C-275/01

SINCLAIR COLLIS

O P I N I O N OF ADVOCATE GENERAL ALBER delivered on 10 October 2002 1

I — Introduction I I — Legal context

A — Community law

2. Article 2 of the Sixth Directive provides as follows:

1. The House of Lords has referred a 'the following shall be subject to value question to the Court on the interpretation added tax: of 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 2(here- inafter 'the Sixth Directive'). The referring court seeks guidance as to whether an 1. The supply of goods or services effected agreement for the installation of a cigarette for consideration within the territory of vending machine in a public house is a the country by a taxable person acting contract for the 'letting of immovable as such; property', which would be exempt from value added tax under Article 13B(b) of the Sixth Directive.

1. the provision of accommodation, 4. The Sixth Directive was implemented in as defined in the laws of the the United Kingdom by Section 31 of the Member States, in the hotel sector Value Added Tax Act 1994, which pro- or in sectors with a similar func- vides that a supply of services is an exempt tion, including the provision of supply if it is of a description for the time accommodation in holiday camps being specified in Schedule 9 to the Act. or on sites developed for use as Item 1 in Group 1 of Part II of that camping sites; Schedule includes:

2. the letting of premises and sites for 'The grant of any interest in or right over parking vehicles; land or of any licence to occupy land'.

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III— Facts and procedure — The siteholders agree to provide elec- tricity and to ensure that no other cigarette vending machines are installed on the premises.

5. Sinclair Collis Ltd. (hereinafter 'Sinclair Collis'), the appellant in the main proceed- ings, installs vending machines for the sale of cigarettes in public houses, clubs and hotels. To that end it enters into agree- — Sinclair Collis is given the exclusive ments with the owners of such establish- rights to supply cigarettes and other ments. tobacco products at the relevant prem- ises.

9. The Commissioners appealed against the decision of the Tribunal to the High Court, 12. It has therefore referred the following which overturned the Tribunal's decision. question to the Court of Justice for a Lightman J. stressed that the critical ques- preliminary ruling: tion was what, upon the true construction of the agreement, the siteholder was agree- ing to supply. The answer to that question was that the agreement amounted to a licence to keep a machine on a site. It was a licence to occupy land combined with certain ancillary or incidental rights. He accordingly held the supply to be exempt from VAT. 'Is the grant, by the owner of premises ("the Siteholder") to an owner of a ciga- rette vending machine, of the right to install, operate and maintain the machine in the premises for a period of two years, in a place nominated by the Siteholder, in return for a percentage of the gross profits of the sales of cigarettes and other tobacco goods in the premises, but with no other significant rights of possession or control than those set out in the written agreement between the parties, capable of amounting 10. Sinclair Collis appealed against that to the letting of immovable property within decision to the Court of Appeal. The Court the meaning of Article 13B(b) of Council of Appeal upheld the decision of the High Directive 77/388/EEC of the 17th day of Court. Sinclair Collis then appealed further May 1977 on the harmonisation of the to the House of Lords. laws of the Member States relating to

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turnover taxes; and what are the principles machines can be moved around by the applicable in deciding whether an agree- siteholder is another factor suggesting that ment amounts to the letting of immovable there is no occupation of a defined part of property within such meaning?' the land.

16. It follows from the above that the V — Arguments of the parties characteristics necessary for there to be a 'letting of immovable property' are not present or at any rate do not predominate in the contract as a whole. The agreement is first and foremost a contract for the installation of the machines, not for the 14. The appellant is of the view that use or occupation of the land on which they agreements for the installation of machines stand. of the kind in point here do not meet the conditions for a 'letting of immovable p r o p e r t y ' w i t h i n the m e a n i n g of Article 13B(b) of the Sixth Directive. The agreement does not specify any particular location for the machines. Rather, it is generally for the siteholder to select an 17. The United Kingdom Government, on appropriate position for the installation of the other hand, takes the view that, by the machines. The siteholder is simply installing the machine, a person is occupy- bound not unreasonably to withhold his ing the land by the machine to the exclu- consent to the selection of a position for sion of all others. This is quite different installing the machine which the appellant from sitting at a table to drink a cup of considers to be more likely to generate coffee or wander around a park or across a maximum sales. The fact that most of the golf course.

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18. Nor does the fact that the machine may that the mere right to install a machine does be moved invalidate the conclusion that not normally entail any right of occupation there is occupation. It merely means that of a piece of land or control over access to the land occupied has been varied consen- that land. Only if there is occupation and suallyby the parties. control can there be a 'letting of immovable property' for the purposes of Article 13B(b) of the Sixth Directive.

