C-468/93

The Community measures

2. The bedrock of the Community VAT sys­ tem is the Sixth Council Directive

(h) the supply of land which has not been * Original language: English. built on other than building land as 1 — So described by counsel for the Gemeente Emmen at the described in Article 4(3)(b).' hearing, who pointed out that 1 700 claims have been brought against bis client alone in respect of VAT charged on the supply of building land. This reference docs not arise from one of those cases but from an attempt by Gemeente Emmen, in the light of those claims, to have the VAT pos­ ition clarified through an appeal procedure. 2 — OJ 1977 L 145, p. 1.

I-1723

O P I N I O N O F MR FENNELLY — CASE C-468/93

3. The primary purpose of Article 4(3) is to '1. The following shall be exempt from tax permit Member States, at their discretion, to on conditions to be determined by [us] 5by treat as 'taxable persons' those who, though general administrative measures: 'on an occasional basis', engage in the supply of buildings (Article 4(3)(a)) 3and 'the sup­ ply of building land' (Article 4(3)(b)). It is only the definition, in the latter provision, of 'building land', borrowed as it is for the pur­ pose of Article 13B(h), which is relevant to the present case. It says: (a) the supply of immovable property, with the exception of:

van Rechtsverkeer (Law on the Taxation of 7. The dispute was brought before the Gere­ Legal Transactions) 1970. 7 chtshof, Leeuwarden (Regional Court of Appeal, Leeuwarden, hereinafter the 'nation­ al court'), where the essential issue between the appellant and the respondent was whether the eight plots should be treated as 'land prepared for use' ('vervaardigde onro­ erende zaken') within the meaning of the II — Factual circumstances and procedure 1968 Law. The appellant argued before the national court that the works carried out did not transform the plots into such land and, thus, that VAT was not payable. The respon­ dent argued that, either because the services had been provided for each plot or because preparatory work had been carried out on each plot, they had been properly classified as land prepared for use and accordingly subject to VAT. 6. In June 1992 the Gemeente Emmen (the Commune of Emmen), the appellant in the main proceedings (hereinafter 'the appel­ lant'), supplied eight plots of unbuilt land at a price which included a charge for VAT. In its subsequent tax return it included and paid a sum of HFL 67 542 VAT in respect of these supplies. With the written consent of the relevant tax inspector the appellant brought an appeal against its liability to pay that sum to the Belastingdienst Grote Ondernemingen, the respondent in the main 8. The national court explains in its order proceedings (hereinafter 'the respondent'). for reference that, for the purposes of imple­ The lots at issue were all previously desig­ menting the Sixth Directive, the Netherlands nated for agricultural use, but were redesig­ has opted to adapt the notion of a 'prepared nated for building use prior to their transfer immovable' ('vervaardigd onroerend goed'), and, on the appellant's instructions, the already employed in the 1968 Law, and implementation of a re-zoning plan had been apply it to the supply of land, supposedly in commenced involving, inter alia, the laying implementation of the Sixth Directive. The of pipes necessary for the provision of ser­ result was that the VAT exemption on the vices, the excavation of drains, the installa­ 'supply of land' under the Sixth Directive tion of a sewerage system and other opera­ was available in the Netherlands unless the tions. 8 property could be regarded as prepared for use within the meaning of the 1968 Law. The national court refers to a judgment of the Hoge Raad (the Supreme Court of the Neth­ 7 — Staatsblad 1970, p. 611. The level of transfer tax, which is erlands) of 21 November 1990 9 (the fixed at 6%, would be more advantageous than VAT for non-taxable persons purchasing such land because, unlike taxable persons, they arc unable to write off that VAT as an input against VAT due by them on other taxable transac­ tions. 8 — See paragraph 50 below for details. 9 — Smt-Oedenrode, 21 November 1990, BNB 1991/19.

