European Commission v Kingdom of Spain.
Date: 2013-01-17
18. It is settled case-law of the Court that provisions which are in the nature of exceptions to a principle must be interpreted strictly (see, inter alia, Case C-399/93 Oude Luttikhuis and Others [1995] ECR I-4515, paragraph 23; Case C-83/99 Commission  v Spain  [2001] ECR I-445, paragraph 19; and Case C-41/09 Commission  v Netherlands  [2011] ECR I-831, paragraph 58).
19. The Court has also repeatedly held that the need for the uniform application of European Union law and the principle of equality require that the terms of a provision of European Union law which makes no express reference to the law of the Member States for the purpose of determining its meaning and scope must normally be given an autonomous and uniform interpretation throughout the European Union (see Joined Cases C-424/10 and C-425/10 Ziolkowski and Szeja  [2011] ECR I-14035, paragraph 32 and the case-law cited).
22. It is sufficient to note, in that regard, as pointed out by the Advocate General in point 25 of his Opinion, that, when specifying the particular categories of goods to which they apply a reduced rate of VAT, the Member States are required to respect the limits of the categories defined in those points, as interpreted by the Court of Justice.
The first complaint, alleging the application of a reduced rate of VAT to medicinal substances which can be used habitually and suitably in the manufacturing of medicinal products
The scope of the first complaint
– Arguments of the parties
26. The Court notes that, under Article 120(c) of the Rules of Procedure of the Court of Justice and the case-law relating to that provision, the application initiating proceedings must state the subject-matter of the dispute and a summary of the pleas in law on which the application is based and that that statement must be sufficiently clear and precise to enable the defendant to prepare its defence and the Court to rule on the application. It is therefore necessary for the essential points of law and of fact on which a case is based to be indicated coherently and intelligibly in the application itself and for the heads of claim to be set out unambiguously so that the Court does not rule ultra petita  or indeed fail to rule on a claim (see Case C-343/08 Commission  v Czech Republic [2010] ECR I-275, paragraph 26 and the case-law cited).
48. That interpretation is corroborated by the purpose of Annex III to Directive 2006/112, which is to render less onerous, and thus more accessible to final consumers – who ultimately bear the VAT – certain goods regarded as being particularly necessary.
49. Finally, as the Advocate General stated in point 39 of his Opinion, in cases where a medicinal substance may be marketed as a finished product, without needing to be mixed with other substances, and where, consequently, it is likely to be used directly by final consumers ‘for health care, prevention of illnesses and as treatment for medical and veterinary purposes’, there is no reason why a reduced rate of VAT should not be applied to it.
50. In the light of the foregoing, it must be found that point 3 of Annex III to Directive 2006/112 permits a reduced rate of VAT to be applied to medicinal substances only if they are likely to be used directly by final consumers for health care, prevention of illnesses and as treatment for medical and veterinary purposes.
61. In that regard, the Court notes that, as has been stated in paragraph 43 above, the concept of ‘pharmaceutical products’ within the meaning of point 3 of Annex III, while including the concept of ‘medicinal product’ within the meaning of Directive 2001/83, must be interpreted as having a broader meaning than the latter.
62. None the less, the argument of the Kingdom of Spain that the concept of ‘pharmaceutical products’ may cover any medical devices, material, equipment and appliances for general use cannot be upheld.
63. Not only must the categories referred to in Annex III to Directive 2006/112 be interpreted strictly, in so far as the European Union law measure at issue is a derogating measure, in accordance with the case-law set out in paragraph 18 above, but the concepts used in that annex must also be interpreted in accordance with the normal sense of the terms at issue. It must be found that, in the light of the normal sense, in everyday language, of the concept of ‘pharmaceutical products’, any device, equipment, appliances or material for medical or veterinary purposes cannot be regarded as falling within that concept.
64. That interpretation is corroborated by the general scheme of Annex III to Directive 2006/112 and, in particular, the fact that, in point 4 of that annex, medical devices for specific uses are referred to specifically. As submitted by the Commission, that provision would be rendered meaningless if point 3 of Annex III were to be interpreted as authorising a reduced rate of VAT to be applied to any medical device or appliance, irrespective of the intended usage thereof.
65. Moreover, the Court reiterates what it has stated above in paragraph 48, that the aim of applying reduced rates of VAT is, in particular, to lower the cost of certain essential goods for final consumers. However, the cost of devices, appliances, material and medical and veterinary equipment would rarely be borne directly by final consumers, since those products are primarily used by healthcare professionals to provide services which themselves may be exempt from VAT under Article 132 of Directive 2006/112.
85. In that regard, the Court finds that it is apparent from the very meaning of the words ‘personal’ and ‘exclusive’ in point 4 of Annex III that that point does not relate to devices for general use.
87. That conclusion is not called into question by the Kingdom of Spain’s argument that certain devices and apparatus may be used both generally and for the exclusive personal use of the disabled. In that regard, it is sufficient to note that the Court has held that the application of a reduced rate of VAT, in the case of a product which may be put to different uses, is subject, for each supply of goods, to the product being used for its intended purpose by the purchaser (see, by analogy, Commission  v Netherlands , paragraph 65).