C-315/00

1 — Original language: English. 2 — Sixth Council Directive 77/388/EEC of 17 May 1977 on the "Building land" shall mean any unim­ harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: proved or improved land defined as uniform basis of assessment; OJ 1977 L 145, p. 1. such by the Member Slates.'

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4. Article 5(1) defines a supply of goods as 4. hire of safes. 'the transfer of the right to dispose of tangible property as owner'. Article 6(1) defines a supply of services as 'any trans- action which does not constitute a supply of goods'. Member States may apply further exclusions to the scope of this exemp- tion;

5. Article 13B lists a number of exemptions from VAT, including:

'(b) the leasing or letting of immovable property excluding: (g) the supply of buildings or parts thereof, and of the land on which they stand, o t h e r t h a n as d e s c r i b e d in Article 4(3)(a);

'The components of immovable property do not include tangible property which is attached to the ground only for a tempor- ary purpose...'. The relevant national legislation

7. Paragraph 4(12)(a) of the Umsatz- steuergesetz (Law on turnover tax, 'the The facts and the main proceedings Law') 3provides for the exemption from turnover tax of 'the letting or leasing of immovable property [Grundstücke]'. Several exclusions from that exemption 10. The case concerns the status for the are then laid down, which more or less purpose of the exemption in Article 13B(b) reflect those exclusions set out in of two transactions entered into between Article 13B(b)(l) to (3). Mr Maierhofer and the Free State of Bavaria. The referring court describes the facts in the order for reference as follows.

8. The first sentence of Paragraph 94(1) of the Bürgerliches Gesetzbuch (German civil 11. Mr Maierhofer let to the Free State of code, 'BGB') provides: Bavaria various buildings to provide com- munal accommodation for the temporary housing of asylum-seekers. It was agreed that the length of the two leases concerned was to be a minimum period of five years, subject to possible extension, and that the land was to be completely cleared and returned once the letting by Mr Maierhofer 'The essential components of immovable came to an end. property [Grundstück (literally, a plot of land)] include tangible property [Sachen] firmly attached to the ground [Grund und Boden], in particular buildings...'

12. Some of the buildings were on land 3 — BGBl. 1993 I, p. 565. which Mr Maierhofer had rented from the

16. On appeal the Finanzgericht (Finance 14. Mr Maierhofer did not deduct input Court) confirmed the Tax Office's assess- tax when the buildings were erected in ment and found that the buildings leased 1992. In respect of the years in contention, were not component parts of immovable covering the period from 1993 to 1995, he property since they were attached to the declared tax-exempt turnover (namely the land only for a temporary purpose. Under rent he received from the Free State of the agreements governing the provision of Bavaria) arising from the letting of immov- the land, Mr Maierhofer was obliged to able property. The Tax Office assessed Mr return the plots of land in question duly Maierhofer's turnover to tax on the ground cleared. Nor did the owners of those plots that what he had let was not immovable of land have any option to take over the property but merely buildings constituting buildings. Since the buildings fell to be

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20. The Bundesfinanzhof has accordingly 18. The Bundesfinanzhof observes also referred the following questions for a pre- that, according to the case-law of the Court liminary ruling: of Justice, the term 'letting of immovable property' covers the letting of buildings 5 but not the letting of tents, caravans or mobile homes. 6The criteria for a letting of 'immovable property' have thus not yet been clarified. It cannot therefore be '1. Does the term "letting of immovable excluded that the term 'immovable proper- property" in Article 13B(b) of Direc- ty' used in Articles 9(2)(a) and 13B(b) of tive 77/388/EEC cover the provision for consideration of a building con- structed from prefabricated com- 4 — Case C-12/98 Amengual Far |2000] ECR I-527. ponents which is to be removed follow- 5 — Casc C-346/95 Blast [ 1998] ECR I-481. ing the termination of the contract and 6 — Case C-60/96 Cummissum v France [1997] ECR I-3827. may be re-used on another site?

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2. Is it of any significance in that con- as 'lettings'. The main issue is therefore nection whether the lessor makes avail- whether the term 'immovable property' in able to the lessee both the building and Article 13B(b) includes buildings such as the land on which it is erected, or those in issue in the main proceedings. merely the building, which he has erected on the lessee's land?'

21. Mr Maierhofer, the German Govern- 24. Mr Maierhofer, the United Kingdom ment and the Commission have submitted and the Commission consider that such written observations to the Court and, buildings constitute immovable property together with the United Kingdom Govern- for the purposes of Article 13B(b). The ment, were represented at the hearing. German Government submits in the first place that the question is irrelevant and, in the alternative, that such buildings do not constitute immovable property for the pur- poses of Article 13B(b).

the second parliamentary chamber. Those Directive, with its specific exemptions and instructions apparently reflect the case-law specific exclusions, then the legislation of the Bundesfinanzhof referred to in para- must be interpreted in accordance with graph 15 above to the effect that the notion those provisions, and it is not open to the of 'immovable property' in Paragraph national tax authorities to apply any 4(12)(a) of the Law must be interpreted in further exclusions unless the Member State accordance with civil law, and hence by has adopted additional legislative measures reference to the BGB including the provi- to extend liability to VAT to such lettings.' sions on pseudo-components. The instruc- tions accordingly state that there is no letting of immovable property where the buildings let are attached to the ground for a temporary purpose only and that the letting of prefabricated dwelling units may thus be subject to VAT.

