C-408/97

OPINION OF MR ALBER — CASE C-408/97

O P I N I O N O F ADVOCATE GENERAL ALBER delivered on 27 January 2000 *

I — Introduction fees collected were not liable to VAT. However, since the Commission had alleged that there had been an infringement of existing Community law as a result of the failure to levy VÁT, the Netherlands authorities calculated the VAT revenue in this respect and transferred to the Commis- sion contributions to the Communities' 1. In these proceedings for failure to fulfil own resources on the basis thereof. How- Treaty obligations the Commission claims ever, those transfers were made pending that the Netherlands has failed to fulfil its clarification of the points at issue and obligations under the EC Treaty in so far as amounted to NLG 70 000 in respect of value added tax was not levied on fees the toll collected for the years 1981 to charged for use of transport infrastructure 1998. (tolls). 1

2. In 1989 a toll was still being levied in the Netherlands for the use of two bridges and a tunnel. Under the Netherlands legislation I I— Pre-litigation procedure in force at that time those fees were not subjected to VAT. At the time the action was brought only the use of a tunnel was still subject to a toll. That was the tunnel under the Dordtse Kil. In that case too the

* Original language: German. 1 — The Commission has also brought actions against France, 3. By letter of 3 December 1985 the Com- Ireland, the United Kingdom and Greece on the same grounds: see Cases C-276/97, C-358/97, C-359/97, and mission asked the Netherlands Government C-260/98. Unlike the other defendant Member States, the for information on the levying of VAT on Netherlands has made the corresponding amount of own resources available to the Commission pending clarification the toll for the use of transport infrastruc- of the points at issue. In the Member States against which no action has been brought either no tolls are charged or VAT is ture (roads, bridges, tunnels, locks, inter levied on tolls. As a lower rate of tax is levied in Spain, the alia). A reply was made by letter of 8 July Commission has also brought an action against Spain (Case C-83/99). 1986.

8. A reply was made by letter of 27 Feb- ruary 1997. (1) dismiss the application,

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(2) order the Commission to bear the costs 12. Under Article 4(1), (2) and (5) of the of the proceedings. Directive:

' 1 . "Taxable person" shall mean any per- son who independently carries out in any HI — Legal background place any economic activity specified in paragraph 2, whatever the purpose or results of that activity.

Sixth 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 assessment2 2. The economic activities referred to in (hereinafter 'the Directive') paragraph 1 shall comprise all activities of producers, traders and persons supplying services, including mining and agricultural activities and activities of the professions. The exploitation of tangible or intangible property for the purpose of obtaining income therefrom on a continuing basis 11. Article 2 of the Directive provides: shall also be considered an economic activ- ity.

3 — Annex D lists a total of 13 types of activity, including telecommunications, the supply of water, gas, electricity, port and airport services, and the running of trade fairs and exhibitions. 4 — Article 13(A) lists 17 exemptions for certain activities in the public interest. Thus inter alia the following are exempt from tax: the supply of services by the public postal services, hospital and medical care, the supply of services and of goods closely linked to welfare and social security work and to the protection of children and young persons, supply of 15. The relevant activity must be appraised services for their members by non-profit-making organisa- objectively and regardless of its purpose or tions with aims of a political, trade-union, religious, patriotic, philosophical, philanthropic or civil nature, and result. Moreover, in the present case there is activities of public radio and television bodies other than those of a commercial nature. Article 13(B) provides for evidence of a direct link between the service further exemptions for insurance and reinsurance transac- and the consideration. First, only certain tions, certain credit activities and — with four excep- tions — the leasing or letting of immovable property. stretches of road are subject to a toll and,

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second, this amount constitutes a consid- are included among such State responsibil- eration given in return for use. ities, but the operation of such infrastruc- ture is fundamentally different. Since not all roads, bridges or tunnels are subject to a toll, it is clear that the collection of a toll does not involve the exercise of public authority. Moreover, the economic aspect is highlighted by the fact that in the present 16. The mere fact that the infrastructure is case there are alternatives to the toll tunnel created in the first place by public bodies in the road network. does not mean that the provision thereof on payment of a toll is effected in the exercise of public authority.

26. The Netherlands Government also argues that Article 4(5) is applicable in the present case and therefore the toll does not have to be subjected to VAT. Here a 24. In principle every service supplied by a public body is engaging in activities under taxable person in return for a consideration the special regime applicable to it and is is subjected to VAT in the Netherlands thus doing so in the exercise of public except where there are grounds for an authority. Article 4(5) has independent sig- exemption. The tolls, however, are not nificance in respect of the definition of subjected to VAT. 'taxable person'. Consequently, it need not be interpreted as strictly as the Commission claims and it is therefore unreasonable to limit tax exemptions to activities which form the core of public authority. The exceptions laid down in sub-paragraphs (2) and (3), on the other hand, must be interpreted strictly. 25. In its application, the Netherlands Government argues, the Commission fails to furnish any evidence that the Nether- lands has failed to fulfil its obligations under the Sixth VAT Directive. The Com- mission's argument is far too general and abstract and does not define the alleged infringements with sufficient precision. In particular it is also unclear what, in the Commission's view, the Netherlands should 27. Consequently, it is clear that a public have done to have acted in conformity with body which acts pursuant to public law and the Directive. Furthermore, the factual discharges its responsibility in the exercise information was not sufficient to conclude of public authority cannot be treated in the same way as entities governed by private law. Moreover, since the applicable provi- 5 — A toll will be collected in respect of the Westerscheide sions of Netherlands public law relate to Tunnel, which is still under construction, following its completion — expected in 2003 — but that toil will also be the supply of services, the Sixth VAT subjected to VAT Directive does not apply.

