C-16/93
ECLI:EU:C:1994:16
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TOLSMA v INSPECTEUR DER OMZETBELASTING
OPINION OF MR ADVOCATE GENERAL LENZ delivered on 20 January 1994 *
Mr President, 2. In the main proceedings the plaintiff Mr Members of the Court, Tolsma challenges a decision in which the respondent Inspecteur der Omzetbelasting (Inspector of Turnover Taxes, hereinafter referred to as 'the Inspecteur') charged cer tain sums as turnover taxes on the plaintiff's A — Introduction activity as the operator of a barrel organ.
1. In this request for a preliminary ruling the Gerechtshof, Leeuwarden, asks about the definition of a 'supply of services for consid eration' within the meaning of Article 2 of the Sixth VAT Directive. 1 That article pro 3. The plaintiff uses that instrument to play vides inter alia that: music on the public highway, on which occa sions he solicits 'remuneration' from passers-by by rattling his collecting tin.
'The following shall be subject to value added tax:
4. In support of his case in the main pro 1. The supply of ... services effected for con ceedings, the plaintiff argued that he did not sideration within the territory of the country supply services for consideration, since by a taxable person acting as such; he did not demand any 'consi deration/remuneration'. The remuneration he received was given voluntarily.
* Onginal language: German. 1 — Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — Common system of value added tax: uni form basis of assessment (OJ 1977 L 145, p. 1). last amended 5. The Inspecteur maintained on the other bv Council Directive 91/111/EEC of 14 December 1992 (OJ 1992 L 384, p. 47). hand that the service was indeed supplied for
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consideration, since the passers-by who paid B — Opinion remuneration did so because the taxpayer provided them with music. There was there fore a direct link between the service pro vided and the remuneration received, so that the service was effected for consideration. It was irrelevant that no remuneration had been stipulated. 7. I. To answer those questions, it appears to me to be important to examine in its context the concept of the 'supply of services for consideration' within the meaning of Art icle 2 of the Sixth Directive.
6. In the circumstances the Gerechtshof, Leeuwarden, requested a preliminary ruling on the following questions: 8. The Sixth Directive, as part of the com mon system of value added tax, fits into the scheme of the First Directive. 2Article 2 of the latter directive provides as follows in its first two paragraphs:
1 (a) Must a service which consists in play ing music on the public highway, for which no payment is stipulated but payment is nevertheless received, be 'The principle of the common system of regarded as a supply of services effected value added tax involves the application to for consideration within the meaning of goods and services of a general tax on con- Article 2 of the Sixth Directive on the sumption exactly proportional to the price of harmonization of the laws of the Mem the goods and services, whatever the number ber States relating to turnover taxes? of transactions which take place in the pro duction and distribution process before the stage at which tax is charged.
(b) Is it relevant for the purpose of On each transaction, value added tax, calcu answering this question that although lated on the price of the goods or services at the payment received is not stipulated, it is nevertheless solicited and, in view of customary usage, can be expected, although its amount is neither quanti 2 — First Council Directive 67/227/EEC of 11 April 1967 on the harmonization of legislation of Member States concerning fied nor quantifiable? turnover taxes (OJ, English Special Edition 1967, p. 14).
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the rate applicable to such goods or services, system, presuppose the stipulation of a price shall be chargeable after deduction of the or consideration'. 6 amount of value added tax borne directly by 13 the various cost components.
11. Consistently with this, Article 22 of the Sixth Directive obliges taxable persons inter alia to issue invoices or equivalent docu 9. It was precisely that concept which found ments, in other words to document the 'con expression in Article 11 (A) (1) of the Sixth sideration' he is entitled to under the terms Directive with respect to the taxable amount. agreed. Under that provision the taxable amount is 4 the 'consideration' which has been or is to be obtained by the supplier from the pur chaser, the customer or a third party.
