(Reference for a preliminary ruling from the Regeringsrätten)

(Sixth VAT Directive – Articles 2, 5(6) and 6(2) – Provision of meals in a company canteen for a price lower than the cost price – Taxable amount)

Opinion of Advocate General Ruiz-Jarabo Colomer delivered on 23 November 2004

Judgment of the Court (First Chamber), 20 January 2005

Summary of the judgment

Tax provisions – Harmonisation of legislation – Turnover taxes – Common system of value added tax – Taxable transactions – Supplies of goods and services effected for consideration – Meaning – Transactions where the consideration is lower than the cost price of the goods or services – Included – National rule whereby such transactions are regarded as an application of goods or services for private use – Not permitted

(Council Directive 77/388, Arts 2, 5(6) and 6(2))

Articles 2, 5(6) and 6(2)(b) of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, Articles 5(6) and 6(2)(b) of which treat, for the purposes of the imposition of value added tax, certain transactions for which no consideration is actually received by the taxable person as supplies of goods and provisions of services effected for consideration, must be interpreted as precluding a national rule whereby transactions in respect of which an actual consideration is paid are regarded as an application of goods or services for private use within the meaning of the latter provisions, even where that consideration is less than the cost price of the goods or services supplied.

The fact that the price paid for an economic transaction is higher or lower than the cost price is irrelevant to the question whether a transaction is to be regarded as a ‘transaction effected for consideration’ within the meaning of Article 2. The latter concept requires only that there be a direct link between the supply of goods or the provision of services and the consideration actually received by the taxable person. Accordingly, where the transaction in question is effected for consideration, there is no reason to apply Articles 5(6) and 6(2)(b), since those provisions relate only to transactions effected free of charge.

(see paras 22-24, 30, operative part)

JUDGMENT OF THE COURT (First Chamber) 20 January 2005 (1)

(Sixth VAT Directive – Articles 2, 5(6) and 6(2) – Provision of meals in a company canteen for a price lower than the cost price – Taxable amount)

In Case C-412/03,

REFERENCE for a preliminary ruling under Article 234 EC from the Regeringsrätten (Sweden), made by decision of 29 September 2003, received at the Court on 3 October 2003, in the proceedings

Riksskatteverket,

THE COURT (First Chamber),

composed of P. Jann, President of the Chamber, K. Lenaerts (Rapporteur), J.N. Cunha Rodrigues, E. Juhász and M. Ilešič, Judges,

Advocate General: D. Ruiz-Jarabo Colomer,

Registrar: K. Sztranc, Administrator,

having regard to the written procedure and further to the hearing on 21 October 2004, after considering the observations submitted on behalf of:

– Waltham Abbey Residents Association, by J. Devlin, Senior Counsel, J. Kenny, Barrister-at-Law, and D. Healy, Solicitor,

– An Bord Pleanála, by. B. Foley, Senior Counsel, A. Carroll, Barrister-at-Law, and P. Reilly, Solicitor,

– Ireland, by M. Browne, Chief State Solicitor, S. Finnegan, K. Hoare and A. Joyce, acting as Agents, and by D. McGrath, Senior Counsel, F. Valentine, Senior Counsel, and E. O’Callaghan, Barrister-at-Law,

– the European Commission, by M. Noll-Ehlers and N. Ruiz García, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

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.’

4 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)];

…’

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.

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

The Regeringsrätten found that, under the Swedish law, the provisions on the taxation of the supply of goods or services for private use apply both where the goods or services are made available free of charge and where they are made available for a consideration which is lower than the purchase price or cost price of the goods or, as the case may be, the cost of providing the service. In the main proceedings, the question arose as to whether Articles 2, 5(6) and 6(2)(b) of the Sixth Directive preclude those national provisions.

Accordingly, the Regeringsrätten decided to stay proceedings and to refer the following questions to the Court for a preliminary ruling:

1.‘1. In the event that the Regeringsrätten finds, when the case is decided, that the company’s supplies are supplies of goods, are Article 2 and Article 5(6) of the Sixth Directive to be interpreted as precluding provisions in the legislation of a Member State under which the application of goods for private use means that a taxable person transfers goods to a third party for a consideration less than the purchase value of the goods or of similar goods or, if no such value is available, the cost price?

