Finanzamt X v Y.

• Jurisdiction: European Union
• ECLI: ECLI:EU:C:2023:372
• Date: 04 May 2023
• Docket Number: C-516/21
• Celex Number: 62021CJ0516
• Court: Court of Justice (European Union)

Provisional text

JUDGMENT OF THE COURT (Fourth Chamber)

4 May 2023 (*)

(Reference for a preliminary ruling – Taxation – Value added tax (VAT) – Directive 2006/112/EC – Article 135(2), first subparagraph, point (c) – Exceptions to the exemption provided for in Article 135(1)(l) – Letting of permanently installed equipment and machinery in the context of the leasing of an agricultural building)

In Case C‑516/21,

REQUEST for a preliminary ruling under Article 267 TFEU from the Bundesfinanzhof (Federal Finance Court, Germany), made by decision of 26 May 2021, received at the Court on 20 August 2021, in the proceedings

Finanzamt X

v

Y,

THE COURT (Fourth Chamber),

composed of C. Lycourgos, President of the Chamber, L.S. Rossi, J.‑C. Bonichot, S. Rodin and O. Spineanu‑Matei (Rapporteur), Judges,

Advocate General: G. Pitruzzella,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

– the German Government, by J. Möller and A. Hoesch, acting as Agents,

– the European Commission, by R. Pethke and V. Uher, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 8 December 2022,

gives the following

Judgment

1 This request for a preliminary ruling concerns the interpretation of Article 135(2), first subparagraph, point (c) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1) (‘the VAT Directive’).

2 The request has been made in proceedings between Finanzamt X (Tax Office X, Germany) (‘the tax authority’) and Y concerning the imposition of value added tax (VAT) on the provision of equipment and machinery in the context of the leasing of an agricultural building.

Legal context

European Union law

The VAT Directive

3 Title IX of the VAT Directive includes Chapter 3, entitled ‘Exemptions for other activities’, which contains Article 135 of that directive, which is worded as follows:

‘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:

…

(b) the letting of premises and sites for the parking of vehicles;

(c) the letting of permanently installed equipment and machinery;

…

Member States may apply further exclusions to the scope of the exemption referred to in point (l) of paragraph 1.’

Implementing Regulation (EU) No 282/2011

4 Under Article 13b(d) of Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax (OJ 2011 L 77, p. 1), as amended by Council Implementing Regulation (EU) No 1042/2013 of 7 October 2013 (OJ 2013 L 284, p. 1) (‘Implementing Regulation No 282/2011’):

‘For the application of [the VAT Directive], the following shall be regarded as “immovable property”:

…

(d) any item, equipment or machine permanently installed in a building or construction which cannot be moved without destroying or altering the building or construction.’

5 Pursuant to the third paragraph of Article 3 of Regulation No 1042/2013, Article 13b of Implementing Regulation No 282/2011 became applicable on 1 January 2017.

German law

6 The first sentence of Paragraph 4(12) of the Umsatzsteuergesetz (Law on Turnover Tax) of 21 February 2005 (BGBl. 2005 I, p. 386), in the version applicable to the facts in the main proceedings, provides:

‘The following transactions covered by Article 1(1)(l) of this Law shall be exempt from tax:

…

(a) the leasing and letting of immovable property …’.

7 The second sentence of Paragraph 4(12) of the Law on Turnover Tax, in the version applicable to the facts in the main proceedings, states that ‘the leasing and letting of machinery and other equipment of any kind which are part of an operating plant (operating equipment) are not exempt, even if they are essential elements of an immovable property.’

The dispute in the main proceedings and the question referred for a preliminary ruling

8 From 2010 to 2014, Y let, in the context of a lease, a turkey-rearing shed with permanently installed equipment and machinery. According to the referring court, that equipment and machinery included, inter alia, an industrial spiral conveyor belt, which served to feed turkeys, and a heating, ventilation and lighting system maintaining a temperature and brightness appropriate to the stage of growth of the turkeys, guaranteeing the rearing conditions necessary for them to reach slaughter maturity within the specified time. That equipment and machinery were specially adapted for the use of the building as a building for the rearing of such poultry.

9 According to the provisions of the lease, Y received a single payment for the provision of the rearing shed and equipment and machinery. Y took the view that the whole of his leasing service was exempt from VAT.

10 In contrast, the tax authority took the view that the leasing of the equipment and machinery at issue was not exempt from VAT and that the agreed one-off remuneration, 20% of which corresponded to the leasing of machinery and equipment, had to be subject, to that extent, to VAT. Those authorities issued amended tax assessments for the years at issue.

11 The Finanzgericht (Finance Court, Germany), relying both on the case-law of the Court and on that of the Bundesfinanzhof (Federal Finance Court, Germany), upheld the action brought by Y against those notices, taking the view that the leasing service at issue should be fully exempt. According to that court, the provision of the equipment and machinery constituted a supply...