12. As to the article in question here, Art icle 2 (1), its provisions on the scope of the tax must be interpreted in the light of the above considerations. In the Hong Kong Trade case (in which what was lacking was 10. Both texts show that the common sys not an agreement but the payment of consid tem of value added tax relates to the stipu- eration by the recipient of the service) the lated exchange of mutually dependent ser- Court noted the importance of the provi vices — supply of goods or services on the sions on scope for the interpretation of the one part, consideration on the other part. value added tax system. It was held that: 5 Thus in Hong Kong Trade the Court of Justice held that:
'if [the economic activities of taxable per sons] are free of charge in all cases they do not fall within the system of value added tax, 'services provided free of charge are different since they cannot, according to Article 8, 7
in character from taxable transactions which, constitute a basis of assessment'. 8
within the framework of the value added tax
6 — Paragraph 10 of the judgment, my emphasis. 3 — My emphasis. 7 — This is a reference to Article 8 of the Second Directive (OJ, 4 — My emphasis. English Special Edition 1967, p. 16), which was the predeces sor of Article 11 of the Sixth Directive. 5 — Judgment in Case 89/81 Staatssecretaris van Financien v Hong Kong Trade [1982] ECR 1277. 8 — Hong Kong Trade judgment, paragraph 11.
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13. It follows that, contrary to the opinion established between the level of the bene of the Netherlands Government, it is not fits which the recipients obtain from the sufficient in order to fulfil the requirement of services provided and the amount of the 12 'consideration' that an individual actually consideration. receives income (possibly subject to income tax) for his activity and thus takes part in economic life. Despite the indisputably wide scope of the Sixth Directive, 9to which the Netherlands Government draws attention, in principle that requirement is met, in view of its context, only in the case of operations which contain an element of contractual — The consideration must be capable of 10 13 exchange in the above sense. being expressed in money.
14 — It must be a subjective value, since the taxable amount is the consideration actu 14. II. Certain criteria have been developed ally received and not a value estimated in the case-law to define this principle more according to objective criteria. A service closely: for which no subjective consideration is received is consequently not a service 'for 15 consideration'.
— There must be a direct link between the service supplied (which in this case would be the music provided) and the consideration received (in this case the payments by passers-by). 11 The link must be such that a relationship can be 15. III. (1) On this basis I first address Question 1 (a) of the Gerechtshof, Leeuwar 9 — See the judgment in Case C-186/89 Van Tiem [1990] ECR den. I-4363, paragraph 17. 10 — Whether and under precisely what circumstances other eco nomic operations can exceptionally be equated to the oper ations described in the provision need not be examined exhaustively here, since such an equation can in any event be excluded in the present case: see below, paragraph 25 et 12 — Apple and Pear Development Council judgment (see previ seq. ous footnote), paragraph 15. 13 — Coöperatieve Aardappelenbewaarplaats judgment (see foot 11 — Judgments in Case 154/80 Staatssecretaris van Financiën v note 11), paragraph 13, and Naturally Yours Cosmetics Coöperatieve Aardappelenbewaarplaats [1981] ECR 445, judgment (see footnote 11), paragraph 16. paragraph 12; Case 102/86 Apple and Pear Development Council v Commissioners of Customs and Excise [1988] 14 — See paragraph 23 below. ECR 1443, paragraph 11; and Case 230/87 Naturally Yours 15 — Coöperatieve Aardappelenbewaarplaats judgment (see foot Cosmetics Ltd v Commissioners of Customs and Excise note 11), paragraphs 10 and 11; Naturally Yours Cosmetics [1988] ECR 6365, paragraph 11. judgment (see footnote 11), paragraph 16.
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16. In this question the Gerechtshof assumes decide freely how long he wishes to remain that 'no payment is stipulated but payment is on the spot and listen. nevertheless received' for the 'service' con sisting in playing music on the public high way.
19. For the same reasons, it is not possible to establish the necessary relationship between the benefits which the passers-by obtain from the services and the fact of pay 9 ment and its amount. 1 The persons con cerned can decide freely, without being con 17. In my opinion, it is not possible in such tractually bound, on all the factors which are circumstances to speak of a service 'for con of importance for that relationship. Thus sideration'. In the absence of a price or some many passers-by may deposit a compara other value given in return which could be tively large sum in the plaintiff's collecting attributed in one way or another to an agree 16 tin without lingering, while others may listen ment on an exchange, there is no direct 17 to his performance for a considerable time link between the service and the sums without paying anything. received. Instead the receipts originate in voluntary decisions by certain passers-by to pay an amount of their choice.