2.In the event that the Regeringsrätten finds, when the case is decided, that the company’s supplies are food dispensing services, are Article 2 and Article 6(2)(b) of the Sixth Directive to be interpreted as precluding provisions in the legislation of a Member State under which the application of services for private use means that a taxable person performs, arranges performance or in some other way provides a service for himself or his staff for private purposes or for other non-commercial purposes, where the service is provided for a consideration less than the cost of performing the service?’

The questions referred for a preliminary ruling

The questions referred to the Court concern the determination of the taxable amount in the case of a supply of goods or a provision of services by a taxable person to the members of his staff for a price which is lower than the cost price. They have been referred, in particular, to enable the national court to assess the compatibility with the Sixth Directive of the Swedish law, which applies the rules laid down in Articles 5(6) and 6(2)(b) of that directive, in cases in which consideration has actually been paid for the supply of goods or the provision of services but in which that consideration is less than the cost price of those goods or services.

The Greek and Swedish Governments take the view that Articles 5(6) and 6(2)(b) of the Sixth Directive extend the scope of taxable transactions in that even transfers of goods or services which are not effected ‘for consideration’ within the meaning of Article 2 of that directive are rendered subject to VAT. It follows from those provisions, read in conjunction with Article 11A, that the purpose of the directive is to prevent a taxable person or members of his staff from enjoying unjustified advantages over ordinary consumers (see Case C‑415/98 Bakcsi [2001] ECR I‑1831, paragraph 42, and Joined Cases C‑322/99 and C‑323/99 Fischer and Brandenstein [2001] ECR I‑4049, paragraph 56). To that end, the Sixth Directive imposes tax not only on transfers free of charge but also on transfers for a price which is lower than the cost price.

By contrast, the Commission of the European Communities and the Danish Government submit that, in keeping with their wording, Articles 5(6) and 6(2)(b) of the Sixth Directive apply exclusively to transactions effected free of charge. Under Article 11A(1)(a) of that directive, the taxable amount is the consideration actually paid by the employee to the employer, even if that consideration is less than the cost price of the meals provided.

According to the general rule stated in Article 11A(1)(a) of the Sixth Directive, the taxable amount for the supply of goods or services for consideration is the consideration actually received for them by the taxable person. That consideration is thus the subjective value, that is to say, the value actually received, and not a value estimated according to objective criteria (see Case 154/80 Coöperatieve Aardappelenbewaarplaats [1981] ECR 445, paragraph 13; Case 230/87 Naturally Yours Cosmetics [1988] ECR 6365, paragraph 16; Case C‑126/88 Boots Company [1990] ECR I‑1235, paragraph 19; Case C‑258/95 Fillibeck [1997] ECR I‑5577, paragraph 13; and Case C‑404/99 Commission v France [2001] ECR I‑2667, paragraph 38). Moreover, that consideration must be capable of being expressed in money (Coöperatieve Aardappelenbewaarplaats, paragraph 13; Naturally Yours Cosmetics, paragraph 16; and Fillibeck, paragraph 14).

As the Advocate General rightly stated in point 35 of his Opinion, the fact that the price paid for an economic transaction is higher or lower than the cost price is irrelevant to the question whether a transaction is to be regarded as a ‘transaction effected for consideration’. The latter concept requires only that there be a direct link between the supply of goods or the provision of services and the consideration actually received by the taxable person (see, to that effect, Case 102/86 Apple and Pear Development Council [1988] ECR 1443, paragraph 12).

