C-45/01

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OPINION OF MRS STIX-HACKL — CASE C-45/01

II — Legal framework (c) the provision of medical care in the exercise of the medical and paramedi- cal professions as defined by the Member State concerned.'

A — Community law

5. Article 13A(2) of the Sixth Directive provides:

4. Article 13A(1)(b) and (c) of the Sixth Directive provide:

B — National law

— exemption of the services con- 6. As in force at the relevant time, Para- cerned shall not be likely to create graph 4 of the German Umsatzsteuergesetz distortions of competition such as 1980 (Law on Turnover Tax, hereafter 'the to place at a disadvantage com- UStG') 3provided as follows: mercial enterprises liable to value added tax.

'The following transactions covered by Paragraph 1(1)(1) to 1(1)(3) are exempt:

(b) The supply of services or goods shall not be granted exemption as provided for i n (1)(b), ( g ) , (h), (i), ( l ) , (m)and(n) above if:

— it is not essential to the trans- 14. transactions arising from the pursuit of actions exempted, the profession of doctor, dentist, natural medical practitioner, physiotherapist, mid- wife or a similar professional medical activity for the purposes of Paragraph 18(1)(1) of the Einkommensteuergesetz [Law on Income Tax] or pursuit of the profession of clinical chemist. O t h e r — its basic purpose is to obtain addi- supplies of goods and services by associ- tional income for the organisation by carrying out transactions which are in direct competition with 3 — BGBl. I 1979, p. 1953.

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III — Facts and questions board members and principal employees were psychotherapists who were licensed as medical practitioners.

9. The Christoph-Dornier-Stiftung für Klinische Psychologie (hereafter 'the foun- dation') is a charitable foundation estab- lished under private law. According to the order of the national court, its object is to develop the practice of and research into clinical psychology. It also aims at improv- 12. In 1 9 9 0 , the Finanzamt (Finance ing methods of treatment by appropriate Office) taxed the services supplied by the theoretical and practical research and at foundation at a reduced rate of tax under making important results of clinical psy- Paragraph 12(2)(8) of the UStG. Disagree- chological research available to the public. ing with the foundation, it took the view For these purposes, it maintains an out- that the transactions were not exempt from patient facility in which patients are given tax under Paragraph 4(16)(c) of the UStG. psychotherapeutic treatment by qualified psychologists employed by the foundation.

15. The foundation appealed against this judgment to the Bundesfinanzhof. The latter stayed the proceedings and referred the following four questions to the Court for a preliminary ruling: Is an exemption from tax unavailable to the extent that the authorities responsible for providing social secur- ity do not reimburse, or only partially reimburse, patients for the costs of psychotherapeutic treatment given by the aforementioned employees of the plaintiff? ' 1 . Does psychotherapeutic treatment, given in an out-patient facility pro- vided by a foundation (charitable establishment) employing qualified psychologists who are licensed under the Heilpraktikergesetz but who are not registered as doctors, qualify as "closely related activities" to hospital and medical care within the meaning of Article 13A(1)(b) of Directive 77/388? 3. Is the psychotherapeutic treatment pro- vided by the claimant exempt from tax on the basis of the neutrality of value added tax, because the psychothera- pists it employs could have provided the same treatment on a tax-exempt basis under Article 13A(1)(c) of Direc- tive 77/388 if they had provided it 2. In order for there to be an "other duly themselves as self-employed taxable recognised establishment of a similar persons?

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4. Is the claimant entitled to rely on the accordingly c o n c e n t r a t e d on the tax tax exemption of its transactions invol- exemption under letter (b). ving p s y c h o t h e r a p e u t i c t r e a t m e n t under Article 13A(1)(b) and (c) of Directive 77/388?'

18. Before the national court, the claimant in the main proceedings argued in particu- lar that Paragraph 4(16) of the UStG 1980 (the national law intended to transpose Article 13A(1)(b) (hereafter 'letter (b)') of IV — Analysis of the questions referred the Sixth Directive) was incompatible with Community law, since it made the tax exemption dependent on whether the treat- ment was provided under the supervision of a doctor. The Sixth Directive did not provide for such a condition. 16. The questions referred concern on the one hand the conditions of the exemption provided for in Article 13A(1)(b) of the Sixth Directive and on the other the con- ditions of the exemption provided for in Article 13A(1)(c) of the Sixth Directive.

