National Roads Authority v The Revenue Commissioners.

• Jurisdiction: European Union
• Celex Number: 62015CJ0344
• ECLI: ECLI:EU:C:2017:28
• Docket Number: C-344/15
• Court: Court of Justice (European Union)
• Procedure Type: Reference for a preliminary ruling
• Date: 19 January 2017

JUDGMENT OF THE COURT (Sixth Chamber)

19 January 2017 (*1 )

‛Reference for a preliminary ruling — Common system of value added tax — Directive 2006/112/EC — Article 13(1), second subparagraph — Activity of managing road infrastructure and making it available on payment of a toll — Activities engaged in by a body governed by public law acting as a public authority — Presence of private operators — Significant distortions of competition — Existence of actual or potential competition’

In Case C‑344/15,

REQUEST for a preliminary ruling under Article 267 TFEU from the Appeal Commissioners (Ireland), made by decision of 11 June 2015, received at the Court on 6 July 2015, in the proceedings

National Roads Authority

v

The Revenue Commissioners,

THE COURT (Sixth Chamber),

composed of J.-C. Bonichot, acting as President of the Sixth Chamber, A. Arabadjiev and C.G. Fernlund (Rapporteur), Judges,

Advocate General : M. Szpunar,

Registrar: L. Hewlett, Principal Administrator,

having regard to the written procedure and further to the hearing on 25 May 2016,

after considering the observations submitted on behalf of:

— the National Roads Authority, by E. O’Hanrahan, Solicitor, and M. Collins, Senior Counsel,

— the Revenue Commissioners, by M.-C. Maney, Solicitor, and E. Barrington, Senior Counsel,

— the German Government, by T. Henze, acting as Agent,

— the Polish Government, by B. Majczyna, B. Majerczyk-Graczykowska and K. Maćkowska, acting as Agents,

— the European Commission, by M. Owsiany-Hornung and R. Lyal, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 8 September 2016,

gives the following

Judgment

1 This request for a preliminary ruling concerns the interpretation of the second subparagraph of Article 13(1) 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 the National Roads Authority (Ireland) (‘the NRA’) and the Revenue Commissioners (Ireland) concerning the treatment of the NRA as a taxable person for value added tax (VAT) in connection with its activity of making road infrastructure available on payment of a toll.

Legal context

EU law

3 The VAT Directive repealed and replaced as from 1 January 2007 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 Sixth Directive’). According to recitals 1 and 3 of the VAT Directive, the Sixth Directive had to be recast in order to present all the applicable provisions in a clear and rational manner, with a new structure and drafting, in principle without making any substantive changes.

4 As the content of the first to third subparagraphs of Article 13(1) of the VAT Directive corresponds to that of the first to third subparagraphs of Article 4(5) of the Sixth Directive, the Court’s interpretation of the latter provisions should be extended to the former provisions.

5 Article 2(1) of the VAT Directive provides: ‘The following transactions shall be subject to VAT: (a) the supply of goods for consideration within the territory of a Member State by a taxable person acting as such; … (c) the supply of services for consideration within the territory of a Member State by a taxable person acting as such; …’

6 Article 9 of the VAT Directive provides: ‘1. “Taxable person” shall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity. Any activity of producers, traders or persons supplying services, including mining and agricultural activities and activities of the professions, shall be regarded as “economic activity”. The exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis shall in particular be regarded as an economic activity. …’

7 Article 13(1) of the VAT Directive provides: ‘States, regional and local government authorities and other bodies governed by public law shall not be regarded as taxable persons in respect of the activities or transactions in which they engage as public authorities, even where they collect dues, fees, contributions or payments in connection with those activities or transactions. However, when they engage in such activities or transactions, they shall be regarded as taxable persons in respect of those activities or transactions where their treatment as non-taxable persons would lead to significant distortions of competition. In any event, bodies governed by public law shall be regarded as taxable persons in respect of the activities listed in Annex I, provided that those activities are not carried out on such a small scale as to be negligible.’

Irish law

The Value Added Tax Act, 1972

8 Section 8(2A) of the Value Added Tax Act, 1972, in the version applicable to the facts of the main proceedings, provides: ‘Notwithstanding section 2, the State or any public body shall not be treated as a taxable person acting in that capacity in respect of any activity or transaction that is carried out by it in, or is closely linked to, the exercise by the State or such public body of particular rights or powers conferred on it by any enactment, except where— (a) that activity is listed in Annex I (which is set out in Schedule 7) of [the VAT Directive], and is carried out by the State or that public body on a more than negligible scale, or (b) not treating the State or that public body as a taxable person in respect of that activity or transaction creates or would likely create a significant distortion of competition.’

The Roads Act, 1993

9 According to the order for reference, the NRA is an Irish body governed by public law set up by the Roads Act, 1993 (‘the Roads Act’) to manage the national public road network.

10 In accordance with section 17(1) of the Roads Act, the primary function of the NRA is to secure the provision of a safe and efficient network of national roads. It has overall responsibility for the planning and supervision of works for the construction and maintenance of national roads.

11 On that basis, under section 57 of the Roads Act, the NRA may prepare a scheme for the establishment of a system of tolls in respect of the use of a national road.

12 Section 58 of the Roads Act provides in substance that the NRA may, for the use of toll roads, charge and collect tolls whose amounts are fixed in the bye-laws it makes.

13 Under section 61 of the Roads Act, the NRA has the responsibility for introducing the bye-laws it considers expedient for the operation and maintenance of toll roads.

14 Under section 63 of the Roads Act, the NRA also has the legal power to enter into agreements with third parties authorising them to collect tolls on a toll road. The maximum amount of the tolls which may be levied for the use of a toll road, whether operated by the NRA or by a third party, is to be specified in a bye-law made by the NRA to that end.

15 In addition, any agreement concluded between the NRA and a third party under section 63 of the Roads Act must satisfy various requirements set out in that section. The third party must thus agree to comply with one or more or all of the following obligations: (i) to pay some or all of the cost of construction and/or maintenance of the road, (ii) to construct and/or maintain (or join or assist in the construction and/or maintenance of) the road, and (iii) to operate and manage the road for the NRA (including to provide, supervise and operate a system of tolls for the use of the road and their collection).

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

16 According to the documents before the Court, most toll roads in Ireland have been constructed and are operated by private operators under public-private partnerships agreements concluded with the NRA.

17 The referring tribunal observes that there are currently eight toll roads in Ireland operated by private operators, on whose tolls VAT is charged. For each of those toll roads the NRA has adopted a toll scheme and made bye-laws fixing the maximum amount to be charged for the use of those roads. The NRA operates two toll roads itself, the Westlink motorway and the Dublin tunnel.

18 With respect more particularly to the Westlink motorway, the order for reference states that that motorway was previously operated by a private operator under a contract between the operator and the NRA. When additional investment was needed to modernise it in order to ensure traffic flows, but the private operator did not wish to undertake that investment without additional commitments from the NRA, the NRA negotiated a termination of the contract in question, took over operation of the road, and installed an electronic toll system.

19 From July 2010 the revenue authorities treated the NRA as a taxable person for VAT in respect of its activity of making available the two toll roads it operates, on the ground that its treatment as a non-taxable person would lead to significant distortions of competition within the meaning of the second subparagraph of Article 13(1) of the VAT Directive.

20 The...