C-216/97

I — Introduction Home'. 3 Glenview is used to provide residential care. It has 17 bedrooms, bathrooms and dining and communal areas. The Greggs employ 25 staff in the 1. In this case the Court of Justice has been nursing home activity, 4and the business asked to give a preliminary ruling on two systematically aims to make a profit. 5 questions referred to it by the Value Added Glenview Nursing Home is a residential Tax Tribunal of Belfast concerning the care home and a nursing home under the interpretation of Article 13A(1) and (2) of relevant Northern Ireland legislation, that Council Directive 77/388/EEC of 17 May is to say, under the Registered Homes 1977 on the harmonisation of the laws of (NI) Order 1992 ('the Order'), 6but is not the Member States relating to turnover taxes: uniform basis of assessment ('the Sixth Directive'). 1It should be noted at the outset that those provisions, which govern the question of exemptions from the pay- ment of VAT, were clarified by the Court in Case C-453/93 Bulthuis-Griffioen. 2Some 3 — The home was owned and run by the father of Mrs Gregg of the parties who have submitted observa- until April 1992, when it was transferred to Mrs Gregg. Since March 1996 she has run it in partnership with her tions in the present proceedings have invi- husband. ted the Court to re-examine the position it 4 — There are a 'head of home', two supervisors, 14 'care assistants', 7 'ancillary staff' and one office administrator. took in that judgment. Accounting staff are provided by an outside firm of accountants.

. . any establishment which provides or is intended to provide, whether for reward or not residential accommodation with both board and personal care for persons in need of personal care by reason of (a) old age and infirmity, (b) disablement, (c) past or 2. The appellants in the main proceed- present dependence on alcohol or drugs, or (d) past or present mental disorder'. Under Article 16 of the Order a ings, Jennifer and Mervyn Gregg, run a 'nursing home' is defined as '.

* Original language: Greek. of any surgical procedures under anaesthesia, (ii) endo- 1 — OJ 1977 L 145, p. 1. scopy; (iii) haemodialysis or peritoneal dialysis; (iv) treat- 2 _ [1995] ECR I-2341. ment of specifically controlled techniques'.

7 — That last point is significant in relation to the question whether the factual situation falls within the scope of Article 13A(l)(g) of the Directive. 8 — They intend to extend Glenview by adding 13 rooms for the elderly and infirm and a further 12 rooms for nursing and residential care.

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(g) the supply of services and of goods the cases of exemption relevant to the closely linked to welfare and social present case, in application of the relevant security work, including those supplied Community provisions, exempts the fol- by old people's homes, by bodies lowing from VAT: governed by public law or by other organisations recognised as charitable by the Member State concerned;

'The provision of care or medical or surgical treatment and, in connection with it, the supply of any goods, in any hospital or other institution approved, licensed, registered or exempted from registration 2. (a) Member States may make the by any Minister or other authority pur- granting to bodies other than those suant to a provision of a public general Act governed by public law of each of Parliament or of the Northern Ireland exemption provided for in (1) (b), Parliament or of a public general Measure (g), (h), (i), (1), (m) and (n) of this of the Northern Ireland Assembly or Order Article subject in each individual in Council under Schedule 1 to the North- case to one or more of the follow- ern Ireland Act 1974, not being a provision ing conditions: which is capable of being brought into effect at different times in relation to different local authority areas.'

conducting the Glenview Nursing Home preliminary ruling from the Court is of business as 'partners'. 9For that purpose some weight as far as the dispute before it is they rely on the earlier decision of the concerned. The national court is, in any 10 Tribunal in Kaul. case, uncertain whether the terms 'bodies' and 'establishments' do not also cover cases where a natural person is carrying on a business activity alone or with a partner, since one or more natural persons are capable of undertaking their activities 'under social conditions comparable to those applicable to bodies governed by public law' and could be described as 'duly 7. The national court points out that the recognised establishments'. Mention is also issue in the case before it concerns the made of the risk of distortion of competi­ interpretation of Article 13A(1)(b) and (g) tion if exactly the same activity is treated of the Sixth Directive, in particular the differently for tax purposes according to definitions of the terms 'bodies', 'establish­ the form of legal personality taken by the ments' and Organisations' employed by the person carrying on the activity. Lastly it Community legislature. It asks whether the points out that the differences between the use of those terms indicates that the facts of the case before it and the Bulthuis- exemption from VAT set out in the above Griffioen case are not insignificant; that provisions of the Sixth Directive concerns judgment concerned a single natural person only legal and not natural persons, even acting alone, that is to say one woman and though the latter are carrying on activities her nursery facilities, whereas in this case in the public interest to which Arti­ the Greggs are partners in a business that is cle 13A(l)(b) and (g) of the Directive refer. clearly more substantial from the point of The national court cites, first, the decision view of infrastructure and economic size. in Kaul in which the VAT Tribunal decided, on the basis of the reasoning of the Court of Justice in Case C-453/93 Bulthuis-Grif­ fioen [1995] ECR I - 2341, that since Arti­ cle 13A(1)(b) of the Sixth Directive expressly refers to 'bodies' or 'establish­ ments' the exemption provided for is con­ fined to legal persons. The national court points out, however, that the interpretation given in Bulthuis-Griffioen concerned Arti­ cle 13A(l)(g) and not (b) of the Sixth IIΙ — The questions referred for a preli­ Directive. Nevertheless it recognises that minary ruling there is a link for interpretation purposes between the two provisions and that that

