C-346/95

I-483

OPINION OF MR JACOBS — CASE C-346/95

may not exempt from tax the transactions The facts and the national court's questions which are excluded from exemption. The transactions mentioned in Article 13B(b)(1) are therefore compulsorily taxable.

5. Since 1984 Mrs Blasi has provided accom- modation in three buildings situated in Munich for emigrant families from Eastern European countries. The rooms in the build- ings are fully furnished and equipped with cooking facilities and fridges. They are cleaned by the emigrants themselves, who in some cases install telephones at their own expense.

I-484

BLASI v FINANZAMT MÜNCHEN I

8. Having received an assessment to VAT in Is it no longer "provision of accom- respect of the lettings for the year 1984 Mrs- modation in the hotel sector" if the Blasi brought proceedings before the refer- operator keeps the rooms ready for ring court, claiming that she had no liability long-term accommodation and this to VAT. In its order for reference, the refer- finds expression in the conclusion of ring court raises doubts as to whether Para- a long-term letting agreement graph 4(12), second sentence, of the UStG is (longer than six months)? compatible with Article 13B(b)(1) of the Directive. It notes that, whereas the Direc- tive excludes from the exemption applicable to the leasing or letting of immovable prop- erty, the 'provision of accommodation ... in the hotel sector or in sectors with a similar function', the UStG refers only to the short- term provision of accommodation. The refer- ring court has therefore put the following questions to this Court: (b) Is a tax exemption under Article 13B (b)(1) for a proportion of the time possible if it transpires that all the accommodation can be let on a short or long-term basis according to choice?

'1. Is Article 13B(b)(1) of the Council Directive of 17 May 1977 on the har- monisation of the laws of the Member States relating to turnover taxes (Sixth VAT Directive) to be interpreted as meaning that the "provision of accom- modation" in the hotel sector or in sec- tors with a similar function means no more than the short-term accommoda- 3. If Question 1 is answered in the nega- tion of guests? tive:

9. The referring court's questions, which may be considered together, are posited on 11. However, that has no relevance to the the basis that, if Article 13B(b)(l) is inappli- present case. The issue here is not whether cable to Mrs Blasi's services, there would be Germany may exempt Mrs Blasi's services no basis in the Directive for taxing them. In but whether it may tax them. In so far as her particular the German provision could not services were not compulsorily taxable under be based on the last sentence of Article Article 13B(b)(l), the German provision, by 13B(b), which allows Member States to taxing them, would be adding to, rather than 'apply further exclusions to the scope of this limiting, the exclusions from exemption. exemption'. That finding is based on the Court's statement in Henriksen 3 that the last sentence of Article 13B(b) merely permits a Member State to add to the exclusions from exemption and not to restrict such exclu- sions; the referring court concludes that Ger- many cannot rely on that provision in order to restrict the exclusion from exemption in Article 13B(b)(l) to short stays.

tions from exemption is in conformity with moreover, buildings, once constructed, may that general principle. I see no Community change hands many times during their life, interest in seeking to interpret narrowly the often without being subject to further econ- discretion granted to Member States by that omic activity. 7 Under the Directive the provision to bring further transactions charge to VAT is therefore limited in prin- within the scope of the charge to tax. ciple 8 to the supply of building land or of new buildings and the land on which they stand. The preparation of land for develop- ment entails economic activity enhancing the value of the land; and the supply of a new building marks the end of a production pro- cess. Thereafter repeated taxation of immov- able property each time it is sold would not 13. It might therefore have been possible for be justified. The same applies to the letting Germany to justify the provision on the of such property, which is normally a com- basis of the last sentence of Article 13B(b). It paratively passive activity not entailing sig- argues however that the provision can be nificant added value; although an economic based on Article 13B(b)(1). I shall therefore activity for the purposes of Article 4 of the turn to the referring court's questions, which Directive, 9 the letting of immovable prop- concern that provision. erty is therefore in principle exempt from tax.

