On Octover 25, 2007, the ECJ issued its decision in the case C-174/06 (CO.GE.P).
Context: Sixth Directive – VAT – Exempted transactions – Leasing or letting of immovable property – Property owned by the State
Article in the EU VAT Directive
Article 13(B)(b) of the Sixth VAT Directive (Article 135(1)(l) and 135(2)) of the EU VAT Directive 2006/112/Ec.
Article 135
1. Member States shall exempt the following transactions:
(l) the leasing or letting of immovable property.
2. The following shall be excluded from the exemption provided for in point (l) of paragraph 1:
(a) the provision of accommodation, as defined in the laws of the Member States, in the hotel sector or in sectors with a similar function, including the provision of accommodation in holiday camps or on sites developed for use as camping sites;
(b) the letting of premises and sites for the parking of vehicles;
(c) the letting of permanently installed equipment and machinery;
(d) the hire of safes.
Member States may apply further exclusions to the scope of the exemption referred to in point (l) of paragraph 1.
Facts
- After having classified the concession of areas of State maritime property as transactions not subject to VAT, the Consortium issued invoices to CO.GE.P without applying VAT. The tax authorities, by contrast, served VAT adjustment notices for the years 1991 to 1993 on that company.
- By application lodged before the Commissione tributaria di primo grado di Milano (Milan Tax Court of First Instance) on 30 May 1996, CO.GE.P. challenged those adjustment notices, disputing that the services provided by the Consortium were subject to VAT on the ground, inter alia, that the conditions for charging VAT were not fulfilled.
- That court granted the application by judgment of 19 November 1996.
- On 2 February 1998, the Ufficio lodged an appeal against that judgment, on the ground that the transactions carried out should be subject to VAT inasmuch as they constituted supplies of services effected in the course of an economic activity.
- By judgment of 20 September and 20 October 1999, the Commissione tributaria regionale della Lombardia (the regional tax court) dismissed the appeal, accepting CO.GE.P’s argument that concessions of State-owned property, unlike leases of immovable property in the strict sense, cannot be regarded either as assignments of property or as supplies of services for the purpose of the VAT legislation and, consequently, VAT may not be charged on them.
- By document lodged on 13 March 2000, the Ufficio lodged an appeal in cassation before the referring court.
- Before that court the Ufficio argued that the Consortium is indisputably a public economic entity.
- The Ufficio also submitted that, although the concession implies a discretionary power of a public-law nature, it seems nevertheless to have been made in the course of economic and commercial activities, for the purpose of obtaining rental income to be used in the economic activity of the public entity. Furthermore, the concession of a coastal warehouse for the storage of mineral oils, as in the main proceedings, reflects purely economic objectives rather than objectives of common interest or public utility.
- The referring court notes in this connection that, according to the Italian tax authorities, when the concession, as in the main proceedings, is granted by a port authority and not by the maritime authorities, that measure must be regarded as part of an economic or commercial activity because the port authority is a commercial and industrial entity.
- The referring court gives details of some aspects of Italian law in this regard.
- It thus points out that, although the relationship between grantor and grantee constitutes an administrative measure which is authoritative, unilateral and discretionary, such a measure invariably presupposes an expression of intent on the part of the person concerned to obtain the concession. The rules governing the relationship between the granting authority and the grantee are contained in a bilateral agreement.
- The referring court does not accept, furthermore, that, as Italian law stands, concessions of State-owned port property can be regarded as ‘port services’.
- Lastly, the order for reference shows that, according to the case-law of the Corte suprema di cassazione (Supreme Court of Cassation; judgments of 26 May 1992, No. 6281, and of 25 July 2001, No. 10097), in spite of their administrative nature, when concessions of State-owned property are issued by public port authorities, they cannot be brought within the model of the public-law concession granting exclusive use of such property. In fact, in so far as those measures form part of the economic activity carried out by those authorities, they are expressly treated in the same way as leases of immovable property, in spite of the different legal rules governing them. It follows that concessions of State-owned property must be regarded as transactions subject to VAT.
Questions
Where a person is granted a right to use, including exclusively, public property without provision of services of a nature that prevails in relation to the permission to use the property, for a specified period and against payment of an amount much lower than the value of the property, and that grant is made, at the request of the person concerned, by the adoption by a public entity carrying on a business of an administrative measure, such as the concession of State-owned property under national law, rather than by contract, does that grant constitute the leasing or letting of immovable property exempt from VAT under Article 13B(b) of the Sixth Directive?
AG Opinion
None
Decision
Article 13B(b) of the 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 must be interpreted as meaning that a legal relationship such as that at issue in the main proceedings, under which a person has been granted the right to occupy and use, including exclusively, public property, namely areas of State maritime property, for a specified period and against payment, is covered by the concept of ‘leasing or letting of immovable property’ within the meaning of that article.
Summary
A legal relationship under which a subject is granted, for a specified period and against payment, the exclusive or non-exclusive right to use a public good, namely areas of the maritime domain, comes within the concept of ‘rental of immovable property’.
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