In particular, are the partners excluded from exemption because A — Introductory remarks

(a) they do not constitute a "body" governed by public law; (a) Margin of interpretation with regard to the construction of the Community provi- sions at issue

(b) their activities are not undertaken 9. It is worth making the preliminary point under social conditions compar- that, when the Community legislature laid

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GREGG V COMMISSIONERS OF CUSTOMS & EXCISE

Con- position under examination is the position versely, in the German text, the same legal taken by the Court in the abovementioned term (Einrichtung) is used in all the above Bulthuis-Griffioen case. It is not surprising, cases. 11 moreover, that four Member States have intervened, seeking clarification of the position taken by the Community court in that judgment or a redefinition of the case- law position. It should be emphasised that, apart from the Netherlands, the Member States did not have the opportunity of submitting their views on the interpretation to be given to the tax exemptions under Article 13A(l)(g) of the Sixth Directive in the context of the Bulthuis-Griffioen case. The question whether those provisions 16. I consider that the terms 'establish- concern solely legal and not natural persons ment', 'body' and 'organisation' 12 are used was raised indirectly in the written obser by the draftsman of the Directive in the vations of the Commission in the Bulthuis- same sense. As the Commission rightly Griffioen case and was dealt with by the observed, that interpretation is reinforced Court without the other Member States by the approach taken in the above provi- being heard on that point. Also, the way in sions in conjunction with that of Ard- which the parties in the case under exam ination rely on the judgment of the Court and my Opinion in the Bulthuis-Griffioen 11 — The question of the existence of divergences in the case make it necessary, in my view, to rendition of terms or phrases in legislative texts of the Community institutions has already been examined by the explain the true meaning and material Court. In Case 29/69 Stauder ν Ulm [1969] ECR 419, paragraph 3, the Court stated: 'When a single decision is differences of the solution which was addressed to all the Member States the necessity for proposed and applied in that case. uniform application and accordingly for uniform inter pretation makes it impossible to consider one version of the text in isolation but requires that it be interpreted on the basis of both the real intention of its author and the aim he seeks to achieve, in the light in particular of the versions in all four languages.' It has been consistently held that 'in the case of divergence between the language versions, the provision in question must be interpreted by reference to the purpose and

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cle 13A(2)(a) of the Sixth Directive; in the scope of the first question: first, that the latter provision the term 'bodies' covers Glenview business consists of 'medical care both 'bodies' and 'establishments' under and closely related activities'; secondly, Article 13A(1)(b) and 'bodies' and 'organi­ that Glenview is 'duly recognised'; thirdly, sations' under Article 13A(1)(g). Accord­ that the activities carried on by Glenview ingly the answer to be given to the first are 'of a similar nature to those provided by question referred to the Court concerning hospitals and/or centres for medical treat­ the interpretation of Article 13A(1)(b) of ment or diagnosis'. The crucial point on the Sixth Directive cannot differ from that which the national court's question focuses to be given to the second question in is whether Glenview, which is operated by relation to Article 13A(1)(g). Consequently a 'partnership' — in other words, does not it is expedient to examine the two questions have legal personality — may be regarded together. as an 'establishment' providing care 'under social conditions comparable' to those applicable to bodies governed by public law having that same function within the meaning of Article 13A(1)(b) of the Sixth Directive.

