C-149/97

2. Article 2(1) of the Sixth Directive provides that supplies of goods and services effected for consideration within the territory of the country by a taxable person acting as such are subject to value added tax. (1) supply of services and goods closely linked thereto for the benefit of their members in return for a subscription fixed in accor- * Original language: Greek. 1 — Council Directive 77/388/EEC of 17 May 1977 on the har- dance with their rules by non-profit- monisation of the laws of the Member States relating to turn- making organisations with aims of a polit- over taxes — Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1) ical, trade-union, religious, patriotic,

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philosophical, philanthropic or civic scription by any of the following non- nature, provided that this exemption is profit-making organisations — not likely to cause distortion of competi- tion;

(a) a trade union or other organisation of persons having as its main object the negotiation on behalf of its members of the terms and conditions of their ...' (emphasis added). employment;

(b)a professional association, member- ship of which is wholly or mainly restricted to individuals who have or B — National law are seeking a qualification appropriate to the practice of the profession con- cerned;

III — Facts

8. More specifically, it appears from the order A — Objects of the Institute of the Motor for reference that the Institute's object (Object Industry (h)) is primarily 'to take steps to improve the status of approved members of the Motor Trade and secure recognition of their posi- tion'.

6. The Institute of the Motor Industry (here- inafter the 'Institute') was established in 1920 and is a voluntary association of persons working in the retail motor industry.

9. Object (h) is reflected in the Report of Council of 12 June 1996 attached to the Insti- tute's Annual Report for the year to 31 March 7. The objects of the Institute and the means 1996. The report states that 'the principal at its disposal to achieve them, as set out in activity of the Institute during the year was its memorandum of association, are described to progress the improvement of professional in the order for reference. Specifically, the standards of individuals throughout the indus- primary objects of the Institute and its mem- try', that is to say the whole scope of the bers are to improve the professional standard motor industry but not the manufacturing

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12. The Institute pursues this object in various ways. It awards its own vocational engi- neering qualifications to its members. It awards a certificate of management. It 10. The other means of achieving Object (h) approves higher education automotive courses is through the Institute's 'Professional Reas- and programmes. It is an awarding body for surance Campaign'. This involves the issue of a brass plaque to organisations whose man- agement staff are, as to 60 per cent or more, 3 — The plaque displays the names of the members of the Insti- tute working for the organisation and contains a statement Institute members. The plaque is designed to that the named employees are bound by the Institute's Code of Conduct. The plaque is 'on lease' to the organisation in question, costs £350 plus VAT on acceptance and £100 per annum plus VAT thereafter. It can be taken away from the organisation if standards fail to meet those contained in the Code of Conduct or if the organisation ceases to meet the 2 — For example, a person who is already in a managerial job condition that at least 60 per cent of its management staff could obtain an appropriate qualification from the Institute must be Institute members. The Code of Conduct, in sum- to demonstrate his competence and the competence of his mary, requires members to conduct themselves with integrity employer company: the person aspiring to become a manager and skill, to ensure that their work is performed in an effi- could train for and obtain the managerial qualification so as cient and honest manner, to be professional in their dealings to equip him in his search for a managerial job. The same with the public and business colleagues, to be 'professionally principle applies at all levels. The aim, the national court competent', to keep abreast of modern techniques and new relates, is to identify what types of staff the industry needs legislation, 'not to misuse their office or authority for per- and what their customers expect. The Institute recruits mem- sonal gain', to comply with the laws of the country, to respect bers and provides qualifications and seeks to match them to confidentiality and to encourage staff to raise their educa- the demands of the industry. To that end the Institute keeps tional standards. The Institute has its own disciplinary com- a job placement register. mittee to deal with breaches of conduct.