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The term 'immovable property' in — were let for a minimum period of five Article 13B(b) years subject to possible extension and were to be removed following the termination of the contract.

29. It will be recalled that the buildings in issue

30. The German Government submits that the provision of pre-fabricated buildings does not constitute the 'letting of immov- — were constructed as single-storey and able property' within the meaning of two-storey buildings from prefab- Article 13B(b). It notes, first, that most of ricated components, the language versions of Article 13B(b), although not the German version, refer to the immovable nature of the property: the pre-fabricated buildings supplied by M r Maierhofer may however be dismantled and rebuilt elsewhere. Moreover the build- ings at issue in the present case are — stood on a concrete base erected on comparable to the tents, caravans, mobile concrete foundations sunk into the homes and light-framed leisure dwellings in ground and were secured by bolts Commission v France: 9even though fixed embedded in those foundations, to the ground, they can be dismantled without damage at any point and put up again on another plot. Finally, the common feature of the t r a n s a c t i o n s expressly e x c l u d e d from t h e e x e m p t i o n in Article 13B(b) is that they entail more active exploitation of the immovable prop- erty justifying further taxation in addition — had tiled bathroom and kitchen walls to that levied upon its initial sale. 10 On and roofs which were tile on timber, that basis the letting of pre-fabricated houses cannot be exempt within the mean- ing of Article 13B(b): buildings which are put up on a temporary basis only and which may be dismantled without damage may be used on several plots; the operation therefore generates added value going well

31. I am not convinced by those arguments and agree with Mr Maierhofer, the United 34. The Sixth Directive does not expressly Kingdom Government and the Commission define the concept of immovable prop- that buildings such as those in issue in the erty. 1 1Nor does it leave that definition to main proceedings must be regarded as the legal orders of the Member States. 12 immovable property for the purposes of Since according to settled case-law it fol- Article 13B(b). lows from the 11th recital of the preamble to the Sixth Directive that the exemptions provided for in Article 13 of the Directive have their own meaning which must in principle be independent from the civil law concepts of individual Member States, the 32. The only property that is inherently terms used to specify the exemption in immovable is land itself: even conventional Article 13B(b) must be given a Community buildings intended to be permanent fixtures definition. 13 may in many cases be removed and re- erected if sufficient care is taken. On the other hand there are clearly different degrees of 'movability' of property other than land: a true building with walls and foundations will, in view of the costs, only very exceptionally be moved whereas a circus tent's core function is precisely to be movable. 35. I consider that the word 'immovable' must be the starting point and basis of the analysis of the term 'immovable property'. Whilst the German version uses the word 'Grundstück' which means literally 'plot of

land', all the other language versions of the criteria such as the intended duration of the directive use a term equivalent to 'immov- attachment should in my view not be taken able'. into account. It will be recalled that the emphasis in the German legislation is on the intended temporary nature of the attachment of the buildings to the ground and it is clear from the order for reference that that issue is the central concern of the referring court. Intention is however a notoriously fickle criterion since subjective 36. It can be deduced from the existing criteria raise problems of verification. It case-law that the term 'letting of immov- cannot necessarily be assumed that, simply able property' in Article 13B(b) covers not because it is intended when a building is only the letting of land but also the letting erected that it should not remain perma- of conventional buildings and parts of such nently on its site the building will in fact buildings. This is implicit in the many subsequently be removed: many pre-fab- judgments 14 concerning other aspects of ricated buildings put up in the immediate the interpretation of Article 13B(b) in aftermath of the Second World War which neither the Court nor the parties expressly as a temporary measure to allevi- raised doubts about the classification of ate the then housing crisis remain standing conventional buildings as immovable prop- today. Moreover nothing in the Sixth erty. There is as yet however no relevant Directive supports the use of subjective guidance from the Court on the criteria to criteria for determining the borderline be applied in borderline cases: although the between immovable and movable tangible ruling in Commission v France 15indirectly property. On the contrary, Article 4(3)(a) concerned the issue whether tents, cara- defines 'building' objectively as 'any struc- vans, mobile homes and light-framed lei- ture fixed to or in the ground'. Finally, in sure dwellings were 'immovable property' particular in the area of taxation legal for the purpose of Article 13B(b), its value certainty is of paramount importance and as a precedent is limited since France did subjective criteria tend to undermine legal not contest the Commission's action and certainty. there is therefore no analysis of the infringement.