Articles 5(6) and 6(2) of the Sixth Directive treat certain transactions for which no consideration is actually received by the taxable person as supplies of goods and provisions of services effected for consideration. The purpose of those provisions is to ensure equal treatment as between a taxable person who applies goods or services for his own private use or for that of his staff and a final consumer who acquires goods or services of the same type (see Case C‑230/94 Enkler [1996] ECR I‑4517, paragraph 35; Fillibeck, cited above, paragraph 25; and Fischer and Brandenstein, cited above, paragraph 56). In pursuit of that objective, Articles 5(6) and 6(2)(a) prevent a taxable person who has been able to deduct VAT on the purchase of goods used for his business from escaping payment of that tax when he applies those goods from his business for his own private use or that of his staff and from thereby enjoying advantages to which he is not entitled by comparison with an ordinary consumer who buys goods and pays VAT on them (see Case C‑20/91 De Jong [1992] ECR I‑2847, paragraph 15; Enkler, cited above, paragraph 33; Bakcsi, cited above, paragraph 42; and Fischer and Brandenstein, paragraph 56). Similarly, Article 6(2)(b) of the Sixth Directive prevents a taxable person or members of his staff from obtaining, free of tax, services provided by the taxable person for which a private individual would have to have paid VAT.

It is apparent from the order for reference that, in future, the members of Scandic’s staff will continue to pay an actual consideration for the meals supplied by the company. Since the transaction in question is effected for consideration within the meaning of Article 2 of the Sixth Directive, there is no reason to apply Articles 5(6) and 6(2)(b). Those provisions relate only to transactions effected free of charge which are treated as supplies effected for consideration for VAT purposes.

According to the Swedish Government, the aim and effectiveness of Articles 5(6) and 6(2)(b) of the Sixth Directive would be compromised if a transaction effected for a symbolic consideration did not fall within their scope. The payment of VAT could to a large extent be avoided if taxable persons or their employees were able to acquire goods or services for a symbolic sum and be taxed on the basis of that consideration.

The order for reference nowhere indicates that the amount to be paid in future by the members of Scandic’s staff for the provision of a meal in the company’s canteen will be symbolic. In any event, the risk referred to by the Swedish Government may be dealt with only by a request by the Member State concerned for authorisation under Article 27 of the Sixth Directive to introduce measures derogating from that directive in order to prevent certain types of tax evasion or avoidance.

The Swedish Government also points out that, under Article 11A(1)(a) of the Sixth Directive, subsidies directly linked to the price of taxable supplies form part of the taxable amount. Were an undertaking to subsidise the meals provided to its members of staff through an external catering company, it would pay to that company directly the subsidy amount which supplements the price paid by the staff to the catering company. The subsidy would then be regarded as an amount directly linked to the price and would form part of the taxable amount pursuant to that provision. An undertaking which subsidises meals offered by its own catering services must be taxed in the same way.

It should be observed that, under the general rule laid down in Article 11A(1)(a) of the Sixth Directive, the taxable amount for the supply of goods or the provision of a service is formed by the consideration actually received by the taxable person ‘from the purchaser, the customer or a third party … including subsidies directly linked to the price of such supplies’.

The part of that phrase on which the Swedish Government relies relates to situations involving three parties, namely the party which grants the subsidy, the supplier of the goods or the provider of the services which benefits from it and the purchaser of the goods or services (see Case C‑184/00 Office des produits wallons [2001] ECR I‑9115, paragraph 10). In the present case, only two parties are involved, namely Scandic as the supplier of goods or provider of services and the members of its staff. Moreover, as is clear from Article 11A(1)(a) of the Sixth Directive, the consideration is always paid by ‘the purchaser, the customer or a third party’ and never by the supplier or provider itself. The cost incurred by the taxpayer itself in providing meals to its staff therefore cannot form part of the taxable amount for the transaction in question.

It follows from the above that Articles 2, 5(6) and 6(2)(b) of the Sixth Directive must be interpreted as precluding a national rule whereby transactions in respect of which an actual consideration is paid are regarded as an application of goods or services for private use, even where that consideration is less than the cost price of the goods or services supplied.

Costs

Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (First Chamber) rules as follows:

Articles 2, 5(6) and 6(2)(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 precluding a national rule whereby transactions in respect of which an actual consideration is paid are regarded as an application of goods or services for private use, even where that consideration is less than the cost price of the goods or services supplied.

[Signatures]

*

Language of the case: Swedish.