16. The Institute also pursues its aims by having as its objects 'to grant prizes and diplomas to members of the motor trade and allied industries' (Object (g)), and 'to organise and hold meetings for the discussion of sub- jects of interest to the Motor Trade, or for any other purpose in accordance with the objects of the Institute'. 10 14. The VAT and Duties Tribunal relates that, as regards the procedure for attaining its aims, Object (b) of the Institute's memorandum of 9 — Of these 2 MO were Fellows. A Fellow (FIMI) is described association is 'to establish the work of the ... in the Institute's brochure as 'a person qualified by experi- ence and training to hold a senior managerial appointment'. Association as a corporation recognisable by 12 864 were Members. A Member (MIMI) is 'a person quali- law, and if thought fit, in due course to apply fied by experience and training to hold a middle management position'. 8 305 were Associate Members. An Associate for a Royal Charter or other form of incor- Member is a person qualified to work to a given set of stan- dards without supervision. All those members are known as poration into which the present corporation corporate members and have votes. Possession of an N V Q is may merge'. 8 now for the most part a necessary requirement for admission as a corporate member. There were 984 Affiliate Members. An Affiliate Member is 'a person employed or training in the industry who works to the high standards set by the Code of Conduct but who is not yet qualified for associate member- ship'. There are 1 181 student members. A student member 4 — National Vocational Qualification. is 'a person studying for a qualification which would qualify them for eventual corporate (voting) membership'. According 5 — Scottish Vocational Qualification. to its director general, the Institute's aim is to recruit 50 000 6 — The Institute awards 30 different VQs. It has 150 correspon- members, given that about half a million persons are employed dent bodies which deliver the training and detailed assessment in the United Kingdom in the motor trade (leaving out the required for the Institute's awards. manufacturing side of the industry). At the hearing the Insti- 7 — The national court relates in that connection that, until tute explained that the amount paid on registration varies recently, a job placement register had been kept, as a joint according to the capacity of the member. operation, with the Engineering Council. 10 — The VAT Tribunal relates that there are numerous local cen- 8 — The Institute has not as yet applied for a Royal Charter. tres run by local area committees throughout Great Britain.

12 — The question raised concerning exemption from VAT in respect of the activities of certain organisations pursuing trade-union aims is a matter widely canvassed in English law. In an annex to its observations the Institute reproduced 19. By a decision of 15 January 1996 the an extract from Tolley's VAT Case Digest 1996 concerning Commissioners of Customs and Excise ruled cases on the professional/non-professional and/or trade- union/non-trade-union distinction under English law. Thus, that the Institute did not satisfy the condi- an association of taxi-cab owners was held not to be a pro- fessional association or a trade union, so that members' sub- tions for exemption from VAT under Schedule scriptions were not exempt from VAT because its main activity was the provision of a radio service to its members 9 to VATA, so that its supplies of services to who, moreover, were not employees (Tolley's Digest, para. 13.19). Nor could the National Association of Funeral Direc- tors claim exemption from VAT because, in the view of the competent tribunal, it was not a professional association or trade union under English law (Tolley's Digest, para. 13.18). 11 — The laws on maintenance and champerty concern amounts The same was held to be true of the Civil Service Pen- granted to a third party participating in legal proceedings sioners' Alliance (CSPA) (Tolley's Digest, para. 13.29). In the latter case the CSPA was held to consist of pensioners and sharing the award of damages with the interested party rather than workers and was not a professional organisation. in the event of the successful outcome of the proceedings.

24. Finally, according to the VAT Tribunal, the Institute does not fall within the scope of Item 1(a) of Group 9 because it is not a 'trade union' whose main object is the negotiation on behalf of its members of the terms and conditions of their employment.

27. Moreover, the VAT Tribunal points out that the term 'syndicale' and its equivalents which are used in certain language versions, 25. Before the VAT Tribunal the Institute including the French version, appear to be submitted that it constitutes a trade union for used in a broader sense than the term 'trade- the purposes of Article 13A(1)(1) of the Sixth union' and its equivalents appearing in other Directive. In that connection it was argued language versions including the English one.

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28. Consequently, the VAT Tribunal raises tion, being a non-profit-making organisation, the question whether, in light of the French exempt from VAT as falling within the scope language version of Article 13A(1)(1) of the of Article 13A. 1(1) of the Sixth Directive by Sixth Directive, the Institute constitutes an virtue of the following words Organisation with aims of a trade-union nature' ('organisme poursuivant des objectifs de nature syndicale').

