On August 1, 2022, the ECJ issued the Judgment in the case C-294/21 (Etat du Grand-duche de Luxembourg).
Context: Reference for a preliminary ruling – Taxation – Value added tax (VAT) – Sixth Council Directive 77/388/EEC – Article 2(1) – Scope – Taxable transactions – Article 9(2)(b) – Place where transport services are supplied – Tourist trips on the Moselle – River subject to condominium status
Article in the EU VAT Directive
Article 2(1) and Article 9(2) , point b) of the Sixth Directive (77/388/EEC)
Article 9 (Place of supply of services)
Supply of services
1 . The place where a service is supplied shall be deemed
to be the place where the supplier has established his business or has a fixed establishment from which the service is supplied or, in the absence of such a place of business or fixed establishment, the place where he has his permanent address or usually resides.
2 . However:
( a) the place of the supply of services connected with immovable property, including the services of estate agents and experts, and of services for preparing and coordinating construction works, such as the services of architects and of firms providing on-site supervision, shall be the place where the property is situated;
( b) the place where transport services are supplied shall be the place where transport takes place, having regard to the distances covered;
Facts
Navitours operates tourist cruise activities that, according to the AED (Luxembourg service of registered property, domains and VAT), did not fall within the scope of VAT. Navitours operates on the River Moselle, on the section covered by the public international condominium status and on which the Luxembourg and German States jointly exercise their sovereignty. The reason for not falling within the scope of the activities had to do with the river’s condominium status. Therefore, for many years the AED had not requested payment of the VAT on the tickets sold for passenger transport. The Navitours acquisition in 2004 of a new pleasure craft was subject to Luxembourg VAT by the AED. In the context of the legal proceedings following the decision of the director of the AED rejecting Navitours’ objection, the Cour d’appel held that (i) the acquisition of the vessel as an intra-Community supply was subject to VAT, and ii) that the VAT paid by Navitours was deductible as input tax. The Cour d’appel deduced from this that the director of the AED had wrongly confirmed the VAT assessments for the years 2004 and 2005 and had denied Navitours the right to deduct input tax.
Consideration:
For the purpose of assessing the plea relating to the application of the Sixth Directive to the territory of the Moselle under the common sovereignty of Luxembourg and Germany, which plea – having regard to the agreement concluded on 19 December 1984 between Luxembourg and Treaty concluded in Germany concerning the delimitation of the common border between the two states – also raises a question about the applicability of VAT in the European area, a question should first be submitted to the Court for a preliminary ruling.
Source Minbuza.nl
Questions
Are/is Article 2(1) of [the Sixth Directive (77/388/EEC)] of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis, which provides that a value added tax shall be subject to:
1. the supplies of goods and services effected within the territory of the country by a taxable person acting as such for consideration’
and/or Article 9(2) , point b),of [Directive (77/388/EEC)] of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis,
which provides that ‚the place of transport services, the place [ is] applicable, in proportion to the distances covered, where the carriage is carried out, and one and/or the other Article entails the levying of VAT in Luxembourg on passenger transport services provided by a supplier established in Luxembourg,
when these services are provided within a condominium,as this condominium is defined in the Treaty between the Grand Duchy of Luxembourg and the Federal Republic of Germany on the delimitation of the common border between the two States and in the Exchange of Letters signed in Luxembourg on 19 December 1984, as a common territory under joint sovereignty of the Grand Duchy of Luxembourg and the Federal Republic of Germany,
and in respect of which there is no agreement between the two States with regard to the collection of VAT on transport services as provided for in Article 5(1)of the Convention of 19 December 1984 between the Grand Duchy of Luxembourg and the Federal Republic of Germany on the delimitation of the common border between the two States, which provides that ‚the Contracting States shall determine the matters concerning the law applicable to the joint sovereignty common territory by means of an additional agreement’?
AG Opinion
In view of the foregoing, I suggest that the Court answer the Cour de cassation’s preliminary question as follows:
Article 2(1) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization 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 91/680/EEC of 16 December 1991, read in conjunction with Article 3(2) thereof, must be interpreted as applying to passenger transport services supplied in the territory coming under the joint sovereignty of the Grand Duchy of Luxembourg and the Federal Republic of Germany pursuant to the applicable international agreements, irrespective of whether or not those Member States have concluded an agreement on the application of that provision to that territory.
Article 9(2)(b) of the Sixth Directive must be interpreted as not precluding those services from being taxed either by agreement between the two Member States or unilaterally by one of them. In the latter case, the other Member State loses the power to tax the said transactions.
Decision
Articles 2(1) and 9(2)(b) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization 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 91/680/EEC of 16 December 1991,
must be interpreted as meaning:
a Member State must tax passenger transport performed, by a service transport provider established in that Member State, within a territory which, pursuant to an international treaty concluded between that Member State and another Member State, constitutes a joint territory under joint sovereignty of those two Member states and which is not subject to any exception provided for by EU law, provided that those services have not already been taxed by that other Member State. The taxation, by one of the Member States, of those services prevents the other Member State from taxing them in turn, without prejudice to the possibility for those two Member States to regulate in another way the taxation of services performed within that territory, inter alia by means of an agreement, provided that non-taxation and double taxation is avoided.
Source
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