Β — Examination of the substance of the questions referred to the Court 18. In that connection, as regards the answer to the second question, there is no doubt that Glenview provides services 'closely linked to welfare and social secur­ ity work, including those supplied by old people's homes', within the meaning of the Sixth Directive. The question is whether it is an 'organisation recognised as charitable (a) The issues to be examined by the Member State concerned'. Those are the questions which will be examined below.

under Article 13A of the Sixth Directive. meaning of the provisions in question can First they point out that according to the be deduced 1 5but also the particular legal settled case-law of the Court those exemp- form that must be taken by business tions must be interpreted narrowly, since activities in order to be exempt from tax. they constitute exceptions to the general According to the Greggs, the draftsman of principle that every economic activity is Article 13A of the Sixth Directive did not subject to tax. 1 3 The Greggs consider that lay down only the activities to be exempted the exemptions under subparagraphs (b) but also the legal form of those entitled to and (g) of Article 13A(1) of the Sixth exemption. 16 Directive concern exclusively economic operators with separate legal personality and do not cover activities carried on by one or more natural persons.

The Greggs persons. 14 In cases where the Community maintain that one group in the hospital legislature intended to exempt the business care sector is not covered by tax exemp- activity of natural persons from tax, terms tions; these are activities of that nature were used which clearly referred to those which are performed with the aim of persons; conversely, the reference to 'estab- making a profit. They base the above lishment', 'body' or 'organisation'is indi- interpretation on the actual wording of cative of an intention to restrict the scope Article 13A(1)(b) and consider that an of the exemptions granted under subpara- undertaking which aims to make a profit graphs (b) and (g) of Article 13A(1) solely cannot, by its nature, be regarded as a body

persons. 16 — They refer, on that point, to paragraph 13 of Case 107/84 Commission v Germany [1985] ECR 2655, in which the Court stated as follows: 'Although it is true that the exemptions are granted in favour of activities pursuing 13 — See Case 235/85 Commission v Netherlands [1987] ECR specific objectives, most of the provisions also define the 1471, paragraph 19, and Case 348/87 Stichting Uitvoering bodies which are authorised to supply the exempted Financiële Acties [1989] ECR 1737, paragraphs 11 and 13. services. It is therefore incorrect to state that the services 14 — Subparagraphs (c), (e) and (j) of Article 13A(1) provide for are defined by reference to purely material or functional exemptions for doctors, dentists and teachers. criteria.'

18 — The Court has held that any interpretation which broadens (c) Refutation of the above arguments and the scope of Article 13A would be incompatible with the construction of the material Community objective of that provision (see Case 348/87 Stichting Uitvoering Financiële Acties, cited in footnote 13, para- provisions graphs 13 and 14), and that 'Article 13 of the Sixth Directive does not provide exemption for every activity performed in the public interest, but only for those which are listed and described in great detail' (see Case 107/84 Commission ν Germany, cited in footnote 16, paragraph 17 — Mr and Mrs Gregg also refer to paragraph 32 of Case 17, and Case 348/87 Stichting Uitvoering Financiële 353/85 Commission ν United Kingdom [1988] ECR 817. Acties, paragraph 12). It has refused generally to interpret In that case the Community Court held that hospital and tax exemptions broadly (see Case 107/84 Commission ν medical care and closely related activities were 'services Germany, paragraph 20, and point 16 of the Opinion of [which encompassed] a whole range of medical care Advocate General Darmon in Case C-63/92 Lubbock Fine normally provided on a non-profit making basis in [1993] ECR I-6665). establishments pursuing social purposes such as the On that point see my Opinion in Case C-149/97 Motor protection of human health'. Industry [1998] ECR I-7053, point 43 et seq.

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25. The argument that exemption under Article 13A(l)(b) of the Sixth Directive is conditional on public benefit and the non- profit-making character of the hospital or medical activity carried on cannot be founded — as the Greggs seek to do — on the passage in that provision to the 26. The question remains, however, as to effect that the activity in question must be the correct construction of the terms 'body', ' o r g a n i s a t i o n 'and 'establishment' employed by the Community legislature in 19 — Paragraph 32 of Case 353/85 Commission v United the provisions at issue, Article 13A(l)(b) Kingdom. and (g) of the Sixth Directive, taking into

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27. I consider that in the special regulatory framework in which the terms 'body', Organisation' and 'establishment' are employed, they refer to the existence of an autonomous operator, in the sense of a combination of human and material resources constituting a separate entity 28. The Greggs claim that the above inter­ through which, in a continuous and stable pretative approach creates uncertainty in fashion, primarily medical, hospital or law and distorts the conditions of free competition inasmuch as, with the inter­ pretation that there can be a 'body', 20 — See footnote 16 above. 'organisation' or 'establishment' without