32. The Netherlands Government raises a plea alleging (partial) inadmissibility. It claims that neither in the pre-ligation procedure nor in the application has the Commission adduced any concrete evi- dence that the Netherlands has failed to fulfil its obligations under the EC Treaty. 30. Furthermore, the Commission has Moreover, the application is too imprecise failed to demonstrate that there is a con- and therefore the action may be (partially) sideration in the form of a toll for the inadmissible. provision of road infrastructure. The amount of the toll does not necessarily correspond to the value of the service which the user receives. The close link which might exist between the toll and the service does not mean that this toll must be subjected to VAT. In particular there is no 33. On that point it must be said that as economic competition with other market regards the merits it is necessary to consider operators. whether the allegations made by the Com- I - 6426

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34. However, the question whether the Commission's application is sufficiently 36. The aim of the Commission is to precise is one of admissibility. The request remedy a situation which is contrary to for legal protection must, as a matter of the Treaty. In its view such a situation arises principle, be considered in the light of the from the failure to subject the fees for road application and the grounds stated. The infrastructure to VAT. Since it seeks to conduct by which the Commission claims cover all the relevant facts and not just an the Member State concerned has failed to individual case, it is empowered, first, to fulfil its Treaty obligations must be clear include 'continuous infringements' in its from these factors. In that respect the action pursuant to Article 169 of the EC subject-matter of the dispute is as defined Treaty and, second, to complain about by the pre-litigation procedure. Member States' general conduct in the context of this application for a declara- tion.

35. In the present case the Commission had, in the pre-litigation procedure, to rely on the Member States cooperating with it in good faith since it does not have the power, of its own motion, to examine the national VAT system and investigate the relevant circumstances. In respect of the resultant own resources contributions the 37. On those grounds the Commission's Commission also relies on the Member action is admissible.

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Merits taxable, there must be a direct link between the service provided and the consideration received. 6

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COMMISSION V NETHERLANDS

(b) Taxable persons law and they must be carried out by that body acting as a public authority. 7

44. Under Article 4(1) and (2) of the 47. This means, first, that not all activities Directive, a taxable person is any person of bodies governed by public law are who independently carries out any eco- automatically exempt from tax, but only nomic activity — and that includes all those which also serve to discharge a activities of producers, traders or persons specific responsibility in the exercise of supplying services. public authority. Second, an activity carried on by a private individual is not exempted from VAT merely because it consists in carrying out acts falling within the prero- gatives of the public authority. 8

45. Under Article 4(5)(1) of the Directive, States, regional and local government authorities and other bodies governed by public law are not to be considered taxable 48. The subject-matter or purpose of the persons in respect of the activities or activity of the public body does not deter- transactions in which they engage as public mine whether activities are carried out as authorities. This is so even where they public authorities. According to the case- collect dues, fees, contributions or other law of the Court, it is the way in which the payments in connection with these activ- activities are carried out that determines to ities or transactions. what extent public bodies are to be treated as non-taxable persons. 9

(aa) State activity 49. The Court has thus ruled that the bodies governed by public law referred to in the first subparagraph of Article 4(5) of the Sixth Directive engage in activities as public authorities when they do so under

52. It is true that the provision of roads, bridges and tunnels is not expressly classi- 50. Since, under Article 6(1) of the Sixth fied as an activity subject to VAT, as the VAT Directive, even activities carried out in supply of water, gas and electricity is in pursuance of the law are taxable, it is clear Annex D. In reality, the provision of roads that the mere fact that an activity falls infrastructure without charge must be seen within the remit of public law is not as an activity of the State. The question sufficient to fulfil the requirements for remains whether, conversely, the whole VAT exemption in Article 4(5)(1). As that network of roads built with taxpayers' provision constitutes an exception to the money in discharge of a State responsibility definition of taxable person, it must be can be operated by private economic interpreted strictly. Thus, only those activ- operators on payment of a toll which is ities of public authorities which constitute collected from everyone. In any event, the essential core of State activity can be making available a stretch of road in a considered exempt from VAT. This is also manner which is selective, inasmuch as confirmed by Article 4(5)(3), which refers payment is required, cannot be seen as an to the activities listed in Annex D (see activity performed in the exercise of public above at point 12), in respect of which even authority. The levying of the toll is, indeed, bodies governed by public law are liable to also possible in connection with a State VAT. activity and, in itself, does not give rise to tax liability, as Article 4(5)(1) expressly confirms. It should, however, be borne in mind that, in the present case, the road user has a choice between using the toll-free road infrastructure and using toll roads. In providing the toll-free road network, the State responsibility has, in any event, been 51. The planning and construction of discharged and the provision of additional roads, bridges and tunnels are State respon- stretches of road on payment of a toll must sibilities which can only be discharged by be viewed as a purely private economic bodies governed by public law. Such activ- activity. Anyone who needs planning per- ities concern an essential part and thus the mission which is subject to a fee has no core of public responsibilities. They can option but to pay the fee. Anyone who is even be regarded as the provision of following a course of study for which essential facilities. If the State carries out everyone must pay fees has no other means of achieving the same goal, i.e. the relevant qualification. However, in the present case, 10 — Carpanto, cited above at footnote 7, paragraph 16. the user has a genuine choice between two