10. As this approach involves the interpreta- tion of Community law, the national court opted to refer the following questions to the Court: 9. The national court considers that the 1980 Decision concerned matters (presum- ably facts occurring) prior to the adaptation by the Netherlands of its system to that pre- scribed by the Sixth Directive. Furthermore, it states that, as exceptions to tax exemptions permitted by the Sixth Directive are not to 'I (a) Are the words "improved land" as be interpreted strictly, assistance can no used in Article 4(3)(b) of the direc- longer be obtained from the 1980 Decision tive to be understood as meaning in order to interpret the term 'improved only land where the soil itself has land'. 12 Its approach is, therefore, that, in been prepared and/or for which provisions have been made which are of use exclusively for the land itself, or 10 — It appears from the order for reference that both the Dutch authorities and the courts in interpreting the 1968 Law in the light of the Sixth Directive have felt entitled to exclude unimproved land from the definition of 'building land'. 11 — Gemeente Loon op Land; 12 March 1980, BNB 1980/128 where, the Court is informed, the Hoge Raad ruled that the notion of prepared land ought to be under- stood as referring only to land where works had been car- ried out exclusively serving that particular land. In its writ- ten observations the Commission refers to Resolution N o 280-19 756 adopted in 1981 (BTW-51) by the Secretary of State for Finance of the Netherlands wherein the relevant Dutch authorities were directed to employ a wide notion of (b) In view of the fact that exceptions the concept of prepared land, pursuant to which the provi- sion of amenities in the vicinity of the land would be suffi- to exemptions must be interpreted cient for the land to be regarded as coming within the VAT regime. The more restricted view of the land which could widely, is there "improved land" be subject to VAT, confirmed by the Hoge Raad in the 1990 Decision, led to the withdrawal of that resolution and where land has been designated as to the institution of various claims for repayments of VAT described in section 2.3 13 and prior by purchasers affected by the application of the approach specified in the resolution. to the supply and first use of that 12 — It ought to be noted that the national court also employs the term 'bouwrijp gemaakte grond', although there does not appear to be any significance in the alternate reference to the words 'terrein' and 'grond' as both appear to refer to the idea of a site (or plot) of land or ground. 13 — Quoted at paragraph 50 below.

II If the answer to Question I(a) is yes, must both the conditions set out therein be satisfied?

(c) The installation for the land of a surface inlet to the main sewer;

Does that mean that designated land for (d) The raising of the land by adding which the facilities referred to at 1(b), above, soil brought in for the purpose; have been provided by means of one or

1 4 — The facilities which arc referred to comprise the supply by the various utility undertakings, such as telecommunica­ tions, gas, water and electricity, of their central antenna which would normally involve digging ditches, laying pipes, wires, or both, and then refilling the said ditches. It is clear from the order for reference that the national court (e) The laying of drainage pipes in does not wish to emphasize the differing extent of the actual works carried out on each of the eight lots of land at accordance with the designation but issue in the main proceedings. outside the boundary of the land;

I - 1727

O P I N I O N O F MR FENNELLY — CASE C-468/93

11. In accordance with Article 20 of the 13. According to the appellant the reference Statute of the Court, the appellant, the in the 1968 Law to the supply of a 'prepared Dutch Government and the Commission immovable' does not properly define the submitted written observations and also concept of 'building land'. 1 6 The interpreta- appeared at the hearing. Their submissions tion of this notion was governed (at least at may be summarized as follows. an administrative level), prior to the entry into force of the Sixth Directive, by a minis- terial circular pursuant to which the supply of land was subject to VAT whenever it was 'cleared out' or 'improved' ('ontgonnen' or The appellant 'bouwrijp gemaakt'). 17 Improved land was understood to include not only land which had itself been improved, but also land which was prepared (for example by the pro- vision of means of access) and rendered suit- able for subsequent construction. This inter- pretation of the land which could be subject 12. According to the appellant the problem raised by the national court's questions con- cerns the conditions under which VAT may 15 — Article 28(4) of the Sixth Directive originally specified (for be levied on the transfer of a plot of land the then nine Member States) 1 January 1978 as the date from which the new regime was, at least, transitionally in which has not been built upon at the place. This was postponed for all those Member States, save Belgium and the United Kingdom, until 1 January 1979 by moment of its transfer, but which is never- the adoption on 26 June 1978 of the Ninth Council Direc- theless destined for construction. The appel- tive 78/583/EEC, on the harmonization of the laws of the Member States relating to turnover taxes; OJ 1978 L 194, lant maintains that the Netherlands has failed p. 16. correctly to implement the Sixth Directive as 16 — At the hearing the appellant, reiterating its view that the Netherlands had failed to implement the exemption for a result of its decision not to define, as land other than building land required by Article 13B(h), required by Article 4(3)(b), the notion of contended expressly that the adaptation of the concept of prepared land could not be regarded as a proper implemen- 'building land'. To support this argument, it tation of the relevant exemption. The notion of 'building land' should have been defined by the Netherlands in order refers to Article 1, which obliges Member to achieve the Community objective underlying the exemp- tion. States to modify their pre-existing VAT sys- 17 — Although not specified, this is presumably a reference to tems so as to ensure their compliance with Resolution N o 280-19 756, loc. cit., footnote 11 above.

