Case C-315/00 Rudolf Maierhofer v Finanzamt Augsburg-Land

(Sixth VAT Directive – Exemptions – Letting of immovable property – Prefabricated building which can be dismantled and reassembled)

Opinion of Advocate General Jacobs delivered on 6 June 2002

Judgment of the Court (Fifth Chamber), 16 January 2003

Summary of the Judgment

Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Exemptions provided for by the Sixth Directive – Exemption for the letting of immovable property – Definition – Letting of a pre-fabricated building sunk into the ground and intended to be dismantled and re-used elsewhere – Whether included – Whether it is the building and the land or the building alone which is made available to the lessee – Irrelevant (Council Directive 77/388, Art. 13B(b))

The letting of a building constructed from prefabricated components fixed to or in the ground in such a way that they cannot be easily dismantled or easily moved constitutes a letting of immovable property for the purposes of Article 13B(b) of Sixth Council Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, even if the building is to be removed at the end of the lease and re-used on another site. Whether the lessor makes available to the lessee both the building and the land on which it is erected or merely the building which he has erected on the lessee's land is irrelevant in determining whether a letting constitutes a letting of immovable property for the purposes of that provision, as such a letting may concern solely a building. see paras 35, 40-41, operative part 1-2

JUDGMENT OF THE COURT (Fifth Chamber) 16 January 2003 (1)

(Sixth VAT Directive – Exemptions – Letting of immovable property – Prefabricated building which can be dismantled and reassembled)

In Case C-315/00, REFERENCE to the Court under Article 234 EC by the Bundesfinanzhof (Germany) for a preliminary ruling in the proceedings pending before that court between

Finanzamt Augsburg-Land,

on the interpretation of 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 (OJ 1977 L 145, p. 1),

THE COURT (Fifth Chamber),

composed of: M. Wathelet, President of the Chamber, C.W.A. Timmermans, D.A.O. Edward, P. Jann and S. von Bahr (Rapporteur), Judges,

Advocate General: F.G. Jacobs, Registrar: H.A. Rühl, Principal Administrator,

after considering the written observations submitted on behalf of:

─ Mr Maierhofer, by C. Theil, Rechtsanwalt,

─ the German Government, by W.-D. Plessing and B. Muttelsee-Schön, acting as Agents,

─ the Commission of the European Communities, by E. Traversa and K. Gross, acting as Agents, assisted by A. Böhlke, Rechtsanwalt,

having regard to the Report for the Hearing,

after hearing the oral observations of Mr Maierhofer, represented by C. Theil, of the German Government, represented by B. Muttelsee-Schön and F. Huschens, acting as Agent, of the United Kingdom Government, represented by P. Whipple, Barrister, and of the Commission, represented by K. Gross, assisted by A. Böhlke, at the hearing on 7 February 2002,

after hearing the Opinion of the Advocate General at the sitting on 6 June 2002,

gives the following

1 This request for a preliminary ruling concerns the interpretation of Directive 2011/92/EU of the European Parliament and of the Council of 13 December 2011 on the assessment of the effects of certain public and private projects on the environment (OJ 2012 L 26, p. 1), as amended by Directive 2014/52/EU of the European Parliament and of the Council of 16 April 2014 (OJ 2014 L 124, p. 1) (‘Directive 2011/92’).

2 The request has been made in proceedings between, on the one hand, Waltham Abbey Residents Association and, on the other hand, An Bord Pleanála (Planning Board, Ireland; ‘the Board’), Ireland and the Attorney General (Ireland), concerning authorisation granted by the Board for a strategic residential housing development.

Legal context

European Union law

Directive 2011/92

Recitals 7 to 9 of Directive 2011/92 state:

‘(7) Development consent for public and private projects which are likely to have significant effects on the environment should be granted only after an assessment of the likely significant environmental effects of those projects has been carried out. …

(8) Projects belonging to certain types have significant effects on the environment and those projects should, as a rule, be subject to a systematic assessment.