2 1 . Since the first two questions thus con- cern Article 13A(1)(b) of the Sixth Direc- tive and require a certain basic understand- ing of that provision, I shall consider them together.

2 4 . T h e German Government firmly 1. Submissions of the parties rejected this view, most emphatically in the oral hearing, and submitted that Article 13A(1)(b) of the Sixth Directive should not be interpreted too broadly, if only to give proper weight to its nature as an exception to the general rule. It relied on the judgment of the Court in Commission v France, 5in which the Court held that the 22. The foundation began by criticising the contested tax exemption was designed to Bundesfinanzhofs question and explained ensure the availability of low-cost access to that the treatment provided by the psycho- hospital and medical care. In its opinion, therapists it employed encompassed the other forms of medical care were not to be diagnosis, treatment and cure of psycho- given the same privilege. The German logical diseases and disorders, and was Government considered its view to be therefore medical care concerning the supported by the fact that in contrast to health of persons within the meaning of letter (c), letter (b) did not draw a dis- the j u d g m e n t of the C o u r t in Case tinction between 'medical' and 'paramedi- C-384/98 D v W. 4 cal'.

4 — Case C-384/98 Dv W [2000] ECR I-6795, paragraphs 17 5 — Case C-76/99 Commission v France [2001] ECR I-249, and 18. paragraph 23.

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25. The German Government also sub- that the supplies covered by letter (b) and mitted that the psychotherapeutic treat- by letter (c) respectively differed less in ment the foundation provided was not their substance than in the form in which 'closely related activities', since the foun- they were provided. 6 dation's activity was self-contained and the disputed treatment was not provided in combination with any further medical care.

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exemption was available in the present case 33. Given its answer to the first question, depended on whether the foundation was the German Government considered it to to be regarded as an 'other duly recognised be unnecessary to answer the second ques- establishment of a similar nature'. As tion. On a subsidiary basis, it submitted regards the second question, which relates that the recognition procedure was a matter to this point, both the Commission and the for national law. It was not in principle Danish Government pointed out that the impossible t h a t recognition could be Sixth Directive did not lay down any granted on the basis of criteria outside tax formal recognition procedure. Accordingly, law, for example the reimbursement of how recognition was granted was a matter costs by authorities responsible for the for national law. provision of social security; however, for that purpose, it was essential that the national VAT provisions referred to those criteria. The German Government empha- sised that German law required the estab- lishments to provide their services under the supervision of a doctor.

31. However, the Commission did empha- sise that recognition could depend on con- ditions outside tax law, provided they referred to the activity undertaken. In this regard, it considered that the assumption of costs by authorities responsible for the 2. Analysis provision of social security could constitute recognition. However, in its opinion the assumption of part only of the costs could not constitute partial recognition of the establishment concerned.

38. By its first question the national court is clearly to be understood as asking also whether and, if so, to what extent the 36. It appears questionable that the dis- disputed psychotherapeutic treatment is to puted psychotherapeutic treatment falls be classified as medical care. within the concept of activities closely related to medical care. The Commission referred to the judgment in Commission v France, 9 according to which that concept refers to the relationship of an ancillary supply to the principal supply. However, the supplies in the present case are appar- ently unconnected to any other medical 39. In this connection, the question arises supplies: they are not provided within the in the present case as to whether the fact framework of hospital care; nor can they be that the disputed psychotherapeutic treat- regarded as supplementary to any medical ment is not provided by licensed doctors is care provided by licensed doctors. in itself sufficient to preclude subsuming it within the concept of 'medical care'.