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30. It is in the light of the above clarifica- tions that the facts of Bulthuis-Griffioen should be assessed and the position taken by the Court in that case understood; I believe that the solution reached, at least as far as the final conclusion is concerned, was wholly correct. The applicant in the main 29. Moreover, in accordance with the gen- proceedings appeared to run a children's eral principle of tax neutrality, supplies of nursery but it was not clear whether that the same kind should in principle be taxed nursery was the actual operator of the in the same way. That principle constitutes activity for which tax exemption was the logical basis of value added tax. 2 1 sought. In other words, it was not possible Where, consequently, an activity is exer- to maintain accurately that the activity in cised under the essential and institutional question had to be ascribed directly and conditions provided for in the provisions of independently to the nursery and that it Article 13A of the Sixth Directive, it is was not simply tantamount to the contri- properly exempt from the corresponding bution of the services of the applicant as a tax charges, regardless of ownership and its nursery teacher. Conversely, there was outward legal form. Of course the principle evidence to indicate the essential merging of neutrality can in no circumstances con- of the nursery with the nursery teacher who stitute the basis for an interpretation contra ran it; accordingly, the operator of the activities in question was ultimately directly a natural person and not any other 21 — For the principle of fiscal neutrality see, for instance, Case entity which fulfilled the characteristics of a C-317/94 Gibbs [1996] ECR 1-5339, paragraph 23, and 'body' or 'organisation' in the proper sense the recent Opinion of Advocate General Fennelly in Case C-134/97 Victoria Films [1998] ECR 1-7023, point 41. of Article 13A(l)(g) of the Sixth Directive,

31. With regard to the case now before the 32. However, there is a legal impediment to Court, on the facts as stated it is clear that Glenview's exemption from tax under Arti- cle 13A(l)(g) of the Directive, as the national court pointed out in the order for 22 — From that point of view I abide by the position for which I reference, inasmuch as the home is not argued in Bulthuis-Griffioen, in particular at points 13 to recognised as 'charitable' under United 15 of my Opinion, in which I stated that 'whenever the provisions of Article ] 3 lay down that an exempt activity Kingdom law. I would point out that the must be performed by an "organisation" the exemption provided for is not applicable when the economic operator need for recognition as charitable by the is a natural person' (point 13) and that 'a trader who, like Member State is a precondition laid down the applicant, carries on tax exempt activities as a natural person does not fall within the personal scope of the in the Community provision at issue for tax relevant provision contained in Article 13A(l)(g) of the Sixth Directive inasmuch as such a trader cannot be exemption. For its part, the Commission characterised as "an organisation" within the meaning of the provision in question' (point 15). It is true that in that expresses the view that, on the basis of the case the Court added a further factor to the interpretation of the Community provision in question; in paragraph 20 of the judgment it expressly stated that under Arti- cle 13A(l)(g) '... the exemption may be claimed only by 23 — I emphasised the need to examine only the characteristics legal persons...'. I have already explained the reasons why I of the operator seeking the exemption on the basis of the consider that it is not necessary for the status of 'establish- Sixth Directive and the characteristics of the activity ment', 'body' or 'organisation' within the meaning of the carried on but not the legal form taken by the operator in Sixth Directive to depend on the existence of an autono- my recent Opinion in Case C-149/97 Motor Industry mous legal personality in the operator of the activity for (14 May 1998) in connection with the interpretation of exemption. I wholly concur with the operative part of the Article 13A(1)(1) of the Sixth Directive. At point 48 of the judgment in Bulthuis-Griffioen — according to which a Opinion there is an express statement regarding the need trader who is a natural person cannot claim exemption to interpret the provision at issue: 'Accordingly, the better under the relevant provision which expressly reserves the interpretation, in my view, of the relevant expression in exemption to bodies governed by public law or other Article 13 is that it refers to the substantive aims of trade- organisations recognised as charitable by the Member union activity and accordingly covers those non-profit- State concerned — and I do not see any reason why any making organisations which, irrespective of their legal doubt should be cast upon it. form, pursue such aims'.

Under the relevant provisions of Community law, an entity which has the necessary material basis and infrastructure to carry on directly and independently an activity in the area of hospital and medical care and is duly recognised under national law should be regarded as an 'establishment' providing hospital and medical care 'under social conditions comparable' to those applicable to bodies governed by public law within the meaning of Article 13A(1)(b) of the Sixth

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Directive (Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment), even if it does not have legal personality but operates as a partnership under the law of Northern Ireland; accordingly, it is exempt from value added tax provided the other conditions laid down by the above provisions of the Sixth Directive are also satisfied.

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