(9) Projects of other types may not have significant effects on the environment in every case and those projects should be assessed where the Member States consider that they are likely to have significant effects on the environment.’

Article 2(1) of that directive provides:

‘Member States shall adopt all measures necessary to ensure that, before development consent is given, projects likely to have significant effects on the environment by virtue, inter alia, of their nature, size or location are made subject to a requirement for development consent and an assessment with regard to their effects on the environment. Those projects are defined in Article 4.’

Under Article 3(1) of that directive:

‘The environmental impact assessment shall identify, describe and assess in an appropriate manner, in the light of each individual case, the direct and indirect significant effects of a project on the following factors:

…

(b) biodiversity, with particular attention to species and habitats protected under [Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora (OJ 1992 L 206, p. 7), as amended by Council Directive 2013/17/EU of 13 May 2013 (OJ 2013 L 158, p. 193) (“Directive 92/43”)] and Directive 2009/147/EC [of the European Parliament and of the Council of 30 November 2009 on the conservation of wild birds (OJ 2010 L 20, p. 7)];

…’

Article 4 of Directive 2011/92 provides:

‘1. Subject to Article 2(4), projects listed in Annex I shall be made subject to an assessment in accordance with Articles 5 to 10.

(a) a case-by-case examination;

(b) thresholds or criteria set by the Member State.

Member States may decide to apply both procedures referred to in points (a) and (b).

Where a case-by-case examination is carried out or thresholds or criteria are set for the purpose of paragraph 2, the relevant selection criteria set out in Annex III shall be taken into account. Member States may set thresholds or criteria to determine when projects need not undergo either the determination under paragraphs 4 and 5 or an environmental impact assessment, and/or thresholds or criteria to determine when projects shall in any case be made subject to an environmental impact assessment without undergoing a determination set out under paragraphs 4 and 5.

Where Member States decide to require a determination for projects listed in Annex II, the developer shall provide information on the characteristics of the project and its likely significant effects on the environment. The detailed list of information to be provided is specified in Annex IIA. The developer shall take into account, where relevant, the available results of other relevant assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The developer may also provide a description of any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

The competent authority shall make its determination, on the basis of the information provided by the developer in accordance with paragraph 4 taking into account, where relevant, the results of preliminary verifications or assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The determination shall made available to the public and:

(a) where it is decided that an environmental impact assessment is required, state the main reasons for requiring such assessment with reference to the relevant criteria listed in Annex III; or

(b) where it is decided that an environmental impact assessment is not required, state the main reasons for not requiring such assessment with reference to the relevant criteria listed in Annex III, and, where proposed by the developer, state any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

Member States shall ensure that the competent authority makes its determination as soon as possible and within a period of time not exceeding 90 days from the date on which the developer has submitted all the information required pursuant to paragraph 4. In exceptional cases, for instance relating to the nature, complexity, location or size of the project, the competent authority may extend that deadline to make its determination; in that event, the competent authority shall inform the developer in writing of the reasons justifying the extension and of the date when its determination is expected.’

Annex II.A of that directive contains the list of ‘information to be provided by the developer on the projects listed in Annex II’. That list reads as follows:

‘1. A description of the project, including in particular:

(a) a description of the physical characteristics of the whole project and, where relevant, of demolition works;

(b) a description of the location of the project, with particular regard to the environmental sensitivity of geographical areas likely to be affected.

(a) the expected residues and emissions and the production of waste, where relevant;

(b) the use of natural resources, in particular soil, land, water and biodiversity.

4. The criteria of Annex III shall be taken into account, where relevant, when compiling the information in accordance with points 1 to 3.’

Annex III to that directive sets out the ‘criteria to determine whether the projects listed in Annex II should be subject to an environmental impact assessment’.