37. According to the judgment in Card 40. The proposition that it should not be Protection Plan 10 'a service must be classified as 'medical care' is clearly sup- regarded as ancillary to a principal service ported by the requirement that the tax if it does not constitute for customers an exemptions envisaged by Article 13 of the aim in itself, but a means of better enjoying Sixth Directive are to be interpreted strictly the principal service supplied'. Since the since these exemptions constitute excep- disputed supplies are stand-alone supplies tions to the general principle that turnover tax is to be levied on all services supplied for consideration by a taxable person. 11 8 — Case C-141/00 Kügler [2002] ECR I-6833, paragraph 25, with further references. 9 — Cited above, footnote 5, paragraph 25. 10 — Case C-349/96 [1999] ECR I-973, paragraph 30. 11 — Case C-2/95 SDC [1997] ECR I-3017, paragraph 20.

4 1 . However, the purpose of this require- 43. It follows that in principle, the require- ment suggests that the provision should not ment to interpret the exemption conditions be interpreted so narrowly. The require- in Article 13 of the Sixth Directive strictly ment is intended to ensure that the tax does not prevent treating psychothera- privilege granted by Article 13 to certain peutic treatment in the same way irrespec- supplies is granted only to those supplies tive of whether the person providing it is which accord with the purpose for which licensed as a doctor for the purposes of the privilege is granted. As regards the letter (b). However, what is questionable is privileges granted to medical supplies by the significance of the point that the Article 13A(1)(b) or (c) of the Sixth Direc- German versions of letters (b) and (c) use tive, the requirement to interpret excep- different wording to refer to medical care: tions narrowly is therefore properly taken whereas letter (b) refers to 'medical care into account where the question is as to provided by a doctor' (ärtzliche Heil- whether or not all supplies provided by a behandlung), letter (c) refers to 'medical doctor in the course of his profession are to care concerning the health of persons' be exempted from tax. 12 However, the (Heilbehandlungen im Bereich der Human- present case concerns not whether a dis- medizin). tinction should be drawn between different activities carried out by a doctor but the tax treatment of supplies which, it is not disputed, would attract the tax privilege if they were carried out by a licensed doctor. 44. The Court's most recent discussion of the relationship between the two exemp- tions is in its judgment in Kügler. In that judgment the Court stated, '[i]t follows that Article 13A(1)(b) and (c) of the Sixth Directive, which have separate fields of application, are intended to regulate all exemptions of medical services in the strict sense. Article 13A(1)(b) exempts all ser- vices supplied in a hospital environment while Article 13A(1)(c) is designed to exempt medical services provided outside such a framework, both at the private 42. The German Government does not address of the person providing the care dispute the proposition that the disputed and at the patient's home or at any other psychotherapeutic treatment concerns the place'. 1 4 health of persons. Accordingly, it falls within the definition of medical care in letter (c), established by the Court as being medical care concerning the health of persons. 13 45. That indicates that the Court considers 12 — D v W (cited above, footnote 4), paragraphs 15 ff. See also it possible to draw a clear distinction my Joint Opinion in Cases C-212/01 Unterpertinger [2003] ECR I-13859 and C-307/01 D'Ambrumenil [2003] ECR I-13989. 13 — D v W, cited above, footnote 4, paragraphs 17 and 18. 14 — Cited above, footnote 8, paragraph 36.

46. The difference between the definitions of the two tax exemptions seems to be that 49. In its judgment in Kügler, 17 the Court the exemptions relate to activities which moreover recalled that, '[t]he principle of are carried out in different places: under fiscal neutrality precludes, inter alia, econ- letter (b), in establishments pursuing social omic operators carrying on the same activ- purposes, and under letter (c), in other ities from being treated differently as far as places, in particular in consulting rooms. the levying of VAT is concerned'. To the By contrast, the substance of the activity extent that the foundation's employees appears not to be definitive, with the have the necessary professional training as consequence that the difference between qualified psychologists having received the wording of the two sets of conditions further education to qualify as medical for exemption cannot preclude the appli- practitioners, such that their services are cation of the letter (b) exemption to the equivalent to services supplied by specialist disputed psychotherapeutic treatment. 16 — See Commission v France (cited above, footnote 5), paragraph 2 3 . 15 — Cited above, footnote 6, in particular paragraph 35. 17 — Cited above, footnote 8, paragraph 30.

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doctors with equivalent qualifications, the Recognition of the foundation principle of fiscal neutrality precludes treat- ing the services provided by the two pro- fessions differently.