29. Furthermore, the VAT Tribunal did not consider that exemption from VAT for sup- plies of goods and services by the Institute to "... organisations with aims of a... trade-union its members had the result of distorting com- ... nature ..."? petition, as was contended on behalf of the Commissioners.

31. The Institute and the Commission take the view that the expression 'organisations with aims of a ... trade-union ... nature' in Article 13A(1)(1) of the Sixth Directive covers the Institute, adding that the French language version is wider than the corresponding 34. Conversely, the French language version English one. refers to 'organismes sans but lucratif pour- suivant des objectifs de nature syndicale'. However, the French term 'syndical' has a wider meaning than the English term 'trade- union'. In French it refers to matters relating to a professional organisation or association and those relating to a workers' trade union. The latter meaning corresponds to the English term 'trade-union'. Again, in French, 15 the term 'syndicat' means 'an organisation whose 32. Conversely, the United Kingdom Gov- object is the defence of common interests', ernment takes the view that the term in ques- such as professional interests. 16 tion means organisations which are not nec- essarily trade unions but whose aims in relation to their members are of the same nature as those of a trade union to its members. Accord- ingly, it concludes that the expression 'organi- sations with aims of a trade-union nature' covers non-profit-making organisations which (a) work to defend the collective interests of their members (whether they be employees or self-employed persons) and (b) represent 35. Schematically, it may be said that the the interests of their members (depending on terms used in the different official languages the case) vis-a-vis employers, government of the Community in order to render the term bodies and others. Accordingly, organisations such as the Institute do not fall within the scope of that expression. 13 14 — See for example Robert's Dictionnaire alphabétique et analogique de la langue française, sixth volume, 1972, under 'syndicale'. 15 — See Robert, op. cit., under 'syndicat'. 16 — The fact that the French term 'syndicat' has a wide meaning 13 — See for example Webster's Third New International Dictio- is also borne out by the fact that it is also used in the expres- nary of the English Language unabridged, 1981, under sion 'syndicat d'initiative' — association for the develop- 'trade-union'. ment of tourism.

37. Conversely, the term 'objectifs de nature syndicale', which includes professional asso- ciations which are not workers' unions, con- stitutes the broad rendering. The corre- sponding terms in Italian (sindacale), Dutch 40. Thus, in resolving this problem, the (syndikale), Spanish (sindical), and Portu- Court's case-law can be of assistance. In guese (sindical) have the same meaning. Cricket St. Thomas, the Court held 21 that the formulation in one of the Community's lan- guages (in that case English) 'cannot serve as the sole basis for the interpretation of that provision, or be made to override the other language versions in this regard. Such an approach would be incompatible with the requirement for the uniform application of 38. Where there are such linguistic discrep- Community law.' The Court went on to ancies, the English version must be inter- emphasise that 'in the case of divergence preted in the light of the other language ver- between the language versions the provision sions, 17 in order to discover the meaning common to all the language versions. 18 — Case 26/69 Stauder v Ulm [1969] ECR 419. 19 — Stauder judgment (paragraph 3). See also Case 19/67 Sociale Verzekeringsbank v Van der Vecht [1967] ECR 345. 17 — For the solution by the Court of such a problem see Case 20 — Stauder (paragraph 4). 295/81 IFF v Hauptzollamt Bad Reichenball [1982] ECR 21 — Case C-372/88 Cricket St. Thomas [1990] ECR I-1345, para- 3239, paragraphs 8 and 9. graph 18.

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42. At the outset I would observe that the 44. The Sixth Directive also provides for purpose of the Sixth VAT Directive is the exemption from VAT, by way of exception, harmonisation of the laws of the Member of certain limitatively enumerated activities States relating to turnover taxes by means of of general interest, that is to say activities the creation of a common system of value enumerated therein (Article 13). Conse- added tax and a uniform basis of assessment. quently, where a general principle is dero- It was also stated (11th recital) that 'a common gated from, the exemption must be strictly list of exemptions should be drawn up so that interpreted because, as the Court has, more- the Communities' own resources may be col- over, held,25M any interpretation which would lected in a uniform manner in all the Member widen the scope of Article 13(A) would be States'. It follows from that recital, as more- inconsistent with the aim of the provision.