A — 'Letting of immovable property' 27. The tax exemptions listed in Article 13 within the meaning of Article 13B(b) of of the Sixth Directive are, moreover, the Sixth Directive according to the settled case-law of the Court, to be construed strictly, since they are exceptions to the general principle that all supplies made by a taxable person for consideration are subject to value added tax. 6 24. The concept of 'letting of immovable property' is not defined in the Sixth Direc- tive itself. 3 28. The Court of Justice has not yet been called upon to give a comprehensive inter- pretation of the concept of 'letting of immovable property' for the purposes of Article 13B(b) of the Sixth Directive. Where is has considered the matter before 25. However, it is settled case-law that the the present request for a preliminary ruling, exemptions from VAT provided for in it has been concerned inter alia with the Article 13 of the Sixth Directive have their status of a transaction surrendering a own independent meaning in Community lease, 7a licence to use a golf course 8 and law and must therefore be given a Com- a licence to use a road on payment of a munity definition. 4 toll. 9

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of Justice held that it is an essential element machines is not a fixed sum but a per- of a contract to let property that a specific centage of the profits made from the sale of period be agreed for use of the property: the cigarettes is irrelevant to the question how to classify the main supply under the contract. It is precisely in circumstances involving the letting of sales areas that rents are in practice conditional on turnover.

'[The term letting of immovable property] cannot be considered to cover contracts where... the parties have not agreed on any duration for the right of enjoyment of the immovable property, which is an essential element of a contract to let'. B — Classification of the agreement for installation of the machine in this case

30. Advocate General Jacobs took the view 32. It is for the national court to determine in his Opinion in the Stockholm Lindöpark the exact nature of the agreement at issue case 1 1 that it is a salient and typical here. In the light of the criteria set out characteristic of a lease or let that 'it under section A above, however, an agree- necessarily involves the grant of some right ment of the kind described in this case to occupy the property as one's own and to appears not to constitute a 'letting of exclude or admit others'. The right must immovable property' for the purposes of also be linked to a defined piece of Article 13B(b) of the Sixth Directive. property.

35. What is uncertain with regard to the 38. The United Kingdom also takes the contract at issue in this case, however, is view that the appellant does enjoy the right whether the agreement includes the right to to control access to the machines. The occupy a particular piece of property and appellant has a right of access to the to refuse others access to that property. machines to maintain them, remove the money and keep them stocked with ciga- rettes. That right is sufficient for the purposes of occupying the land. It is not necessary to have unlimited rights of access.

36. As stated at points 14 to 16 above, the appellant takes the view that it does not because the agreement does not specify a site for installing the machine and because it only has limited rights of access which do 39. I concur with the appellant's view. The 14 — Case C-358/97 Commission v Ireland, cited in footnote 4, agreement in this case does not give the paragraphs 56 and 57, and Case C-359/97 Commission v appellant the right to occupy a particular United Kingdom, cited in footnote 3, paragraphs 68 and 69. piece or parcel of land.

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40. That is clear from the fact that the 43. The argument advanced by the United agreement does not identify any particular Kingdom and by Lord Slynn in this con- area, by size or location, in the public house nection that moving the machine merely where the machine to be installed. It is, varies the land occupied by agreement rather, left to the siteholder to determine between the parties is not entirely convinc- where the machine is to stand. The appel- ing. lant only has the right to require that it be moved if it considers a different location to be more suitable for the purposes of maxi- mising profits. The appellant cannot there- fore be said to occupy a particular, pre- cisely defined site.

47. The facts in this case may therefore be compared with the provision of a meal in a hotel restaurant, as contrasted with the 49. I too made that point in my Opinion in provision of a hotel room. Whereas in the Case C-358/97 Commission v Ireland (road latter case the dominant feature is the tolls): occupation of the room itself, in the former the essential element is the meal, combined with certain ancillary services. In order to receive the service the diner must sit down at a table in the restaurant, and must therefore use a particular area of land for a time. But the use of that area of land is not the main feature of the contract viewed in the light of its scheme and purpose. It 'The chief purpose of the "contract" cannot therefore be said to amount to between the parties is not so much the use occupation of the part of the land on which of the property as the one-time provision of the table is placed. 15 a service using that property. For car drivers a brief use of the property is in fact of secondary importance, as their priority is to reach their destination quickly and safely.' 17

48. Advocate General Jacobs took a similar approach in his Opinion in Case C-150/99 Stockholm Lindöpark, which related to a licence to use a golf course, stating as follows:

50. In addition, in the situation in this case, the appellant has no right to control access to the site where the machine stands, or to exclude others' access to that site. 'Whilst it is obviously difficult to play golf without a course to play it on, the service 16 — Opinion in Stockholm Lindöpark, cited in footnote 1 1 , point 35. 15 — See on this also Advocate General Jacob's Opinion in 17 — My Opinion in Case C-358/97 Commission v Ireland, Stockholm Lindöpark, cited in footnote 1 1 , point 32. point 67.

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VII — Conclusion

58. I therefore propose that the Court should answer the question referred as follows:

The grant, by the owner of premises ('the Siteholder') to an owner of a cigarette vending machine, of the right to install, operate and maintain the machine in those premises for a period of two years, in a place nominated by the Siteholder, in return for a percentage of the gross profits of the sales of cigarettes and other tobacco goods in the premises, but with no other significant rights of possession or control than those set out in the written agreement between the parties, does not amount to the letting of immovable property within the meaning of Article 13B(b) of the Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes.

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