C-258/95
ECLI:EU:C:1997:19
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FILLIBECK v FINANZAMT NEUSTADT
OPINION OF ADVOCATE GENERAL LÉGER delivered on 16 January 1997 *
1. The Bundesfinanzhof (Federal Finance required to work. Employees were mainly Court) has referred three questions to the transported in vehicles belonging to the Court concerning the interpretation of cer- employer, although some were transported tain provisions of the Sixth VAT Directive ' by another employee in his own private (hereinafter 'the Directive'). The Court is vehicle on the employer's behalf. In neither essentially asked to consider the manner in case was any specific charge made to which free collective transport provided by employees using the transport, nor was any an employer to its employees, from their deduction made from their wages. home to the workplace, should be treated for VAT purposes.
Facts and procedure 4. Those transport services were provided pursuant to the Bundesrahmentarifvertrag für das Baugewerbe (Federal Collective Framework Agreement for the Building Industry) where the employees' homes and 2. According to the order for reference, the the building sites were more than a mini- facts in this case are as follows. mum distance apart (six kilometres).
3. Julius Fillibeck Söhne G m b H & C o . KG (the applicant and appellant on a point of law, hereinafter 'the applicant') runs a build- 5. In that context, the Finanzamt (Tax ing firm. In the years in question, 1980 to Office) (the defendant and respondent on a 1985, it provided transport for some of its point of law, hereinafter 'the defendant') employees free of charge from their homes considered there to be taxable transactions to the various building sites where they were within the meaning of the German legisla- tion on turnover tax. 2
* Original language: French. 1 — Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to 2 — Paragraph 1(1)(1), second sentence, (b), of the Umsatz- turnover taxes — Common system of value added tax: uni- stcuergesctz of 1980 (1980 Law on turnover tax form basis of assessment (OJ 1977 L 145, p. 1). — hereinafter 'the UStG 1980').
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6. In its appeal, the applicant challenged the specifically agreed, fixed return for the ben- view that those transport services were tax- efit in kind'. 5 It therefore referred the fol- able. It claimed, in that respect, that the lowing questions to the Court for a prelimi- judgment of the Bundesfinanzhof of 11 nary ruling: March 1988 3 did not apply to circumstances such as those in the present case and on that ground the transport at issue could therefore not be regarded as a taxable supply for the purposes of the provisions of the UStG 1980 cited above. 4 '(1) Does the transport provided by an employer constitute a service "effected for consideration" within the meaning of Article 2(1) of Directive 77/388/EEC — that is to say, effected for a propor- tion (to be estimated) of the work per- formed by the employees — where, Both the defendant and the Finanzgericht pursuant to a collective agreement, the (Finance Court), before which its action was employer conveys employees (without unsuccessful, it claimed, failed to recognize specially agreed and calculated consider- that the transport services at issue were not ation) from their homes to the work- provided to employees for their own private place where they are more than a speci- use, but were provided by the employer pre- fied distance apart, and the work dominantly in the interests of its business performed — which has no actual con- and pursuant to its obligation, in its capacity nection with such transport services — as a building firm, under the Collective is already to be carried out in return for Framework Agreement for the Construction the agreed money wages as in the case Industry. of the other employees?
7. The national court considers that this case (2) Does Article 6(2) of Directive raises 'questions relating to the taxation of 77/388/EEC cover the use of goods so-called benefits in kind provided by an forming part of the assets of the busi- employer to its employees where the ness or a service carried out free of employees do not have to provide any charge even where — as in the case of free transport for employees from their homes to the workplace and back in a company vehicle — it does not serve 3 — V R 30/84 and V R 114/83 (BFHE 153, 155, 162, BStBl II 1988, 643, 651). purposes other than those of the busi- 4 — The national court points out (point II. 1 of the order for ref- ness as far as the employer is concerned, erence) that, in that judgment, the Bundesfinanzhof aban- doned the former case-law. Whereas a notional part of the work performed by the employees had previously been treated as consideration for the transport supplied by the employer, it now considers that it is impossible to ascertain the value of that notional part of the work constituting con- 5 — Page 8 of the English translation [amended] of the order for sideration. reference.
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but does serve the employees' private 9. Article 2(1) provides that: purposes and the employees are not charged turnover tax in this respect (on account of their use free of charge of the transport service)?
'The following shall be subject to value added tax:
1. The supply of goods or services effected for consideration within the territory of the (3) In the event that Question 2 is answered country by a taxable person acting as such'. 6 in the affirmative: Does Article 6(2) of Directive 77/388/EEC also cover a case where the employer does not convey the employees in its own vehicles, but commissions a third party (in this case, one of its own employees) to effect the 10. It is not disputed that in this case the transport?' transport services constitute a supply of ser- vices by a taxable person for the purposes of the Directive; the national court's only ques- tion is whether the supply is effected for consideration.
