strictly, since they constitute exceptions to the general principle, arising from Article 2 of Directive 2006/112, that VAT is to be levied on all services supplied for consideration by a taxable person. However, that requirement of strict interpretation does not mean that the terms used to specify the exemptions referred to in Article 132 should be construed in such a way as to deprive them of their intended effect (judgment of 25 February 2016, Commission v Netherlands, C‑22/15, not published, EU:C:2016:118, paragraph 20 and the case-law cited).
24


The term ‘closely related’, contained in Article 132(1)(i) of Directive 2006/112, is not defined therein. Nevertheless, it is clear from the wording of that provision that it relates to the supply of services which are closely linked to ‘children’s or young people’s education, school or university education, vocational training or retraining’. Thus, a supply of services can be regarded as ‘closely related’ to those latter services only where they are actually supplied as services ancillary to the education provided by the relevant establishment, which constitutes the principal supply (see, to that effect, judgments of 14 June 2007, Horizon College, C‑434/05, EU:C:2007:343, paragraphs 27 and 28 and the case-law cited, and 25 March 2010, Commission v Netherlands, C‑79/09, not published, EU:C:2010:171, paragraph 50).
25


In accordance with the Court’s case-law, a service may be regarded as ancillary to a principal supply if it does not constitute an end in itself, but a means of better enjoying the principal supply (judgment of 25 March 2010, Commission v Netherlands, C‑79/09, not published, EU:C:2010:171, paragraph 51 and the case-law cited).
26


In that regard, the application of the exemption for activities ‘closely related’ to education is, in any event, subject to three conditions, laid down, in part, in Articles 132 and 134 of Directive 2006/112. In essence, first, both the principal supply and the supplies of services closely related to it must be provided by bodies referred to in Article 132(1)(i) of that directive; secondly, those supplies of services must be essential to the exempt activities; and, thirdly, the basic purpose of those supplies of services must not be to obtain additional income for those bodies by carrying out transactions which are in direct competition with those of commercial enterprises liable for VAT (see, to that effect, judgments of 14 June 2007, Horizon College, C‑434/05, EU:C:2007:343, paragraphs 34, 38 and 42, and 25 March 2010, Commission v Netherlands, C‑79/09, not published, EU:C:2010:171, paragraph 61).
35


As regards the third condition, it must be noted that that condition is an express enunciation of the principle of fiscal neutrality, which precludes, in particular, treating similar supplies of services, which are thus in competition with each other, differently for VAT purposes (see, to that effect, judgment of 14 June 2007, Horizon College, C‑434/05, EU:C:2007:343, paragraph 34 and the case-law cited).