Flashback on ECJ Cases – C-117/11 (Purple Parking and Airparks Services) – Parking service combined with passenger transport from car park to airport is a single composite service

On January 19, 2012, the ECJ issued its decision in the case C-117/11 (Purple Parking and Airparks Services).

Context: First subparagraph of Article 104(3) of the Rules of Procedure – Taxation – VAT – Sixth Directive – Article 28(2)(a) – Article 28(3)(b) – Exemption of certain transport services – Transaction combining car parking services and the transport of travellers between the car park and an airport – Existence of two separate supplies of services or of a single supply – Principle of fiscal neutrality

Article in the EU VAT Directive

Articles 28(2)(a) and Article 28(3)(b) of the Sixth Directive.

Article 28(2) (Exemption)

‘Notwithstanding Article 12(3), the following provisions shall apply during the transitional period referred to in Article 28 l.

(a) Exemptions with refund of the tax paid at the preceding stage and reduced rates lower than the minimum rate laid down in Article 12(3) in respect of the reduced rates, which were in force on 1 January 1991 and which are in accordance with Community law, and satisfy the conditions stated in the last indent of Article 17 of the second Council Directive of 11 April 1967, may be maintained.

Article 28(3)(b) of the Sixth Directive provides that, during the transitional period referred to in Article 28(4), Member States may ‘continue to exempt the activities set out in Annex F under conditions existing in the Member State concerned’.

Facts

The appellants in the main proceedings are two companies established in the United Kingdom which provide ‘off-airport’ parking and ‘off-airport park-and-ride’ services.
The car parks operated by the appellants are located some distance away from various national airports. They pay particular attention to the safety of those car parks. The car parks are securely fenced and are floodlit at night. They are all covered by CCTV surveillance, and they are also patrolled at regular intervals, 24 hours per day and 7 days per week.
Customers drive their vehicles to the car park, leave them in an arrivals area and then board a bus or mini-bus provided by the car park operator in order to be transported, with their luggage, to the airport terminal. Their vehicles are parked by the employees of that operator. On their return, the customers again use the means of transport provided by the car park operator between the airport terminal and the car park, where their vehicle is made available in a departure area. The transport service is designed to be available at all times and in a sufficiently frequent and reliable manner, the buses leaving either at regular intervals or on demand.
The brochures provided by the appellants to customers emphasise the safety of the car park and the efficiency and simplicity of the parking operation. Reference is made in those brochures to ‘simply leaving your car, and moving yourself, your family and your luggage into one of our courtesy buses, with the driver of the vehicle helping with the luggage’.
The price charged by the appellants to their customers is entirely by reference to the time, calculated per day, that the vehicles are parked in the car park. The number of passengers is irrelevant and the transport is not charged separately. The daily rate is calculated with a view to under-cutting the long term ‘on-airport’ parking areas by about GBP 1 to GBP 2 per day. The costs incurred by the two appellants of providing the transport to customers between the car park and the airport are included in the calculation of the daily rate. They respectively amount to approximately 33% and 80% of the total cost of their activity.
Until 2006, the appellants paid VAT to the Commissioners on the basis of the standard rate for all the services supplied to their customers, in the light of Note 4A(b) to Group 8 of Annex 8 to the Value Added Tax Act 1994, which excludes transport services such as those provided by the appellants from the zero-rating prescribed, in principle, for transport in any vehicle designed or adapted to carry not less than 10 passengers.
However, in 2006, the appellants claimed that that exclusion infringed the principle of fiscal neutrality and that, therefore, their supplies of transport services should have been regarded as zero-rated supplies. The appellants thus sought reimbursement from the Commissioners of the part of the VAT paid in respect of the transport services for the period from 1 April 2003 to 31 March 2006.
The Commissioners refused those claims on the ground that the appellants provided a single supply, of parking services taxable at the standard rate, in relation to which the transport service was only an ancillary, incidental or closely linked supply. The Commissioners argued that, in any event, the exception to zero-rating, prescribed in Note 4A(b) to Group 8 of Annex 8 to the Value Added Tax Act 1994, does not infringe the principle of fiscal neutrality.
The First-tier Tribunal (Tax Chamber) dismissed an appeal brought against that refusal by decision of 8 July 2009, holding that the parking and transport services supplied by the appellants constituted a single supply of standard-rated taxable services, given, in particular, that the customers wanted parking and that the transport was imposed on them due to the distance between the car park and the airport.
The appellants appealed against that decision to the Upper Tribunal (Tax and Chancery Chamber), claiming that they provided two separate and distinct supplies of services, one of parking and the other of transport.