First question
11. The question of whether a supply of ser- vices is effected for consideration has been addressed in numerous cases and has now been settled.
8. The Bundesfinanzhof is in doubt, first, as 12. According to the Court, in order for a to whether, and if so the extent to which, the supply of services to be regarded as effected transport services provided by the employer for consideration, and thus to be taxable, to its employees in this case constitute sup- there must be a direct link between the ser- plies 'effected for consideration' (in the form vice provided and the consideration received. of a proportion — to be estimated as appro- priate — of the work performed) within the meaning of Article 2(1) of the Directive. 6 — Emphasis added.
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13. That principle was first laid down in 15. It is also useful to refer to Case C-16/93 Case 154/80 Coöperatieve Aardappelenbe- Tolsma,10 in which the Court held that a waarplaats, 7 which concerned the so-called supply of services is effected 'for consider- 'Second VAT Directive'. 8 ation' within the meaning of Article 2(1) of the Directive, only
'... if there is a legal relationship between the 14. In Case 102/86 Apple and Pear Develop- provider of the service and the recipient pur- ment Counàl,9 the Court confirmed that suant to which there is reciprocal perfor- decision, this time in the context of the Sixth mance, the remuneration received by the VAT Directive, and held that the body in provider of the service constituting the value question which, in pursuit of its task of actually given in return for the service sup- defending the common interests of growers plied to the recipient.' n of apples and pears, carried out collective advertising campaigns financed by a manda- tory annual charge, was not supplying ser- vices for consideration, in the absence of any direct link between the service provided and the consideration received. On that occasion, the Court recalled that it
'... has already held with reference to the concept of the "provision of services against The Court held that if individual growers payment" in Article 2(a) of the Second did receive benefits, then those benefits were Directive, whose wording is similar to that only derived indirectly from those accruing of Article 2(1) of the Sixth Directive, that generally to the industry as a whole and, fur- taxable transactions, within the framework thermore, that there was no link between the of the VAT system, presuppose the existence level of benefit derived by individual grow- of a transaction between the parties in which ers from the services of the Apple and Pear a price or consideration is stipulated. The Development Council and the level of the Court concluded that, where a person's mandatory charge which they had to pay. activity consists exclusively in providing ser- vices for no direct consideration, there is no basis of assessment and the services are therefore not subject to VAT (judgment in 7 _ [1981] ECR 445, parigraphs 12 and 13. 8 — Second Council Directive 67/228/EEC of 11 April 1967 on the harmonization of legislation of Member States concern- ing turnover taxes —Structure and procedures for applica- tion of the common system of value added tax (OJ, English Special Edition 1967 (I), p. 16). 10 — [1994] ECR 1-743. 9 — [1988] ECR 1443. 11 — Paragraph 14.
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Case 89/81 Staatssecretaris van Financiën v — the consideration must be capable of Hong Kong Trade Development Council being expressed in money; 1 6 [1982] ECR 1277, paragraphs 9 and 10)'. , 2
— the consideration must be the subjective And that, value given to it by the parties. 17
'In its judgments in Case 154/80 Coöper- atieve Aardappelenbewaarplaats [1981] ECR 17. The three conditions which the case-law 445, paragraph 12, and Case 230/87 Natu- of this Court requires to be satisfied in order rally Yours Cosmetics [1988] ECR 6365, for a supply of services to be regarded as paragraph 11, the Court stated on this point being effected for consideration and, as such, that the basis of assessment for a provision subject to value added tax, are not satisfied of services is everything which makes up the here. consideration for the service and that a pro- vision of services is therefore taxable only if there is a direct link between the service pro- vided and the consideration received (see also the judgment in Case 102/86 Apple and 18. A mere 'proportion (to be estimated) of Pear Development Council v Commissioners the work performed by the employee', to use of Customs and Excise [1988] ECR 1443, the words of the national court, cannot be paragraphs 11 and 12).' 1 3 considered real consideration for the trans- port services received by the employee.
16. The three following criteria can be iden- tified from those decisions, which makes it possible to define the concept of the supply 19. In the present case, no direct link can be of services effected 'for consideration': 14 observed between the service supplied and the consideration received.
— there must be a direct link between the service supplied and the consideration 20. The service which, in this case, consists received; ,5 of the transport services is supplied indepen- dently of any consideration received. Employees using the free collective transport 12 — Paragraph 12. 13 — Paragraph 13. 14 — See, to that effect, point 14 of the Opinion of Advocate General Lenz in Tolsma, cited above. 16 — Coöperatieve Aardappelenbewaarplaats (paragraph 13) and 15 — Coöperatieve Aardappelenbewaarplaats (paragraph 12), Naturally Yours Cosmetics (paragraph 16). Apple and Pear Development Council (paragraph 11) and 17 — Coöperatieve Aardappelenbewaarplaats (paragraphs 13 and Naturally Yours Cosmetics (paragraph 11). 14) and Naturally Yours Cosmetics (paragraph 16).