to VAT was, according to the appellant, 15. To support this approach, reliance is expressly retained following the entry into placed, by way of analogy, on the definition force of the Sixth Directive. 1 furnished by the Sixth Directive of the con­ 19 cept of 'supply' ('levering') which Member States may consider, pursuant to Article 5(5)(b) of the Sixth Directive, to include '... the handing over of certain works 20 of construction'. The appellant maintains that the use, in Article 4(3)(b), of the term 'improved land' alongside the term 'unim­ proved land' implies that for land to be capa­ ble of being classified as 'building land' cer­ tain construction works must have been carried out to it by the person supplying the relevant plot(s). Reference is made to the interpretation of Article 5(5)(b) adopted by 14. The appellant maintains that, in the light the Court in its ruling in Van Dijk's of the legal uncertainty arising from the lack Boekhuis ν Staatssecretaris van Financiën. 21 of a specific implementation of In order, therefore, for a transfer of building Article 4(3)(b) of the Sixth Directive, the land to occur, works must have been carried national court was correct to consider it nec­ out by the transferor which, having regard to essary to turn to Community law for guid­ the original state of the land, would generally ance as to what could be considered as build­ be accepted as having altered its nature. ing land. According to the appellant, to be Accordingly, the appellant argues that 'sub- regarded as improved land, the site must be stantial' transformation must have taken designed to serve as a location for one or place; the execution of general works in the several buildings. It claims that the provision immediate environment of the relevant land, calls for a distinctive definition of the con­ such as the installation of a sewerage scheme, cept of 'improved land' so as to differentiate would not constitute a substantial alteration it from the concept of 'unimproved land', for this purpose. which is also contained in the same indent, for the overall purpose of defining the con­ cept of 'building land'. It, thus, argues that not all unbuilt land which is destined for construction ought to be subject to VAT. In particular, unbuilt land should not be consid­ ered to be 'building land' within the meaning of Article 4(3)(b), unless it is designed to serve as a site for the construction of one or 16. The appellant acknowledges that, if the several buildings and has been improved by Court were to consider the mere alteration the execution of extensive physical work on of the designation of land as sufficient to the land itself.

18. In the Netherlands, the relevant legisla- tive provision is Article ll(l)(a)(l) of the 1968 Law. The point of reference for the The Dutch Government interpretation of that provision is stated to be the 1990 Decision of the Hoge Raad where the notion of a prepared good was interpreted, in the light of the Sixth Direc- tive's reference to 'building land', as encom- passing only improved land, in the sense that work has been carried out or infrastructures put in place which exclusively serve that land. The Dutch Government claims that this definition discharges in national law the obligation to define 'building land' imposed on the Netherlands by the Sixth Directive. 23 17. The principal observation of the Dutch According to the Government, the Hoge Government is essentially that the determi- Raad's definition includes only land upon nation of the scope of the notion of 'building which the infrastructures necessary to pre- land' as employed in the Sixth Directive pare that land for construction have been depends exclusively, in conformity with provided. Accordingly, it maintains that the Article 189(3) of the Treaty, obliging the questions posed should be answered as Member State only to achieve the result required by the directive, on how it has been interpreted by the Dutch legislature. Thus, according to the Dutch Government, in 22 — In answer to a question posed at the hearing, the Dutch making its reference, the national court over- Government confirmed that all unimproved or unbuilt building land is exempt from VAT in the Netherlands. looked the express wording of Article 4(3)(b) 23 — This assertion is supported by reference to the terms of the of the Sixth Directive which leaves the real- Judgment whereby the Hoge Raad apparently intimated that its interpretation was in conformity with the Sixth ization of the definition of that notion to the Directive, and because the factual situation at issue con- cerned events occurring in 1985 after the Sixth Directive's discretion of the Member States. At the entry into force.