40. I do not therefore accept the German Government's proposal to adopt the stricter criterion of an inseverable attach- ment to the ground. I have already explained above that even conventional buildings may be removed and re-crectcd elsewhere. It is thus not in my view appropriate to construe the term 'immov- able' as meaning inseverable from the 39. Article 13B(b) exempts the leasing or ground: that test might not only entail the letting of immovable property from VAT; exclusion of practically all buildings but Article 13B(g) exempts the supply, other also require a complex assessment of than as described in Article 4(3)(a) (and whether a given building could in fact be hence other than before first occupation), removed and re-erected. of buildings or parts thereof and of the land on which they stand. Article 13B(g) accord- ingly exempts 'second-hand' sales of build- ings, parts of buildings and the land on which they stand; in parallel, Article 13B(b) exempts the letting of immovable property. It is clear from the w o r d i n g of Article 13B(g) that the terms used in that 41. Nor do I consider that it is correct to provision must be construed in accordance assume that the letting of structures which with Article 4(3), which refers to the are firmly fixed to or in the ground but concepts of 'land' and 'building' and which may be removed and re-erected defines building as 'any structure fixed to elsewhere necessarily entails a more active or in the ground'. The concepts of land and exploitation of property comparable to the buildings as described in Article 4(3) there- transactions listed in Article 13B(b)(l) to fore constitute in my view the two basic (4). In the present case for example Mr elements of the concept of 'immovable Maierhofer merely lets the buildings in property' in Article 13B(b). If the Commu- issue to the Free State of Bavaria; in so nity legislature had wished to keep certain doing he does not exploit the property 'buildings' as defined in Article 4(3) outside the concept of immovable property in Article 13B(b) — and hence at the same 16 — In further support of that construction it is interesting to note that the French, Portuguese and Spanish versions of time to exempt pursuant to Article 13B(g) Article 4(3)(a) use two terms without distinction in the same paragraph, one corresponduing to ' b u i l d i n g ' and the the supply of certain structures firmly fixed other being closer to 'immovables'.

45. Mr Maierhofer and the Commission are of the view that that circumstance is 42. In my view, buildings such as those in irrelevant: the criteria for determining issue must be regarded as firmly fixed to or whether a given building is 'immovable in the ground within the meaning of the property', and hence whether a letting of suggested criterion. The buildings stand on the building is exempt by virtue of a concrete base erected on concrete foun- Article 13B(b), do not include the owner- dations sunk into the ground and are ship of the land on which it stands. secured by bolts embedded in those foun- dations. It appears that they were solidly built in order to last at least five years. It would take a team of eight persons a period of ten days to dismantle them. They may thus be distinguished from tents, caravans and mobile homes which are both inherently mobile and less firmly attached 46. The German Government makes no to the ground. observations on the second question. The United Kingdom however submits that the ownership of the land on which the build- ings are constructed is very significant for classification of the transaction for the purposes of Article 13B(b). In essence, 43. I accordingly conclude that the term unless Mr Maierhofer was in a position to 'immovable property' in Article 13B(b) of convey the land as well as the buildings to the Sixth Directive covers buildings con- the Free State of Bavaria the transactions structed from prefabricated materials such cannot be regarded as the leasing or letting as those in issue in the main proceedings if of immovable property and he should they are firmly fixed to or in the ground. simply be regarded as having erected build-

ings and hence made a taxable supply of different context, it is settled case-law that construction services. it is the inherent nature of the activity in question which governs its tax status and not the form of the arrangements between the parties. The Court has recently given guidance on the scope of the concept 'letting and leasing'. First, it has stated that 47. To my mind, however, there is nothing that term cannot be considered to cover in Article 13B(b) to suggest that the criteria contracts in which the parlies have not for determining what constitutes 'the leas- agreed on any duration for the right of ing or letting of immovable property' for enjoyment of the immovable property, the purposes of that provision include the which is an essential element of a contract pattern of ownership of the land and any to let. 17 Second, it has ruled that the letting building thereon. of immovable property for the purposes of Article 13B(b) essentially involves the land- lord of property assigning to the tenant, in return for rent and for an agreed period, the right to occupy his property and to exclude other persons from it. 18I cannot therefore 48. Nor am I persuaded by the argument of see how maintenance or construction work the United Kingdom to the effect that involving a building risks being construed 'extreme consequences' will follow if a as a leasing or letting of immovable prop- letting of a building on land not owned erty within the meaning of Article 13B(b). by the lessor may be exempt under Article 13B(b). The United Kingdom sug- gests that in that case a contractor engaged by a householder to replace the roof of his house — or even just one tile of the roof — could argue that his services should come within the exemption because the house itself was immovable property. The United Kingdom accepts that the parties in that example would have to structure their payment arrangements to 50. I accordingly conclude on the second look like a lease, but submits that that question referred that it is not relevant to would not present a difficulty in commer- the question whether the letting of a build- cial terms so long as the price reflected ing falls within the exemption in payment over time. It accordingly con- Article 13B(b) whether the lessor makes cludes that vast amounts of construction available to the lessee both the building and work could be brought within the exemp- the land on which it is erected or merely the tion in Article 13B(b). building which he has erected on the lessee's land.

(2) It is not relevant to the question whether the letting of a building falls within the exemption in Article 13B(b) whether the lessor makes available to the lessee both the building and the land on which it is erected or merely the building which he has erected on the lessee's land.

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