5 1 . The clear distinction drawn in the Court's case-law 1 8 suggests that as a rule there should be no overlap. In my opinion, the finding in paragraph 36 of Kügler cannot be understood as meaning that the 53. In the present case it is not in dispute fact that the disputed psychotherapeutic that there being no relevant provision in the treatment is provided in an out-patient Sixth Directive, the question whether an facility in itself precludes the application establishment has been duly recognised for of letter (b). Whether that circumstance the purposes of the letter (b) tax exemption affects the availability of the letter (b) tax is to be answered by reference to national exemption is instead to be examined in the law. For that reason, the judgment in context of the question whether the facility Kügler is applicable: according to it, '[i]t is an 'other duly recognised establishment'. will... be for the national authorities, in accordance with Community law and sub- ject to review by the national courts, to 18 — See above, paragraphs 44 f. determine, in the light in particular of

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practice followed by the competent admin- 55. Because of the similarity between the istrative body in analogous situations, substance of letter (g) and of letter (b), 21 which organisations should be recognised these statements appear to apply equally to as charitable within the m e a n i n g of the interpretation of letter (b). Article 13A(1)(g) of the Sixth Directive'. 19

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B — The third question sions' within the meaning of letter (c) would be covered by letter (b) too. The foundation submitted that it was accord- ingly necessary to answer the third ques- tion. 1. Submissions of the parties

60. As regards the substance of the ques- 57. The parties differ as to whether it is tion, the foundation submitted in summary necessary to answer the third question. By that the services supplied by the employed contrast, they largely agree as to how the psychotherapists would have been exempt substance of the question should be from tax if the psychotherapists had sup- answered. plied them in the course of a self-employed practice. In this connection, the foundation emphasised that irrespective of the exist- ence of a contract of employment the psychotherapists carried out their activity on their own responsibility and applying their expertise independently. 58. The German Government was of the view that there was no need for an answer since letter (b) was a lex specialis compared with letter (c) and therefore ousted the latter provision. The Commission pointed out that the Bundesfinanzhof referred the third question only in case the letter (b) tax 61. The German Government likewise sub- exemption was not available. Since it was mitted that the psychotherapists employed for the national court to establish whether by the foundation could have provided the the letter (b) tax exemption was available same treatment on a tax-exempt basis if in the present case, it was necessary to they had provided it independently as answer the third question. taxable persons, since psychotherapeutic services of qualified psychologists were 'medical care' within the meaning of Article 13A(1)(c) of the Sixth Directive.

63. I should like first to observe that I think it necessary to answer the third question irrespective of what the relationship dis- cussed above between the letter (b) tax 66. The reason the Court gave for its exemption and the letter (c) tax exemption d e c i s i o n w a s t h a t t h e w o r d i n g of may be. 22 As the Commission observed, it Article 13A(1)(c) did not make the tax is for the national court to establish exemption dependent on whether the tax- whether the letter (b) tax exemption is able person was endowed with a particular available in the present case. legal form. 24 It was enough that medical (or paramedical) services were involved and were supplied by persons who pos- sessed the necessary professional qualifi- cations. The Court also emphasised that such an interpretation was consistent with the objective of reducing the cost of medi- cal care. 25 Finally, the Court stated that 64. However, it appears to be unnecessary such an interpretation was consistent with to consider the parties' submissions indi- the principle of fiscal neutrality, which vidually, since the answer to the third precluded, inter alia, economic operators question may be taken directly from carrying on the same activities from being Kügler. 23 treated differently as far as the levying of VAT was concerned. 26

65. By its first question in Kügler, the 67. Since it is not disputed in the main Bundesfinanzhof asked whether the tax proceedings that the qualified psychologists exemption envisaged in Article 13A(1)(c) employed by the foundation supply medical of the Sixth Directive was dependent on the care and possess the necessary professional legal form of the taxable person supplying qualifications, it appears that the answer to the medical or p a r a m e d i c a l services the first question in Kügler may be applied referred to in that provision. On that point, directly to the present case. the Court held that 'the exemption envis-