(i) the preservation of fiscal neutrality pur­ suant to which the liability to pay VAT ought to be determined by reference to objective criteria capable of affording 19. The Dutch Government none the less those affected a sufficient degree of legal recognizes that the extent of the discretion­ certainty regarding their potential liabili­ ary power conferred on Member States ties; regarding the definition of 'building land' is not unlimited. 2 4 Thus, it accepts that general principles of interpretation, particularly that requiring a broad construction of exceptions to exemptions, are applicable and limit the extent of the Member States' discretion. (ii) the requirement to interpret exemptions However, it considers the Hoge Raad's inter­ from VAT strictly 2 7 and the correspond­ pretation to be wholly in conformity with ing obligation to ensure a broad inter­ such a requirement and observes that the pretation of any exception to such national court should find the answers to its exemptions; 2 8 questions by examining the criteria formu­ lated in the 1990 Decision. 2 5

I - 1731

O P I N I O N O F MR FENNELLY — CASE C-468/93

of 'building land' and that this compe- individual building permits. 31 Conversely, a tence must be exercised in the light of plot of land which has been furnished with the criteria outlined at points (i) and (ii) the infrastructures required for building is above. 29 not necessarily building land, particularly where, for whatever reason, building permis- sion is withheld.

The principle underlying the Sixth Directive is that every economic transaction conducted by a taxable person within a Member State should be subject to VAT. Thus, while the Member States are at liberty to define the concept of 'building land', that liberty is not unlimited. The Commission, therefore, 22. The Commission observes penultimately argues that it is necessary to develop an that it is only the adoption of this objective objective approach to the definition of approach which avoids pointless arguments 'building land'. regarding which particular works should be regarded as sufficient to transform land into building land. 32 It cites the list of operations set out in the national court's second ques- tion to demonstrate this point. It is for each Member State to determine in detail, in 21. From this point of reference, the Com- accordance with the discretion conferred by mission submits that the decisive criterion is Article 4(3)(b) of the Sixth Directive, the the designation of land for building pur- public law acts which determine whether a poses. It is not possible to regard its physical buyer has a right to build on a particular site improvement as the decisive factor because and, thus, whether it is building land. the wording of Article 4(3)(b) refers to both improved and unimproved land. 3 0 The cru- cial issue is whether a plot of land is desig- nated as building land. The intention of the parties, being subjective, at the time of the transaction cannot be decisive. The Commis- sion considers the decisive factor to be the acquisition of the right to build on the land, whether by way of zoning or obtaining 23. Finally, the Commission gives its opin- ion on the potential effects of this approach.

Given the absence of harmonization of the which have led me to go outside the observa­ notion of 'building land', it acknowledges tions presented to the Court. In particular, I that they would not be uniform throughout believe that I must consider the conse­ the Community. In the Netherlands, for quences of the unusual situation created by example, the effect would be to broaden the the interpretation by the national courts in categories of taxed transactions. For the par­ the Netherlands of a pre-existing legal con­ ties involved in particular transactions, the cept, poorly adapted to give effect to the Commission anticipates negative conse­ dividing line envisaged by the Sixth Directive quences only for individual (non-taxable) between exempt land and non-exempt build­ purchasers who, not being registered VAT ing land. payers, are not, thus, in a position to deduct the amount of VAT included in the price paid for the supply of the land from VAT payable in respect of their own supplies of goods or services. 33

