C-51/88

OPINION OF MR JACOBS — CASE 51/88

OPINION OF MR ADVOCATE GENERAL JACOBS delivered on 21 February 1989"'

My Lords, hiring-out of a form of transport not of movable tangible property. The defendant agreed with this assessment (both of tax due and the reason on which it was based) and claimed the payment of tax accordingly on 7 May 1984. The plaintiff challenged the claim but the defendant rejected the challenge on 20 September 1985.

1. The plaintiff, Mr Hamann, owned a yacht-charter business established in the Federal Republic of Germany and operating from Kiel. It appears from the order for reference that the yachts were generally sailed by the charterer for pleasure outside German territorial waters in Danish and 3. The plaintiff then challenged the latter Swedish waters — presumably in the Baltic decision before the Finanzgericht, Sea — and also as far as Norway and Hamburg. That court, by order of Finland. Therefore a large part of the utili­ 22 December 1987, received at the Court zation of the service supplied — the use of a Registry on 17 February 1988, referred the yacht — took place outside German tax following question on the interpretation of jurisdiction and within the tax jurisdiction the Sixth VAT Directive (Sixth VAT of other countries, including countries not Directive of 17 May 1977 on the harmon­ Member States of the European ization of the laws of the Member States Communities. relating to turnover taxes — Common system of value-added tax: uniform basis of assessment (77/388/EEC, Official Journal L 145, 13.6.1977, p. 1):

7. Article 9(2) of the directive provides certain exceptions to that general rule. In 5. Article 2 of the directive provides, so far particular, subparagraph (d) states (before as material: amendment):

'The following shall be subject to 'in the case of the hiring-out of movable value-added tax: tangible property, with the exception of all forms of transport, which is exported by the lessor from one Member State with a view to its being used in another Member State, the place of supply of the service shall be the place of utilization.' 1. the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such The reason for the exception made in the case of the hiring-out of movable property is no doubt to prevent distortion of trade and distortion of competition. To take the Article 3 governs the territorial application illustration given at the hearing by the agent of the directive: by Article 3(1), the of the Commission, if there were a 'territory of the country' is the area of substantial difference in the rate of VAT on application of the EEC Treaty as stipulated the hiring-out of television sets, between the in respect of each Member State in Federal Republic of Germany and Article 227. It has not been suggested that Denmark, then to tax the hiring in the the application of the directive is affected by Member State from which the goods were the fact that the yachts may have been sailed supplied might lead to a substantial in part outside the territories of any of the distortion. Member States.

9. Again, the purpose of the exclusion from the exception of forms of transport is, in the 11. Although it is therefore likely that the ordinary case, readily apparent, since where reference in this case was not strictly such forms of transport as cars, vans, or necessary to decide the dispute, it is well even bicycles or horses, may be used across established that this Court must nevertheless national frontiers, it would be wholly rule on the question referred and I therefore impracticable to seek to tax the hiring-out turn to that question. The plaintiff in the of such forms of transport in the 'place of main proceedings argues, in essence, that utilization'. yachts sailed for pleasure purposes are not forms of transport since transport is not the main purpose for which they are used. That view is contested by the Tax Office, by the German Government and by the Commission, which contend in substance 10. Before addressing the issue whether that the term 'forms of transport' must be yachts are to be regarded as forms of understood more widely as covering any transport, I would add that it seems very means of conveyance even if it is not used doubtful whether, even if yachts are to be principally as a means of conveyance. regarded as not being forms of transport, the present case would fall within the exception in Article 9(2)(d), which requires that movable property, to come within the exception, should have been exported by the lessor from one Member State with a view to its being used in another Member State. 12. At first sight, it would seem that the While that issue has not been addressed by expression 'forms of transport' might be the national court, it seems manifestly not interpreted either in the sense contended for the case that the yachts were exported by by Mr Hamann or in the wider sense. On the lessor, Mr Hamann, with a view to the one hand, it could be contended that the their being used in another Member State, essential criterion of a means of transport is and therefore the hiring of the yachts would its functional purpose; and that the trans­ not fall within the exception even if they portation of yachtsmen, and the contents of were to be regarded as movable property. the yacht, is merely incidental to the The reason why the issue has not been purpose of sailing, which is primarily a addressed by the national court appears to recreational activity. On that view, a sailing be that the German legislation, the German boat is primarily an item of leisure Law of 1980 on Turnover Tax ('Umsatz­ equipment rather than a means of transport. steuergesetz'), does not contain the On the other hand, it could be said that, requirement set out above; it merely although the reasons for sailing may be of a provides, in Article 3a(2)4, that the purely recreational or sporting character,

15. Later legislation in the same field, which may be used for comparative purposes, is also of interest. In the directive 13. However, in my view, there is a clear of 28 March 1983 on tax exemptions within answer to the question of interpretation as it the Community for certain means of arises in the context of the Sixth Directive. transpon temporarily imported into one First, as I have already pointed out, the Member State from another (83/182/EEC, purpose underlying the provisions points to Official Journal L 105, 23.4.1983, p. 59), a broad interpretation of the term. Indeed, Article 1(1) includes in the scope of the because of the practical difficulties in taxing directive (and, by implication, within the such supplies of services, if a narrower meaning of 'certain means of transport') interpretation were adopted, there would be inter alia 'pleasure boats'. On this occasion, a risk that such supplies of services would there is a slight difference of wording in escape taxation altogether. Moreover any other language texts. Instead of derogation from the directive must be inter­ 'Beförderungsmitteln' the German has preted restrictively, which points here to a 'Verkehrsmittel'. The French continues to broad interpretation of the term in issue. use 'moyens de transpon'. Once again, Such an interpretation also finds some however, the linguistic differences are not support in the language of the provision significant and it is clear that the concept, as itself: while in the German version of envisaged by the Community legislator, Article 9(2)(d) the term used is 'außer remains the same since the directive itself is Beförderungsmitteln', that is 'with the designed to fit into the general VAT system. exception of means of transport', other language versions include an additional encompassing adjective: in English 'all', in French 'tout' and so on, indicating that the term is intended in the most comprehensive sense. 16. Taking these points together I am led to the conclusion that pleasure boats (including chartered yachts) were intended to be included in the expression 'forms of transport'.