71. The Commission considered that the possibility Article 13A(2)(a) of the Sixth Directive granted to the Member States (in 69. The foundation referred in particular to particular in relation to letter (b)) of what it considered to be the incorrect making the grant of the tax exemptions transposition of the Sixth Directive in the subject to certain conditions did not in Federal Republic of Germany. In transpos- p r i n c i p l e affect the c o n c l u s i o n t h a t ing Article 13A(1)(b) of the Sixth Directive, Article 13A(1) had direct effect. Nor did the national legislature had made the tax Article 13A(2)(b) of the Sixth Directive exemption subject to an additional con- preclude Article 13A(1) from having direct dition, namely that the supplies had to be effect, since that restriction was contingent provided 'under the supervision of a doc- in nature and therefore, according to the tor'. This gave rise to a difference in case-law of the Court, did not prevent treatment between certain medical supplies direct effect. 27 which were excluded from the tax exemp- tion in the Federal Republic of Germany and identical supplies to which other Member States did grant the exemption, and this infringed the principle of fiscal neutrality. The foundation submitted that national law required to be interpreted in 72. Moreover, the requirement that the conformity with the Sixth Directive and establishment concerned be duly recognised therefore disregarding the condition it con- by the Member State did not preclude letter sidered to infringe the Sixth Directive. (b) from having direct effect. Once such recognition had been given in an individual case, it was sufficiently clear from that provision what economic activities were covered by the exemption from VAT. 70. The German Government disputed the proposition that the letter (b) and the letter 2 7 — In this regard, the Commission referred to Joined Cases (c) tax exemptions had direct effect, since 231/87 and 129/88 Ufficio distrettuale delle imposte neither was, so far as its subject-matter was dirette di Fiorenzuola d'Arda and Others v Comune di Carpaneto Piacentino and Another [1989] ECR 3233, concerned, unconditional. Letter (b) pro- paragraph 32.

74. On that point, the Court held that the exemption provided for in Article 13A(1)(g) of the Sixth Directive could be relied upon by a taxable person before national courts 77. The Court then considered the point in order to oppose national rules incom- that the Member State had an undoubted patible with that provision. discretion for the purpose of according the organisations in question recognition. In that regard, it stated that as long as the Member States observed the limits of the discretion which was accorded to them by Article 13A(1)(g) of the Sixth Directive, 75. The Court started from the proposition persons could not rely on the Sixth Direc- that in accordance with settled case-law, tive in order to acquire recognition. 'wherever the provisions of a directive appear, so far as their subject-matter is concerned, to be unconditional and suffi- ciently precise, those provisions may, in the absence of implementing measures adopted within the prescribed period, be relied upon as against any national provision which is incompatible with the directive'. 3 0

78. The Court held that '[i]t will accord- ingly be for the national authorities, in 76. In order to establish the direct effect of accordance with Community law and sub- Article 13A(1)(g), the Court said in par- ject to review by the national courts, to

28 — Cited above, footnote 8. 31 — Cited above, footnote 8, paragraph 52, under reference to 29 — See above, paragraph 52. Case 8/81 Becker [1982] ECR 5 3 , paragraph 33. 30 — Cited above, footnote 8, paragraph 5 1 . 32 — Cited above, footnote 8, paragraph 5 3 .

79. The Court thus reached the conclusion t h a t the e x e m p t i o n p r o v i d e d for in Article 13A(1)(g) of the Sixth Directive 81. Accordingly, it is to be held that the could be relied upon by an individual exemptions provided for in Article 13A(1)(b) and (c) of the Sixth Directive may be relied upon by a taxable 33 — Cited above, footnote 8, in particular paragraph 58. person in order to oppose national rules 34 — Cited above, footnote 8, paragraph 60. incompatible with that provision.

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V — Conclusions

82. It is accordingly submitted that the Court should answer the questions referred as follows:

(1) Psychotherapeutic treatment, given in an out-patient facility by a foundation employing qualified psychologists who are licensed medical practitioners but who are not registered as doctors, qualifies as 'medical care', and therefore not as 'closely related activities' to such care, within the meaning of Article 13A(1)(b) of 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 assessment. It is for the national court to establish, in the light of all relevant factors, whether the taxable person is a 'duly recognised establishment of a similar nature' within the meaning of Article 13A(1)(b) of the Sixth Directive.