(i) The transitional derogation

IV — Consideration of the questions referred to the Court

necessary to ascertain whether the Nether- clearly envisaged that the transitional period would initially last from 1 January 1978 until lands is actually under any obligation to lay 31 December 1983 for the then nine Member down such a definition. States, it none the less gave the Council the duty both of reviewing its continued opera- tion and terminating any or all of the rele- vant derogations, acting unanimously on a proposal from the Commission. 35 In so far as the transactions covered by Annex F(16) are concerned, it appears that the Council's current policy is to await the expiry, at the 26. I digress briefly to draw attention to one end of 1996, of the current arrangements 36 significant qualification on any such obliga- designed to advance the achievement of a tion, though not involved in the present case. definitive system of VAT for the internal Article 28 is the sole article of Title XVI of market. 37 the Sixth Directive dealing with '[T] ransi- tional [P] rovisions'. It is provided at para- graph (3) that:

'During the transitional period referred to in paragraph 4, the Member States may:

27. In principle Member States are conse- quently entitled under Article 28(3)(b) to

I-1734

GEMEENTĽ EMMEN v BELASTINGSDIENST G R O T E O N D E R N E M I N G E N

maintain any exemption of Annex F(16) entry into force of the directive' whether by transactions which predated the Sixth Direc­ legislative, administrative or judicial means. tive. The continued existence of these Arti­ cle 28(3) derogations reflects the ongoing effects of the Council's inability to agree a common list of exemptions at the time of the 39 adoption of the Sixth Directive. The scope of any exemption thereunder must be con­ strued narrowly, in the light of the overrid­ 28. The exemption from VAT of the supply ing objective of the Sixth Directive to create of land in effect, pursuant to the 1968 Law, a uniform basis of assessment for a common, when the Sixth Directive entered into force integrated system of VAT. The first con­ in the Netherlands, was qualified. Once a dition of such an exemption is that it should plot of land was classified as a 'prepared be a mere continuation of a pre-existing tax immovable' for the purposes of the exemption granted by national law. As the 1968 Law, its supply was subject to turnover Court ruled in Kerrutt, 40 the wording of tax. The agent for the Commission stated at Article 28(3)(b) 'precludes the introduction the hearing that the Netherlands has never of new exemptions or the extension of the applied or sought to apply any scope of existing exemptions after the date of Article 28(3)(b) derogation. Nor has any such claim been advanced on behalf of the Netherlands at any stage of these proceed­ ings. In these circumstances, the Netherlands has been under an obligation since 1 January 1979 to ensure the availability of the exemp­ tion provided in Article 13B(h) for the sup­ ply of land other than building land and under a corresponding duty to subject all supplies of building land to VAT.

I - 1735

O P I N I O N O F MR FENNELLY - CASE C-468/93

in the present case, raises a possible issue held that Article 13B(d)(1) of the Sixth concerning direct effect. That issue has nor­ Directive concerning the exemption for the mally arisen either in the context of disputes granting and negotiation of credit was between Member States, or their public directly effective notwithstanding the condi­ authorities, and private natural or legal per­ tions set out in the opening words of 44 sons (the so-called 'vertical direct effect' of Article 13B. According to the Court: directives), or in disputes arising between such private persons themselves ('horizontal direct effect').

41 — See Joined Cases 231/87 and 129/88 Ufficio Distrettuale delle Imposte Dirette di Fioretiztiola d'Arda and Others ν Comune di Carpatieto Piacentino and Others [1989] ECR 3233, paragraph 31 of the judgment. 42 — See, initially, Case 41/74 V«» Duyn ν Home Office [1974] Moreover [they] refer to measures intended ECR 1337 as confirmed in Case 148/78 Pubblico Ministero to prevent any possible evasion, avoidance or ν Ratti [1979] ECR 1629 and on various subsequent occa­ sions, including Case C-91/92 Faccini Dori [1994] ECR I- abuse. A Member State which has failed to 3325. This right may be exercised 'regardless of the capacity in which the latter is acting'; see Case 152/84 Marshall ν take the precautions necessary for that Southampton and South-West Hampshire Area Health Authority [1986] ECR 723, paragraph 49 of the judgment. A tax authority is clearly an emanation of the State tor the direct effect of directives; see Case 8/81 Becker ν Finanzamt Münster Innenstadt [1982] ECR 53. 44 — See the text of Article 13B set out in paragraph 2 above of 43 — Loc. cit., ibid. this Opinion.