Moreover, the Court has clarified 26 that 'Arti- or a trade-union or professional organisation, cle 13 of the Sixth Directive does not provide can constitute aims of a trade-union nature. exemption for every activity performed in the Nor, moreover, can the exercise of any activity public interest, but only for those which are on the part of its members suffice for an listed and described in great detail'. The Court organisation to be said to constitute a body has therefore declined to apply an extensive pursuing aims of a trade-union nature and, interpretation of the exemptions permitted consequently, for it to come within the terms under the Directive where there are no inter- of the expression Organisation with aims of pretative elements to allow extension of the a ... trade-union ... nature', in such a way as exemption permitted under the relevant pro- to be covered rattorte personae by the exemp- visions and in particular Article 13. 27 tion from VAT provided for in Article 13A(1)(1).

45. Accordingly, a systematic interpretation of the provisions of the Sixth Directive guides us to a construction of the term before the Court which is consistent with the Direc- tive's guiding principle. 48. Accordingly, the better interpretation, in my view, of the relevant expression in Article 13 is that it refers to the substantive aims of trade-union activity and accordingly covers those non-profit-making organisations which, irrespective of their legal form, pursue such 46. We come therefore to the issue, under aims. Community law, of the definition of aims of a trade-union nature for the purposes of the Sixth Directive, that is to say, what those aims comprise.

50. In order to identify the demarcation line in law as between aims of a trade-union nature 51. The decision in ASTI may therefore pro- and those of a non-trade-union nature, for vide two elements relevant to the issue now the purposes of the Sixth Directive, I believe before the Court which enables us to apply that the Court's case-law can be of assistance. an operational criteria in approaching the term In ASTI 28 which concerned a Community 'trade union' under Community law. Thus, provision which was not subject to a narrow the epithet 'trade-union' is proper to an organi- interpretation, 29 unlike Article 13 in this case, sation which, irrespective of its legal form, the Court held 30 that the provision in ques- has as its aim the defence (safeguarding and tion 'constitutes a particular expression of the promoting) of the interests of its members principle of non-discrimination in the specific (whether workers, employers of the liberal field of workers' participation in trade-union professions or also generally persons carrying organisations and activities' and that its appli- on any economic activity) and their represen- cability 'cannot be limited on the basis of tation. 33 Consequently, it is not sufficient for considerations relating to the legal form of a non-profit-making organisation simply to the body in question'. The Court further held promote the interests of its members where that the bodies at issue in that case 31 did not that does not go hand in hand with the include merely bodies which were 'not ... in law, trade-union organisations', but also those

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defence of those interests and representation there are no differences as to the nature and of its members in regard to decision-makers operation of the economic activities in ques- affecting it. 34 tion when they are carried on by organisa- tions which pursue trade-union aims and when they are carried on by organisations not having those aims, even if they are non- profit making and there is no risk of a distor- tion to competition. For in such a case there would be different treatment of different situ- ations and that is not precluded by Commu- 52. Consequently, the question to be deter- nity law. mined is whether, as a consequence of that legal classification, a distinction is drawn in national legislation between the charging to VAT or exemption therefrom of supplies of goods and services to their members to the detriment of those organisations which, even though they pursue trade-union aims within the meaning of the Sixth Directive, are none the less required to pay the corresponding VAT. 54. Moreover, I believe that the written answer by the Commission 35 to the European Par- liament (No 831/82) on the subject of exemp- tion from VAT for organisations of a trade- union nature 36 goes in the same direction as my definition of the expression 'organisations with aims of a trade-union nature'. That reply 53. Conversely, if that condition of pursuit of is as follows: trade-union aims is not met, there can be no question of an infringement of the principle of equal treatment in the sense of unequal treatment of equivalent economic activities, as the Institute maintains, according to which