20. This also shows that the comparison made by the Netherlands Government with musicians who operate on the basis of con tractual agreements with the individual lis teners in their audience does not hold water, 18. Moreover, that is consistent with the fact since in such a case the service and the con that the 'service' itself is not defined contrac sideration, and the relationship between the tually in any way as regards either its princi two, have been defined by the parties by ple or its extent. The Commission rightly agreement, whereas that is not the case here. points out that the plaintiff plays music vol untarily and can terminate his performance at any time. Conversely, the passer-by can 18 — It may be noted that in such circumstances the very exist ence of a 'service' can be questioned. However, it appears from the wording and context of the questions referred that what the national court is concerned witli is the character istic defined bv the words 'for consideration' in Article 2 of 16 — Paragraphs 7 to 13 above. the Sixth Directive. 17 — Paragraph 14 above, first indent. 19 — Sec footnote 12 above and the text referred to there.
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21. Contrary to the opinion of the German ties. The consideration for the benefits Government, the necessary 'inherent link' obtained by the passers-by could be valued, between the 'service' and the 'consideration' if at all, only according to objective crite 21 can also not be deduced from the fact that ria, but that is not sufficient, according to the passers-by 'only give money because the the case-law cited above, with respect to the music has been played to them first'. Some requirement of a service provided 'for con passers-by certainly might be induced by the sideration'. plaintiff's performance to hand over certain sums of money to him. Others who would in any event have been prepared to make a donation might perhaps decide on a larger amount than if the plaintiff did not make music but merely asked for money. How ever, the plaintiff and the passers-by do not determine the service and consideration as mutually dependent elements of a bargain. In 24. Question 1 (a) of the Gerechtshof, Leeu those circumstances the motives which warden, should therefore be answered to the underlie the greater or lesser inclination of following effect: passers-by to make donations are irrelevant.
The playing of music on the public highway, for which no payment is stipulated but for which a payment is received, cannot be 22. It is therefore clear that the requirement regarded as a service effected for consider of an 'inherent link' as defined in the case- ation within the meaning of Article 2 of the law is not fulfilled. Sixth Directive on the harmonization of the laws of the Member States relating to turn over taxes.
23. Moreover, I do not consider that the payments by the passers-by are a subjective 20 25. (2) Question 1 (b) is distinguished from value (or subjective consideration), since Question 1 (a) by the inclusion of an addi there is no (subjective) relationship between tional factor. For the purposes of Question 1 service and consideration defined by the par-
21 — For example, the average length of stay of individual 20 — See paragraph 14 above, third indent. passers-by, the average sura paid by them, etc.
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(b) the national court assumes that a 'pay shows that a greater or lesser volume of pay ment' is 'solicited and, in view of customary ments can be expected, that would be of no usage, can be expected, although its amount relevance, since the amount donated by the is neither quantified nor quantifiable'. By individual passer-by, as can be seen from the referring to this additional element, the very text of the question, is neither quanti Gerechtshof is in fact asking whether such a fied nor quantifiable. The usage referred to case can be equated with the case of a stipu by the national court would therefore not lated consideration. create any relationship between the perfor mance by the plaintiff and the payment by the individual passers-by comparable with the relationship in the case of an agreed exchange of service and consideration.
26. In my opinion this question must be answered in the negative, so that my previ ous assessment remains. 29. The same would apply if in the opinion of the national court the average passer-by could be 'expected' on the basis of a social custom to comply with the plaintiff's request for a payment. Since the amount of the pay ment is not quantifiable, that too does not create a situation comparable with that of an agreed exchange of service and consideration.
27. Firstly, the circumstance that 'payment' is 'solicited' confirms that there is no legal entitlement to it. Consequently, that circum stance does not permit the present case to be equated with that of an agreed exchange of service and consideration. 30. Question 1 (b) should therefore be answered to the following effect:
It is immaterial in this respect that a payment 28. The national court states that 'payment is solicited and in view of customary usage ... in view of customary usage, can be expect can be expected to a greater or lesser but in ed', but it is not entirely clear what precisely any event neither quantified nor quantifiable is meant thereby. If it meant that experience extent.
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C — Conclusion
31. In conclusion, I propose that the Court give the following answers to the ques tions of the Gerechtshof, Leeuwarden:
(1) A musical performance on the public highway, for which no payment is stip ulated but a payment is received, is not to be regarded as a supply of services for consideration within the meaning of Article 2 of the Sixth Directive on the harmonization of the laws of the Member States relating to turnover taxes.
(2) It is immaterial in this respect that payment is solicited and in view of custom ary usage can be expected to a greater or lesser but in any event neither quan tified nor quantifiable extent.
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