I -1736

GEMEENTE EMMEN ν BELASTINGSDIENST G R O T E O N D E R N E M I N G E N

46 — See, for example, Case 148/78 Ratti, loc. cit., foot­ note 42 above, paragraph 23 of the judgment; Becker, loc. cit., footnote 42 above and, more recently, Joined Cases 45 — Loc. cit.. footnote 42 above, paragraphs 33 and 34 of the C-6/90 and C-9/90 Francovich and Others [1991] ECR judgment. I-5357, paragraph 11.

I - 1737

OPINION OF MR FENNELLY — CASE C-468/93

cannot include those who would not benefit binding on all the authorities of Member from that provision if properly implemented. States including, for matters within their jurisdiction, the courts. It follows that, in applying the national law and in particular the provisions of a national law specifically introduced in order to implement [the direc­ tive], national courts are required to interpret their national law in the light of the wording and purpose of the directive ...'.

47 — Case 14/83 [1984] ECR 1891, paragraph 27 of the judg­ ment. 49 — See Case C-106/89 Marleasing [1990] ECR I-4135. 48 — Ibid., paragraph 26 of the judgment. 50 — Ibid., paragraph 9 of the Opinion (emphasis in original).

I-1738

GEMEENTE EMMEN ν BELASTINGSDIENST GROTE O N D E R N E M I N G E N

51 — Sec Case 80/86 Kolpingbuts Nijmegen [I987J ECR 3969; paragraph 13 of lhe judgment. The Court, referring to Case 14/86 Pretore di Salò ν Χ [1987] ECR 2545, pointed out that this interpretative obligation would not have the effect of requiring a national court to interpret its national law in 36. Building land, whatever it is, does not a manner capable of aggravating the potential criminal lia­ enjoy the obligatory exemption conferred by bility of those acting in contravention of the relevant direc­ tive. It may be that a similar limitation would restrict the Article 13B(h) of the Sixth Directive. But retroactive application of a national court's interpretation of what is it? To find out we must look at a domestic tax law permitting a VAT exemption in harmony with the corresponding exemption prescribed by the Sixth Article 4(3)(b), which acts as a definition sec­ Directive, where such a harmonious application would increase the potential liabilities of affected taxpayers. tion. Its accidental location in Article 4 can­ 52 — Loc. cit., foninole 47 above, paragraph 28 of the judgment. not influence the content of the definition.

I - 1739

O P I N I O N O F MR FENNELLY — CASE C-468/93

38. In order to determine the meaning of 'building land', it is necessary, in the light of the submissions of the appellant and the Netherlands, in particular, to determine the ambit of the Member States' discretion. Arti­ cle 13 of the Sixth Directive lists two catego­ ries of obligatory exemptions from VAT. While both Article 13A and 13B oblige 37. The Court has also consistently held that 'the terms used to specify the exemptions envisaged by Article 13 of the Sixth Directive 55 — See SUFA, paragraph 13 of the judgment. See, for example, are to be interpreted strictly, since they con­ the recent confirmation of this principle in Case C-453/93 Bultbuis-Griffioen ν Inspector der Omzetbelast­ stitute exceptions to the general principle ing [1995] ECR I-2341, paragraph 19 of the judgment. that turnover tax is levied on all services sup­ 56 — See, for example, Case 173/88 Skatteministeriet ν Henriksen [1989] ECR 2763 where the Court held that the phrase plied for consideration by a taxable '"excluding ... the letting of premises and sites for parking vehicles" in Article 13B(b) of the directive introduces an exception to the exemption laid down in that provision in regard to the leasing or letting of immovable property. It thus places the transactions which it encompasses under the general rules of the directive, which make all taxable trans­ 53 — See Case 235/85 Commission ν Netherlands [1987] actions subject to tax, except where exemptions are ECR 1471, paragraph 7 of the judgment and Case expressly provided for. That provision thus cannot be inter­ 348/87 SUFA, loc. cit., footnote 27 above, paragraph 10 of preted restrictively as meaning that only open parking the judgment. places, to the exclusion of closed garages, come within its 54 — See, SUFA, loc. cit., ibid., paragraph 11 of the judgment. scope' (paragraph 12 of the judgment).