Directive 2014/52

Recitals 11 and 29 of Directive 2014/52 state:

‘(11) The measures taken to avoid, prevent, reduce and, if possible, offset significant adverse effects on the environment, in particular on species and habitats protected under [Directive 92/43] and Directive 2009/147 …, should contribute to avoiding any deterioration in the quality of the environment and any net loss of biodiversity, in accordance with the [European] Union’s commitments in the context of the [United Nations Convention on Biological Diversity, signed in Rio de Janeiro on 5 June 1992,] and the objectives and actions of the Union Biodiversity Strategy up to 2020 laid down in the [Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions] of 3 May 2011 entitled ‘Our life insurance, our natural capital: an EU biodiversity strategy to 2020’ [(COM(2011) 244 final)]

…

(29) When determining whether significant effects on the environment are likely to be caused by a project, the competent authorities should identify the most relevant criteria to be considered and should take into account information that could be available following other assessments required by Union legislation in order to apply the screening procedure effectively and transparently. In this regard, it is appropriate to specify the content of the screening determination, in particular where no environmental impact assessment is required. Moreover, taking into account unsolicited comments that might have been received from other sources, such as members of the public or public authorities, even though no formal consultation is required at the screening stage, constitutes good administrative practice.’

Directive 92/43

Article 6(3) of Directive 92/43 provides:

‘Any plan or project not directly connected with or necessary to the management of the site but likely to have a significant effect thereon, either individually or in combination with other plans or projects, shall be subject to appropriate assessment of its implications for the site in view of the site’s conservation objectives. In the light of the conclusions of the assessment of the implications for the site and subject to the provisions of paragraph 4, the competent national authorities shall agree to the plan or project only after having ascertained that it will not adversely affect the integrity of the site concerned and, if appropriate, after having obtained the opinion of the general public.’

Article 12(1) of that directive provides:

‘Member States shall take the requisite measures to establish a system of strict protection for the animal species listed in Annex IV(a) in their natural range, prohibiting:

(a) all forms of deliberate capture or killing of specimens of these species in the wild;

(b) deliberate disturbance of these species, particularly during the period of breeding, rearing, hibernation and migration;

(c) deliberate destruction or taking of eggs from the wild;

(d) deterioration or destruction of breeding sites or resting places.’

Point (a) of Annex IV to that directive mentions ‘all species’ of bats belonging to the suborder of ‘microchiroptera’.

Irish law

Some of the buildings were on land which a local authority had let to Mr Maierhofer and others were on land which the lessee of the buildings, the Free State of Bavaria, had rented itself. In both cases the sites were to be fully restored to their original condition once the lease came to an end.

Mr Maierhofer had constructed on those sites single-storey and two-storey buildings similar to prefabricated houses using prefabricated components. The buildings stood on a concrete base erected on concrete foundations sunk into the ground. The walls, which were made of panels, were secured to the foundations by bolts. The roof framework was covered with tiles. The floors and walls of the bathrooms and kitchens were tiled. The construction system was such that the buildings could be dismantled at any time by eight persons in ten days and subsequently re-used.

Mr Maierhofer did not deduct input tax in respect of the construction of the buildings in 1992. For the period 1993 to 1995, he declared exempt transactions for the letting of immovable property under the first sentence of Paragraph 4(12)(a) of the UStG.

The Finanzamt none the less assessed Mr Maierhofer's letting transactions at the normal rate of tax on the ground that the transactions related not to immovable property but merely to buildings which were not in reality the components of immovable property within the meaning of Paragraph 95 of the BGB. The Finanzamt took any deductible tax into account when assessing the tax due.

The Finanzgericht (Finance Court, Germany) dismissed the action which Mr Maierhofer had brought against the decisions by which the Finanzamt had demanded that tax.

Mr Maierhofer then appealed to the Bundesfinanzhof on a point of law. He claims that the first sentence of Paragraph 4(12)(a) of the UStG, read with the Sixth Directive, has been incorrectly applied.