11 — Case 235/85, cited above at footnote 7, Case 348/87 Stichting Uitvoering Financiële Acties v Staatsecretaris van Financiën [1989] ECR 1737, paragraph 10, and Case C-186/89 Van Tiem [1990] ECR I-4363, paragraph 17. 55. Article 4(2) of the Sixth VAT Directive 12 — Opinion of Advocate General Lenz of 12 February 1987 in Case 235/85, point 22, and judgment in that case, cited defines economic activity as 'all activities of above at footnote 7.

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VAT Directive taxable transactions may ered taxable persons even in respect of the include the performance of services in activities or transactions in which they pursuance of an order made by or in the engage as public authorities, where treat- name of a public authority or in pursuance ment as non-taxable persons would lead to of the law. The objective nature of the significant distortion of competition. In the definition of economic activity also calls for light of the observations made above, this the classification of the activity in this case sub-class should not require analysis as as an economic one as the activity itself such activity must be considered not to must be considered, regardless of its pur- form part of State activities. The following pose or result. analysis is thus given only in the alterna- tive.

duty to treat other nationals equally in the 65. In conclusion, brief consideration present case. Second, the cases of distortion should given to the question — even mentioned — no right to deduct input tax though it is not raised by any of the parties on the one hand and reduced costs on the here — of the extent to which the lapse other — are not the result of waiving tax or established in Cases C-276/97, C-358/97, charging tax as the case may be, but of the C-359/97 and C-260/98 14 of the claims for misapplication of the law. Following clar- the payment of contributions to own ification by the Court, the Member States resources 15 affects the present case. will certainly levy VAT in a uniform manner. (The same will then be true of payments to own resources.) If the Com- mission's argument is taken to its logical conclusion, distortion of competition would most of all prejudice those countries where no road tolls are levied at all.

66. In the abovementioned cases the Com- mission allowed considerable time to elapse between the conclusion of the pre-litigation procedure and the bringing of the action without taking adequate steps to resolve the questions at issue.

63. There is thus no distortion of competi- tion within the meaning of Article 4(5)(2) which would justify treatment as a taxable person. However, as I explained in points 38 to 58, that is not the key issue. In the present case there is a supply subject to VAT because the levying of the toll is not 67. Since it is clear from the first part of a State activity. Article 9(2) of Council Regulation (EEC, Euratom) No 1553/89 of 29 May 1989 on the definitive uniform arrangements for the collection of own resources accruing from value added tax, 16 that the VAT own resources base relating to Member States' annual statements may be corrected only until 31 July of the fourth year following the financial year concerned, it must be

assumed that in principle any collection of Commission had sent an additional rea- contributions to own resources is likewise soned opinion (23 December 1996) impossible after expiry of this time-limit. approximately seven years after an initial Under the second part of Article 9(2) that reasoned opinion (19 October 1989). applies unless those statements concern However, in the light of the above observa- points previously notified either by the tions it must also be assumed here that the Commission or by the Member State con- claim for payment of resources has lapsed cerned. The aim of this rule is to enable in so far as it relates to the financial years points which are disputed but have been prior to 1993. So, even though the Nether- raised to be resolved even at a later date. lands has transferred the calculated contri- However, it must be assumed that those butions to own resources subject to a concerned will also make an effort in the reservation, it should be possible to request intervening period to resolve the problems reimbursement of the resources paid before and that such a resolution is in fact 1993 or to have them credited to subse- possible. quent financial years.

68. However, in the proceedings against France, Ireland, the United Kingdom and 70. However, since this problem does not Greece there was not sufficient further form the subject-matter of these proceed- dialogue in the years between the conclu- ings, no final decision need be taken on it sion of the pre-litigation procedure and the here. bringing of the action and therefore any claim for payment of contributions has lapsed in accordance with the 43-month time-limit. Only the financial years prior to the bringing of the action which fell within that time-limit are not yet closed and the relevant annual statements can still be VI — Costs corrected.

(2) The Kingdom of the Netherlands shall bear the costs of the proceedings.

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