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made available to them by the employer do 22. Furthermore, in the course of the pro- not make any payment, nor is any sum ceedings, neither party proposed any estima- deducted from their wages as consideration tion of the distinct proportion of the work for that service. Furthermore, the wages can- performed which represents the consider- not be regarded as comprising consideration ation for the transport services. for that service, since they are only paid as consideration for the work performed.
Just as in Apple and Pear Development 23. As a result, in so far as no consideration Council, cited above, in which all apple and having a direct link with the service supplied pear growers paid the same charge to the can be identified, it is, a fortiori, impossible body in question and there was no link in this case to express the consideration 'in between the charge paid and the benefits money', as required by the case-law cited derived, the employees in this case are above, and to recognize a 'subjective' value required to perform the same work and given to it by the parties. receive the same salary, irrespective of whether they derive a benefit from the free transport; there is no consideration which has a direct link with the transport provided by the employer.
24. Since transport services provided free of charge by an employer to its employees can- not be regarded as effected 'for consider- The employer is required to make free trans- ation' within the meaning of Article 6(2) of port available for all its employees under the the Directive, those services do not fall relevant collective agreement, but they are within the scope of that provision and on free to choose whether or not to make use of that basis cannot therefore be subject to it. value added tax.
21. A distinct proportion of the work per- formed by the employee cannot therefore be regarded as the (estimated) value of the con- 25. The first question should therefore be sideration for the transport services. answered in the negative.
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Second question Member States may derogate from the provi- sions of this paragraph provided that such derogation does not lead to distortion of competition'.
26. In the event that the first question is answered in the negative, the national court asks whether the transport services at issue fall within the definition of taxable transac- 28. According to Article 11(A)(1)(c) of the tions for the purposes of Article 6(2) of the Directive, the taxable amount of the transac- Directive. tions referred to in Article 6(2) is 'the full cost to the taxable person of providing the services'.
27. That provision reads as follows:
29. The wording of the national court's question seems to suggest that a distinction should be made between 'the use of goods forming part of the assets of the business' (Article 6(2)(a)) and 'supplies of services car- '2. The following shall be treated as supplies ried out free of charge' (Article 6(2)(b)). of services for consideration:
(a) the use of goods forming part of the However, that distinction does not seem to assets of a business for the private use of me to be necessary in the circumstances of the taxable person or of his staff or more this case. Only the expressions 'private use generally for purposes other than those of the taxable person or of his staff' and 'pur- of his business where the value added tax poses other than those of his business', on such goods is wholly or partly which are used in both provisions, are rel- deductible, evant.
(b) supplies of services carried out free of charge by the taxable person for his own 30. To summarize, either the transport at private use or that of his staff or more issue is regarded as being effected for the pri- generally for purposes other than those vate use of the staff, for purposes other than of his business. those of the business, or, alternatively, it is
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regarded as serving the purposes of the busi- 34. The United Kingdom Government and ness, in which case it is not subject to any tax the Commission, however, consider that the under Article 6(2) of the Directive. special circumstances of this case should be taken into account and justify non-taxation under Article 6(2).
31. Arguments were submitted in favour of 35. I support that view. both approaches during the proceedings.
36. First, it seems difficult to deny that the transport provided for employees from their home to the workplace is a matter which in 32. First, the applicant claimed that the principle concerns their private life. transport provided for employees directly and exclusively serves the purposes of the business and therefore falls within the employment relationship and does not con- cern the 'private' domain of employees. It submits, in that respect, that even if the transport did theoretically concern the employees' 'private sphere', it would have 37. The employee decides where his home been brought within the employment rela- will be with regard, where appropriate, to his tionship by virtue of the collective agreement place of work, and that determines the dis- pursuant to which it is provided. It con- tance between the two and the means of cluded therefore that Article 6(2) does not transport he is free to choose for that jour- apply in this case. ney. The employer is not involved in any way in those decisions, since the employee's only obligation towards him is to report to his place of work at the agreed time. The employee is responsible for taking the neces- sary steps to arrive at the workplace and he alone is responsible for deciding how to do so. As a result, under normal circumstances, transport provided for an employee from his 33. In contrast, the other parties considered home to the workplace is 'for the private that the free transport of employees serves use' of staff, and is effected for purposes their private purposes and thus serves pur- 'other than those of the business'. That is not poses other than those of the business; altered by the fact that the transport may be Article 6(2) therefore applies. organized by the employer, who makes free
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collective transport available to those 41. The particular characteristic of a building employees wishing to use it. firm is that its employees are required to work on building sites in various locations according to the needs of the company's cus- tomers, rather than working on a permanent basis at a place of work agreed in advance with the employer. The place in which they are required to work can change from one day to the next, or even in the course of a single day. Employees must be prepared to 38. In general, therefore, the transport pro- move as soon as the employer asks them to vided for employees by an employer free of do so. That is a specific characteristic which charge using a company vehicle must be con- distinguishes employees in the building sec- sidered to be subject to value added tax, tor, in this case, from employees who are since it is treated as a supply of services required to work in a place determined in effected for consideration in accordance with advance, for example on the premises of the Article 6(2) of the Directive. company employing them. Employees are consequently unable to exercise any degree of choice or control over the length of the journey between their home and the work- place.