The Bundesfinanzhof points out that Paragraph 4 of the UStG, which implements Article 13B(b) of the Sixth Directive, does not expressly exempt from turnover tax transactions such as Mr Maierhofer's, which consist of letting buildings constructed on a temporary basis. However, if national case-law is applied, the first sentence of Paragraph 4(12)(a) of the UStG is to be interpreted in accordance with German civil law, and in particular with the first two sentences of Paragraph 95(1) of the BGB, which provides that tangible property, including buildings, which is attached to the ground only for a limited period is not a constituent part of immovable property. Looked at in that way, the letting of such buildings is a taxable transaction.

The Bundesfinanzhof entertains some doubts, however, as to the compatibility with Community law of the approach of German case-law and therefore deems it necessary to refer the following two questions to the Court for a preliminary ruling:

The first question

By its first question, the national court is asking the Court about the meaning of the expression letting of immovable property in Article 13B(b) of the Sixth Directive.

According to the German Government, there is no need to give a precise definition of letting of immovable property, since Article 13B(b) of the Sixth Directive enables Member States to add further exclusions to those referred to therein, a power which the German legislature has used. It is clear from administrative guidelines approved by the Bundesrat that the letting of buildings constructed from prefabricated components and attached to the ground for a limited period does not amount to a letting of immovable property for the purposes of the BGB and does not therefore fall within the exemption from turnover tax laid down for the letting of immovable property.

The Court notes, however, first, that Paragraph 4 of the UStG, which implements Article 13B(b) of the Sixth Directive, provides that the letting of immovable property is, as a general rule, to be exempt and excludes from exemption only certain specific letting transactions broadly corresponding to those referred to in points 1 to 4 of the first subparagraph of Article 13B(b) of the directive. The provisions of Paragraph 4 of the UStG do not contain any additional exclusions and, in particular, do not specifically exclude buildings constructed from prefabricated components.

Second, the Bundesfinanzhof does not even mention in its order for reference the administrative guidelines to which the German Government refers. Furthermore, as became clear from the oral argument presented at the hearing, those guidelines, even if they were approved by the Bundesrat, are merely directions and are not a legal provision in the same way as Paragraph 4 of the UStG. They cannot therefore establish a further exclusion for the purposes of the second subparagraph of Article 13B(b) of the Sixth Directive.

In those circumstances, the Federal Republic of Germany cannot be regarded as having availed itself, when implementing the Sixth Directive, of the power conferred by Article 13B(b) of the directive to provide exclusions other than those expressly laid down by that provision.

Further, it should also be borne in mind that according to settled case-law the exemptions provided for by Article 13 of the Sixth Directive have their own independent meaning in Community law and that they must therefore be given a Community definition (see Case C-358/97 Commission v Ireland [2000] ECR I-6301, paragraph 51).

Thus, the interpretation of the expression letting of immovable property in Article 13B(b) of the Sixth Directive cannot be determined by the interpretation given by the civil law of a Member State. It is therefore necessary, contrary to the German Government's submission, to consider the meaning of the expression letting of immovable property.

In interpreting a provision of Community law, it is appropriate to consider its wording as well as the context in which it occurs and the objectives of the rules of which it forms part (see Case C-223/98 Adidas [1999] ECR I-7081, paragraph 23, and Case C-191/99 Kvaerner [2001] ECR I-4447, paragraph 30).

The wording of Article 13B(b) of the Sixth Directive does not define the term letting of immovable property. It is thus appropriate to consider the context in which the provision occurs and the objectives of the rules of which it forms part.

It is apparent from the wording of Article 13B(b) of the Sixth Directive that the Community legislature intended the letting of movable property to be subject to tax ─ in contrast to the letting of immovable property which, as a general rule, is to be exempt.

The Court has thus held that a national provision which extended to certain movable property the exemption from VAT which, pursuant to Article 13B(b) of the Sixth Directive, is restricted exclusively to the letting of immovable property was contrary to the provisions of that directive (see Case C-60/96 Commission v France [1997] ECR I-3827, paragraph 16).