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guage versions while the terms used in others the category of bodies having aims of a trade- are very specific (e. g. "trade-union" and union nature within the meaning of the Sixth "gewerkschaftlich"). Directive. Accordingly, it may be eligible for exemption from VAT under Article 13(A)(1 )(l) of the Sixth Directive, where the two criteria mentioned in that provision are satisfied: (a) it is a non-profit-making organisation and (b) exemption in respect of its activities does not create the risk of a distortion of competition. Thus I consider that it is not sufficient for The Commission feels that these discrepan- such an organisation and, more generally, any cies should not, in practice, affect non-profit- non-profit-making professional organisation making organisations (whether trade, to be active in providing goods and services employers' or employees' organisations) in the common interest of its members, but whose activity is confined to representing the rather it must have as its object the further- collective interests of their members. In such ance and defence of the interests of its mem- cases, these organisations act as the collective bers and their representation, as stated above. emanation of their members whose subscrip- tions are then a tangible manifestation of their membership of a collective organisation and do not represent a consideration for services rendered. Such organisations should therefore be outside the scope of VAT.

56. In each case it is thus a question of fact for the national court to determine whether a Organisations of the kind referred to above non-profit-making organisation has as its whose activity is not confined to representing object the defence of the interests and repre- the collective interests of their members are sentation of its members in order for it to be liable to fall within the scope of the tax where deemed to be pursuing aims of a trade-union the subscriptions charged by them do, in fact, nature within the meaning of Article represent a consideration for individual ser- 13(A)(1)(l) of the Sixth Directive. vices supplied to members' (emphasis added).

reference, 37 we see that it seeks to improve in that connection from the Court, that the the professional standard of its members and Institute has never suggested that any of its to improve career structures in the different members have ever turned to it for the defence sectors of the industry, and consequently to and representation of their interests vis-a-vis enhance public perception of the industry and employers or anyone else, and that the mem- the people working in it. To that end the bers of the Institute would, if necessary, turn Institute consciously responds to the indus- to the trade unions of which they are mem- try's requirements for skills for specific per- bers for that purpose. sonnel (from senior management level to tech- nical levels), validates courses (organised by other institutions) for the teaching of specific skills, makes awards to persons completing those courses, grades its members, dissemi- nates information designed to keep its mem- bers up to date with developments in the industry, and keeps a job placement register. 59. Accordingly, if it were accepted that a non-profit making body, such as the Insti- tute, constitutes an Organisation with aims of a trade-union nature', that would be to extend the exemptions from VAT to cases not pro- vided for by the terms of Article 13(A)(1)(1) of the Sixth Directive, which are to be strictly construed. N o r do I believe that it is possible to construe the exemption more extensively than is provided for in the relevant article. 38

61. In my view, a professional association 63. It was the Economic and Social Commit- such as the Institute cannot be regarded as tee's view that exemption from VAT would pursuing aims of a trade-union nature within be possible to the extent to which trade unions the meaning of the Directive because the and professional organisations did not engage result of unreasonably stretching the limits of in competitive operations, such as commer- that concept would be to water it down. Thus, cial transactions or the giving of advice organisations such as that described by the involving payments separate from the general national court cannot be subsumed under the contributions and varying according to the concept of 'organisations with aims of a trade- extent of the services rendered. In the same union nature' because to do so would be to opinion we see that such exemption was alter the content of that vague legal concept deemed to be particularly appropriate as with the result that it would end up being a regards trade-union contributions since oth- concept having nominal value only and being erwise trade unions' income from contribu- without any binding legal effect and, in the tions would be reduced by the amount of the final analysis, without any specific practical tax without the members being able to deduct usefulness. this tax, as they themselves are not taxable persons. 40

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VI — Conclusion

65. In light of the foregoing analysis I propose that the Court should give the fol- lowing reply to the question referred to it by the VAT and Duties Tribunal, London:

Article 13(A)(1)(l) of Council Directive 77/388/EEC of 17 May 1977 on the har- monisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment, must be construed as meaning that an organisation with the characteristics described in the order for reference cannot be deemed to be 'pursuing aims of a trade-union nature' and, accordingly, the services which it supplies to its members are not exempt from VAT.

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