Member States to lay down clear conditions 39. The specificity of the questions referred for their 'correct and straightforward appli­ by the national court, particularly the detail cation', it is clear from Becker that the of Question II, suggests that the use of the exemption must be sufficiently precise and notion of a prepared immovable to deter­ unconditional as to be capable of conferring mine the application of VAT to land transac­ rights on individuals. However, a significant tions in the Netherlands inevitably engen­ number of the exceptions listed in both ders debate as to the nature and extent of Articles 13A and 13B envisage some form of particular improvement works which will Member State recognition of a body bring land within its scope. I find this involved. In some cases, the text uses the approach prima facie difficult to reconcile expression, 'as defined by the Member State with the simple wording of Article 4(3)(b) concerned' or 'as defined by the Member which states that building land 'shall mean States'. In the case of exclusions for 'the leas­ any unimproved or improved land defined as ing or letting of immovable property' such by the Member States' (emphasis add­ (Article 13B(b)), Member States 'may apply ed). Nevertheless, the emphasis on prepara­ further exclusions to the scope of this tory works pervades the appellant's conten­ exemption'. Article 13B(f) provides an tion that only the transfer of improved land exemption for 'betting, lotteries and other can come within Article 4(3)(b) and that forms of gambling, subject to conditions and unbuilt land is exempt except where it can be limitations laid down by each Member State'. shown to be improved; in other words, that With such provisions the role of the Member it must be designed to serve as a site for the State is unambiguously to limit the scope of construction of one or several buildings and the exemption in accordance with the general have been so improved by the execution of provisions of the Sixth Directive. 5 7 The extensive physical work on the land itself. In power to define found in Article 4(3)(b) is merely a power to define the subject-matter response to a question at the hearing, counsel of the exception to the exemption. I see no for the Netherlands maintained that the reason to treat it differently from the other Member States' discretion to define 'building powers to define found in Article 13. Its land' allows the exclusion from the defini­ nature suggests, as does its wording, that it tion of all unimproved building land. This should be construed so as to give a broad disjunctive interpretation of Article 4(3)(b) effect to the definition of 'building land' and, means that unimproved building land will in particular, that it cannot leave out unim­ always be exempt from VAT. proved land.

58 — To justify a contrary (and thus narrower) interpretation, the text would, in my opinion, have to have indicated the exist- ence of the additional choice such as: '"Building land" shall mean any improved other than unimproved land defined as such by the Member States ' . The wording contains no indi- cation that the reference to both unimproved and improved land should be interpreted other than conjunctively. 59 — The wordings are as follows (emphasis added): (French) 'Sont considérés comme terrains à bâtir, les terrains nus ou 42. I find the Commission's approach more aménagés définis comme tels par les États Membres'; (Ger- man) 'Als Baugrundstücke gelten erschlossene oder liner- satisfactory in the search for a definition of schlossene Grundstücke entsprechend den Begriffsbestim- 'building land'. The Dutch Government mungen der Mitgliedstaaten'; (Italian) 'Si considerano terreni edificabili i terreni, attrezzati o no, definiti tali dagli claims that it has exercised the discretion to Stati membri'; (Danish) 'ved "byggegrunde" forstås grunde, hvad enten de er byggemodnet eller ikke, når de af give such a definition, paradoxically, by not medlemsstaterne betragtes som sådanne' (emphasis added). They appear clearly to encompass all aspects of the notion giving one, but by allowing the Dutch courts of 'building land' to be defined by the Member States. Only to interpret a pre-existing concept which the Dutch text is possibly elliptical on this point. It is worded as follows: 'Als bouwterrein worden beschouwd de does not purport to define 'building land'. door de Lid-Staten als zodanig omschreven al dan niet bou- wrijp gemaakte terreinen'. It appears that the reference to Any definition of the scope of the exemption 'al dan niet' may carry the implication of a 'whether or not' or 'one or the other' type of choice in English, but I do not which complied with the requirements of believe such a possibility in one language version should Article 13B should, at least, have the merit of affect the adoption of a common Community notion of 'building land' in conformity with the objective of the Sixth clarity. However, this is a quality which Directive and, indeed, with the other language versions. quite obviously does not exist at present in

44. This leaves us the problem of providing material for a satisfactory definition of 'building land', in the absence of a definition by a Member State. Before doing so, I would like to digress briefly to explore the implica­ tions and feasibility of the alternative view proposed by the Dutch Government.