The property at issue in Commission v France was caravans, tents, mobile homes and light-framed leisure dwellings. A characteristic of that property, classified as movable, was that it was either mobile, in the case of caravans and mobile homes, or could be easily moved, in the case of tents and light-framed leisure dwellings.

By contrast, the buildings at issue in the case before the national court, described at paragraph 13 of this judgment, are not mobile; nor can they be easily moved. They are buildings with a concrete base erected on concrete foundations sunk into the ground. They can be dismantled on expiry of the lease for subsequent re-use but by having recourse to eight persons over ten days.

Such buildings made of structures fixed to or in the ground must be regarded as immovable property. In that connection, it is significant that the structures cannot be easily dismantled or easily moved but, contrary to the German Government's submission, there is no need for them to be inseverably fixed to or in the ground. Nor is the term of the lease decisive for the purpose of determining whether the buildings at issue are movable or immovable property.

If building is defined in that way, that is consonant with the definition of the term in Article 4(3)(a) of the Sixth Directive concerning the supply of buildings or parts of buildings. There is no reason to treat that term differently depending on whether what is concerned is a letting transaction under Article 13B(b) of that directive or a supply under Article 4(3)(a).

The answer to the first question must therefore be that the letting of a building constructed from prefabricated components fixed to or in the ground in such a way that they cannot be easily dismantled or easily moved constitutes a letting of immovable property for the purposes of Article 13B(b) of the Sixth Directive, even if the building is to be removed at the end of the lease and re-used on another site.

The second question

By its second question, the national court is asking whether the fact that the lessor makes available to the lessee the building and the land on which it is erected, or merely the building which he has erected on the lessee's land, is relevant in determining whether a letting constitutes a letting of immovable property for the purposes of Article 13B(b) of the Sixth Directive.

Mr Maierhofer and the Commission submit that that circumstance is wholly irrelevant as regards classification of a transaction as a letting of immovable property.

The United Kingdom Government, however, submits that it is significant whether the lessor makes available to the tenant not only the building itself but also the land on which the building is erected. Otherwise, there is a risk that a taxable supply of services, such as construction or repair works to a building, might be made to look like an exempt transaction for the letting of immovable property.

In that regard, it is appropriate to point out that Article 13B(b) of the Sixth Directive defines exempt transactions by reference to the nature of the transactions effected. In order to determine whether a transaction comprises a letting or construction or repair work, account must be taken of its essential features (see, as regards Article 2(1) of the Sixth Directive, Case C-349/96 CPP [1999] ECR I-973, paragraph 29), irrespective of the way in which it might be artificially presented.

Furthermore, as is apparent from the answer to the first question, the letting of immovable property may concern solely a building. It is not necessary for it to concern both the building and the land on which the building is erected in order for it to be classified as a letting of immovable property for the purposes of Article 13B(b) of the Sixth Directive.

The answer to the second question must therefore be that whether the lessor makes available to the lessee both the building and the land on which it is erected or merely the building which he has erected on the lessee's land is irrelevant in determining whether a letting constitutes a letting of immovable property for the purposes of Article 13B(b) of the Sixth Directive.

Costs

The costs incurred by the German and United Kingdom Governments and by the Commission, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main action, a step in the proceedings pending before the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT (Fifth Chamber),

in answer to the questions referred to it by the Bundesfinanzhof by order of 25 May 2000, hereby rules:

Whether the lessor makes available to the lessee both the building and the land on which it is erected or merely the building which he has erected on the lessee's land is irrelevant in determining whether a letting constitutes a letting of immovable property for the purposes of Article 13B(b) of the Sixth Directive 77/388.

Wathelet

Timmermans

Edward

Jann

von Bahr

Delivered in open court in Luxembourg on 16 January 2003.

Registrar

President of the Fifth Chamber

1Language of the case: German.