14. By its first and second questions the referring court asks in effect whether the short-term provision of accommodation is a sufficient criterion for the purposes of Article 13B(b)(1), and, if so, what period is to be regarded as short-term. 16. However, while generally exempting the leasing or letting of immovable property,

Article 13B(b) also provides for exclusion of 19. As regards the German provision, it is certain transactions from exemption. The true that the short-term letting of residential common feature of those transactions is that property may not entail all of the additional they entail more active exploitation of the supplies of goods and services, such as provi- immovable property justifying further taxa- sion of meals and drinks, cleaning of rooms, tion in addition to that levied upon its initial provision of bed linen etc., normally pro- sale. vided in hotels. Nevertheless, there can be no doubt that a taxable person offering, for example, short-term holiday lets of residen- tial property fulfils essentially the same func- tion as — and is in a competitive relationship with — a taxable person in the hotel sector. The essential distinction between such let- tings and exempt lettings of residential prop- erty is the temporary nature of the accom- modation. In any event, short-term lets are more likely to involve additional services such as provision of linen and cleaning of 17. With more particular reference to Article common parts of buildings or even of the 13B(b)(l), it may be noted, first, that its accommodation itself (indeed a number of terms, in particular the phrases 'accommoda- such services are provided by Mrs Blasi); tion, as defined in the laws of the Member moreover, they involve more active exploita- States' and 'sectors with a similar function', tion of the property than long-term lets in so are somewhat imprecise. It seems to me that far as greater supervision and management is the intention was to leave the Member States required. some latitude in defining the precise limits of the exclusion.

are subject to tax. While it may be true that 22. It may be noted that the opening words it is not unknown for persons to stay for of Article 13B require Member States to lay long periods in hotels, any inadequacies of down conditions for ensuring the correct the German provision in that respect are not and straightforward application of the material to the present case and may in any exemptions and of preventing any possible event be of minimal practical significance. evasion, avoidance or abuse. Germany is in my view entitled to consider that the other criteria suggested by Mrs Blasi, such as whether the accommodation is the centre of interests of the persons concerned or whether additional services are provided, would be too uncertain and difficult to apply. For example, a residential caravan on a camping site in Spain might be regarded as the centre of interests of a retired person who sells his house and goes to live there throughout the year; it would be difficult for the camping site owner to apply such a cri- terion. Moreover, the level of services and facilities provided by hotels, hostels and camping sites varies considerably. There are hotels which offer no more than a room and camping sites which provide little more than a camping field. Moreover, the German Gov- ernment might reasonably consider that such criteria would be less likely than one based 21. Moreover, it seems to me that the on the period of stay to achieve the aim of requirement flowing from the case-law of competitive neutrality. the Bundesfinanzhof that, in order for the letting of an immovable property to qualify for exemption, there must be an intention, evidenced by a lease or other agreement, to let the property for a minimum period of six months is not unreasonable. It provides a workable and legally certain means of distin- guishing between short-term accommoda- tion similar to that provided in the hotel sec- 23. In so far as Mrs Blasi's genuine intention tor and the longer-term letting of residential is to provide longer-term lets of residential property for which the Directive provides property it would be open to her to enter exemption. A hotel or hostel will be willing into an agreement to that effect. If, on the to accept guests for potentially short stays, other hand, the inherently temporary nature whereas a landlord interested in more passive of the stays prevents her from doing so, then longer-term lets will require an agreement it is not unreasonable that the tax authorities providing confirmation of the tenant's inten- should take the view that what is at issue is tion to stay for a longer period. I see no rea- short-term commercial exploitation of son to interpret the Directive as imposing a immovable property and equate the accom- maximum of three months as the Commis- modation which she provides with the tax- sion suggests. able accommodation provided by a hostel or

A national rule subjecting t o V A T the p r o v i s i o n of s h o r t - t e r m a c c o m m o d a t i o n t o guests, that is t o say, t h e p r o v i s i o n of a c c o m m o d a t i o n o t h e r w i s e t h a n u n d e r an agreement p r o v i d i n g for a m i n i m u m stay of six m o n t h s , is c o m p a t i b l e w i t h Article 13 B(b)(l) of t h e Sixth V A T Directive.

I-490