Questions

What particular factors does the Referring Court have to take into account when deciding whether, in circumstances such as those of the present case, a taxable person is providing a single taxable supply of parking services or two separate supplies, one of parking and one of transport of passengers?

In particular:

a) Is this case covered by the reasoning adopted by the Court of Justice in Case C-349/96 Card Protection Plan and Case C-41/04 Levob. In particular, can the transport services in question be regarded as ancillary to the parking services or so closely linked to them that they form, objectively, a single indivisible economic supply, which it would be artificial to split?

b) In considering question 1(a), what account should the Referring Court take of the costs of providing the transport services, as opposed to the parking services, in accordance with paragraphs 24-26 of the ECJ’s judgment in Joined Cases C-308/96 and C-94/97 Madgett and Baldwin, in assessing whether or not the transport services are ancillary to the parking services?

c) In the light of the ECJ’s judgment in Case C-572/07 Tellmer, in particular paragraphs 21-24, should the Referring Court when answering question 1(a) take account of the fact that the transport element of the supplies could be (but is not in fact) provided in a variety of ways (for example, the taxable person could provide those transport services using a third party provider who invoices the taxable person or could use a third party provider who contracts directly with the customer and separately charges for the transport services) and to what extent (if at all) is it relevant whether or not the contract gives the customer the right to choose between the different manners in which the transport element could be provided?

When the Referring Court is considering whether or not there is a single indivisible economic supply in answering question 1(a), what account should it take of the principle of fiscal neutrality?

In particular:

a) Does the answer depend on whether or not the taxable person also provides parking services or transport services separately to other groups of customer?

b) Does the answer depend on how other transport services to and from airports, not provided by operators of parking services, are treated under national law?

c) Does the answer depend on whether or not other instances of the provision by taxable persons of parking and transport services (not involving transport to and from airports) are treated under national law as constituting two distinct supplies, one taxable and one zero-rated?

d) Does the answer depend on whether or not the taxable person can show that the services it provides are in competition with other similar services involving both a parking and a transport element, whether provided by the same supplier or provided by two separate suppliers? In particular, does the answer depend on whether the taxable person can show that consumers who wish to use their cars to perform part of the journey to the airport can obtain parking and transport to the airport from individual and separate suppliers, for example by parking at a location near a train station and transport by train from that location to the airport or by parking at a location near an airport and another form of public transport to the airport?

e) How is the Referring Court to take account of the conclusions reached by the ECJ in Case C-94/09 Commission v France in relation to the principle of fiscal neutrality and transport services in that case?

Does Community law and, in particular, the principle of fiscal neutrality, preclude a provision of domestic law which excludes zero-rating for transport services between an airport and a car park where the person providing the transport element and the person supplying the car parking element are the same person or connected persons?

AG Opinion

None

Decision

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, as amended by Council Directive 92/111/EEC of 14 December 1992, must be interpreted as meaning that, for the purpose of determining the rate of value added tax applicable, services for the parking of a vehicle in an ‘off-airport’ car park and for the transport of the passengers of that vehicle between that car park and the airport terminal concerned must, in circumstances such as those at issue in the main proceedings, be regarded as a single complex supply of services in which the parking service is predominant.

Summary

Parking service combined with passenger transport from car park to airport – two different or one single service?

For the determination of the applicable VAT rate, services providing a parking space for a vehicle in an off-airport parking lot (‘off-airport parking’) and the passengers of this vehicle must be arranged between that parking lot and the airport terminal concerned. transported as a single composite service in which the valet service prevails.

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