Commission of the European Communities v United Kingdom of Great Britain and Northern Ireland.

• Jurisdiction: European Union
• Celex Number: 61985CJ0416
• ECLI: ECLI:EU:C:1988:321
• Court: Court of Justice (European Union)
• Date: 21 June 1988
• Procedure Type: Recours en constatation de manquement - fondé
• Docket Number: 416/85

Avis juridique important

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61985J0416

Judgment of the Court of 21 June 1988. - Commission of the European Communities v United Kingdom of Great Britain and Northern Ireland. - Value added tax - Zero rating. - Case 416/85.

European Court reports 1988 Page 03127

Summary
Parties
Grounds
Decision on costs
Operative part

Keywords

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1 . Action against a Member State for failure to fulfil its obligations - Objective nature - Objectives pursued by the Commision - Not to be considered

( EEC Treaty, Art . 169 )

2 . Tax provisions - Harmonization of legislation - Turnover tax - Common system of value-added tax - Reduced rates and exemptions retained on a transitional basis for "clearly defined social reasons and for the benefit of the final consumer" - Concept

( Council Directive 67/228, Art . 17, last indent, and Council Directive 77/388, Art . 28 ( 2 ) )

Summary

1 . An action by the Commission pursuant to Article 169 of the Treaty against a Member State for failure to fulfil its obligations, the bringing of which is a matter for the Commission in its entire discretion, is objective in nature . In the context of the balance of powers between the institutions laid down in the Treaty, it is not for the Court to consider what objectives are pursued in such an action . Its role is to decide whether or not the Member State in question has failed to fulfil its obligations as alleged .

2 . The identification of "cleary defined social reasons" for which certain reduced rates and exemptions from value-added tax may be retained on a transitional basis pursuant to the last indent of Article 17 of the Second Directive and Article 28 ( 2 ) of the Sixth Directive is in principle a matter of political choice for the Member States and can be the subject-matter of supervision at the Community level only in so far as, by distorting that concept, it leads to measures which because of their effects and their true objectives lie outside its scope .

Since, under the general scheme of value-added tax, the final consumer is the person who acquires goods or services for personal use, as opposed to an economic activity, and thus bears the tax, the second condition laid down in those provisions for the retention of certain reduced rates and exemptions, that is to say that they must be "for the benefit of the final consumer" must in the light of the social purpose of Article 17 be understood as meaning that the beneficiary must not use exempted goods or services in the course of an economic activity . The provision of goods or services at a stage higher in the production or distribution chain which is nevertheless sufficiently close to the consumer to be of advantage to him must also be considered to be for the benefit of the final consumer as so defined .

Parties

In Case 416/85

Commission of the European Communities, represented by its Legal Adviser D . R . Gilmour, acting as Agent, with an address for service in Luxembourg at the office of G . Kremlis, a member of its Legal Department, Jean Monnet Building, Kirchberg,

applicant,

v

United Kingdom of Great Britain and Northern Ireland, represented by S . J . Hay, of the Treasury Solicitor' s Department, acting as Agent, assisted by D . Vaughan, QC, with an address for service in Luxembourg at the British Embassy, 28 boulevard Royal,

defendant,

APPLICATION for a declaration that by applying a system of zero-rating to certain groups of goods and services the United Kingdom has failed to fulfil its obligations under Article 28 ( 2 ) of the Sixth Council Directive 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 ( 77/388/EEC, Official Journal 1977, L 145, p . 1 ),

THE COURT

composed of : Lord Mackenzie Stuart, President, G . Bosco, O . Due, J . C . Moitinho de Almeida and G . C . Rodríguez Iglesias ( Presidents of Chambers ), T . Koopmans, U . Everling, K . Bahlmann, Y . Galmot, C . Kakouris, R . Joliet, T . F . O' Higgins and F . Schockweiler, Judges,

Advocate General : M . Darmon

Registrar : H . A . Ruehl, Principal Administrator

having regard to the Report for the Hearing and further to the hearing on 15 September 1987,

after hearing the Opinion of the Advocate General delivered at the sitting on 2 December 1987,

gives the following

Judgment

Grounds

1 By an application lodged at the Court Registry on 13 December 1985 the Commission of the European Communities brought an action pursuant to Article 169 of the EEC Treaty for a declaration that by continuing to apply a zero rate of value-added tax to certain groups of goods and services the United Kingdom of Great Britain and Northern Ireland has contravened the provisions of 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 ( Official Journal 1977, L 145, p . 1 ) ( hereinafter referred to as "the Sixth Directive ") and has therefore failed to fulfil its obligations under the EEC Treaty .

2 Article 28 of the Sixth Directive lays down transitional provisions for the progressive adaptation of national legislation in certain...