43. If I am right in suggesting that unim­ proved building land must be included in any definition, a ready solution emerges for the problem described in the preceding para­ graph. If land can be described as 'building land' when unimproved, the extent of any 45. Firstly, as I have already said, this opens particular development works or provision up the prospect of further, repeated and of services, i. e. of 'improvements' is of no more refined references for preliminary rul­ consequence. Once it has become building ings to the Court. The tacit Dutch definition land even though unimproved, it will so of 'building land' as improved land does not, nevertheless, make any attempt to address the substantive question of what is improved 60 — See footnote 25 above. land.

I - 1743

OPINION OF MR FENNELLY — CASE C-46S/93

61 — See footnote 21 above. 62 — Ibid., paragraphs 20 and 21 of the judgment.

I -1744

GEMEENTE EMMEN ν BELASTINGSDIENST GROTE ONDERNEMINGEN

decisive, but, rather, that the crucial criterion includes an obligation to lay down rules should be whether, objectively, in accordance designed to ensure that the exemption is with the system of public law in force in the applied in a straightforward manner and to Member State concerned, it can be said that prevent 'any possible evasion, avoidance or the land supplied can, in principle, be built abuse'. All of this remains within the discre­ upon. I accept the Commission's observation tion of the national authorities. The exercise that in many cases the zoning of land for of that discretion should, consistent with the building in an official and publicly available objective underlying the exemption, be left development plan would be sufficient to ren­ entirely to the Member State, subject only to der it 'building land' for the purposes of the judicial review. Sixth Directive. To require the possession of an individual permit for the erection of spe­ cific buildings in all cases, would, in my opinion, represent an unduly strict threshold for the attainment of building land status. However, there may be Member States or areas of Member States where such a system of zoning does not exist, in which case an individual building permit would be the only 49. It is, of course, the absence of any Mem­ means of discerning the publicly recognized ber State action of the kind described in the status of building land. preceding paragraph which requires the Court to provide the national court with an interpretation of Articles 13B(h) and 4(3)(b) which will enable it to decide whether the plots in question in this case are 'building land' for the purposes of the Sixth Directive. The duty of the Court is to assist the national court to decide the case before it. The national court must take into account the requirements of the Sixth Directive, the facts of the case, including any relevant aspects of national law, such as, for example, the requirement of legal certainty. 63

52. In my opinion the Court should answer the questions posed by the national judge by providing the following essential elements of guidance: (ii) the lots are all part of land which was previously for agriculture but has now been designated in a zoning plan. Prior to the supply of each lot, and on the appellant's instructions, implementation of the zoning plan applicable to the lot was commenced and, on the instructions (a) if land is designated as ‘building land’ in of the various utility undertakings, mains an official zoning plan, that is sufficient to were laid for the central antenna, tele- bring it within the definition in communications lines and the gas, water Article 4(3)(b) of the Sixth Directive, and electricity supply (utilities). In that whether it is improved or not; context ‘implementation of the zoning plan’ means the excavation of drains and the laying of a sewerage system and (res- idential) streets, as well as (other) opera- tions. The laying of utility systems entails digging a ditch and placing pipes (b) services, suitable to assist the develop- in it, and refilling the ditch with the orig- ment of the land need not be physically inal soil; upon the land in order to be relevant to its transformation into improved building land;

(iii) all the lots are on streets which only exist on the plan.

(c) whether any one or more of the particu- lar listed improvements have been carried out is not relevant; the judgement as to whether land is to be regarded as 51. It is clear that, not only has the land in ‘improved building land’ is to be made in question been ‘designated as building land in the light of its purpose.

(3) The national court must, in so far as it is reasonably possible, interpret its national legislation in the light of the wording and purpose of the definition of 'building land' as prescribed by Articles 4(3)(b) and 13B(h) of the Sixth Direc­ tive;

(4) In interpreting the term 'building land', national courts do not need to make a choice between improvement works, such as those listed in Question II referred by the national court.

I-1747