39. That principle is consistent with the aim of that provision, which 'is designed to pre- vent the non-taxation of business goods used 42. The places where the employees con- for private purposes'. 18 cerned are required to work are generally difficult to reach by traditional means, since they are building sites which may be situ- ated, for example, on industrial estates or in outlying areas.
40. However, I believe that, in exceptional cases and under special circumstances, which in this case relate to the nature of the busi- ness, transport provided by an employer 43. Furthermore, because those building could be regarded as being supplied for pur- sites may be some distance from the employ- poses which are not other than those of the ees' homes, depending on where they are business. required to work, working hours in the building sector can mean that employees have to get up particularly early in the morn- ing in order to reach their place of work in 18 — Case C-193/91 Mohsche [1993] ECR 1-2615, paragraph 8. Sec also Case 50/88 Kühne [1989] ECR 1925, paragraph 8. time.
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44. In those circumstances, the risk involved place using a vehicle belonging to the for the employer in leaving employees to employer must be regarded as serving the choose for themselves how to travel from private purposes of those employees and, on their homes to the workplace could be detri- that basis, subject to tax under Article 6(2) of mental to the successful operation of the the Directive, that is not the case when, as a company. It is possible that other more tra- result of special circumstances inherent, for ditional means of transport, such as public example, in the nature of the business, those transport, might prove to be inadequate or transport services serve purposes which are even non-existent in those circumstances. not other than those of the business. Such a situation falls outside the scope of Article 6(2) and the transaction is not taxable.
45. Therefore, transport organized by an employer for its employees from their homes Third question to their places of work may, in certain special circumstances, such as those in the present case, be necessary to meet fundamental requirements for the proper operation of the business. Although it cannot be denied that the employees derive a benefit from the transport made available to them, that ben- 48. By this question, the Bundesfinanzhof efit seems to be of secondary importance asks the Court, in the event that the second compared to the purposes of the business in question is answered in the affirmative, respect of which the free collective transport whether the fact that an employee may be was organized. commissioned to provide the transport at issue, using his own private vehicle, is rel- evant.
46. Although the fact that a collective agree- ment expressly provides for such transport is not conclusive, it is none the less indicative 49. In view of the suggested answer to the of the fact that the building sector involves second question, there is no need to answer an activity with special characteristics, which the third question in this case. must be taken into account.
50. However, if the circumstances were not 47. I therefore consider that the answer to such as to justify regarding the transport as the second question should be that, although being provided for purposes which are not in general the transport provided for other than those of the business, the answer employees from their homes to the work- to the third question would not differ from
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that given to the previous question. An thereof: transport services supplied by an employee commissioned to carry out a task employee must be regarded as comparable to on behalf of the taxable person, within the transport services supplied by the taxable meaning of the Directive, is not acting inde- trader, since they are carried out on behalf of pendently within the meaning of Article 4(1) that trader.
Conclusion
51. For those reasons, I propose that the questions referred by the Bundesfinanzhof should be answered as follows:
(1) Article 2(1) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States on turnover taxes — Com- mon system of value added tax: uniform basis of assessment, is to be inter- preted as meaning that an employer who provides transport for employees free of charge from their homes to the workplace, in the absence of any real connection either with the work performed or the wages received, does not effect a supply of services 'for consideration' within the meaning of that provi- sion.
(2) Article 6(2) of the Directive is to be interpreted as meaning that it applies where employees are conveyed free of charge by the employer from their homes to the workplace and back, in so far as the transport provided serves, in principle, the employee's private purposes and thus serves purposes other than those of the business. That provision does not, however, apply where, as in this case, because of the specific nature of the business, the supply of those transport services is not effected for purposes other than those of the business and therefore serves the purposes of the business.
(3) The first sentence of the answer to Question 2 also applies when the employer does not convey the employees in its own vehicles, but commissions a third party (in this case, one of its own employees) to do so.
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