Odvolací finanční ředitelství v Pavlína Baštová.

• Jurisdiction: European Union
• Celex Number: 62015CJ0432
• ECLI: ECLI:EU:C:2016:855
• Date: 10 November 2016
• Court: Court of Justice (European Union)
• Procedure Type: Reference for a preliminary ruling
• Docket Number: C-432/15

JUDGMENT OF THE COURT (Fourth Chamber)

10 November 2016 (*1 )

‛Reference for a preliminary ruling — Taxation — Value added tax — Directive 2006/112/EC — Article 2(1)(c) — Concept of ‘supply of services for consideration’ — Supply of a horse by a taxable person to the organiser of horse races — Assessment of the consideration — Right to deduct expenses linked to the preparation of the taxable person’s horses for the races — General costs linked to the overall economic activity — Annex III, point 14 — Reduced rate of VAT applicable to the use of sporting facilities — Applicability to the operation of racing stables — Transaction consisting of a single supply or several independent supplies’

In Case C‑432/15,

REQUEST for a preliminary ruling under Article 267 TFEU from the Nejvyšší správní soud (Supreme Administrative Court, Czech Republic), made by decision of 23 July 2015, received at the Court on 7 August 2015, in the proceedings,

Odvolací finanční ředitelství,

v

Pavlína Baštová

THE COURT (Fourth Chamber),

composed of T. von Danwitz, President of the Chamber, E. Juhász, C. Vajda, K. Jürimäe (Rapporteur) and C. Lycourgos, Judges,

Advocate General: N. Wahl,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

— the Czech Government, by M. Smolek, J. Vláčil and T. Müller, acting as Agents,

— the European Commission, by Z. Malůšková and M. Owsiany-Hornung, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 14 June 2016,

gives the following

Judgment

1 This request for a preliminary ruling concerns the interpretation of Article 2(1)(c) and Article 98 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’) and of point 14 of Annex III thereto.

2 The request has been made in proceedings between the Odvolací finanční ředitelství (Appellate Tax Directorate, Czech Republic) and Ms Pavlína Baštová regarding the imposition of value added tax (VAT) on her operation of racing stables.

Legal context

EU law

3 The second subparagraph of Article 1(2) of the VAT Directive provides as follows: ‘On each transaction, VAT, calculated on the price of the goods or services at the rate applicable to such goods or services, shall be chargeable after deduction of the amount of VAT borne directly by the various cost components.’

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

5 Under Article 9(1) of the VAT Directive: ‘“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.’

6 Article 73 of the VAT Directive states as follows: ‘In respect of the supply of goods or services, other than as referred to in Articles 74 to 77, the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price of the supply.’

7 Under Article 98(1) and (2) of the VAT Directive: ‘1. Member States may apply either one or two reduced rates. 2. The reduced rates shall apply only to supplies of goods or services in the categories set out in Annex III. …’

8 Article 167 of the VAT Directive states as follows: ‘A right of deduction shall arise at the time the deductible tax becomes chargeable.’

9 Article 168 of the VAT Directive provides as follows: ‘In so far as the goods and services are used for the purposes of the taxed transactions of a taxable person, the taxable person shall be entitled, in the Member State in which he carries out these transactions, to deduct the following from the VAT which he is liable to pay: (a) the VAT due or paid in that Member State in respect of supplies to him of goods or services, carried out or to be carried out by another taxable person;’ …’

10 Article 173(1) of the VAT Directive is worded as follows: ‘In the case of goods or services used by a taxable person both for transactions in respect of which VAT is deductible pursuant to Articles 168, 169 and 170, and for transactions in respect of which VAT is not deductible, only such proportion of the VAT as is attributable to the former transactions shall be deductible. The deductible proportion shall be determined, in accordance with Articles 174 and 175, for all the transactions carried out by the taxable person.’

11 The list of supplies of goods and services to which the reduced rates referred to in Article 98 of the VAT Directive may be applied is set out in Annex III to that directive. Point 14 of that annex refers to the ‘use of sporting facilities’.

Czech law

12 Article 47(4) of Law No 235/2004 on value added tax (zákon č. 235/2004 Sb. o dani z přidané hodnoty) states as follows: ‘Services shall be subject to the standard rate of tax, unless this law provides otherwise. In the case of the services mentioned in Annex 2, a reduced rate of tax shall apply.’

13 Annex No 2 to that law contains a list of services subject to the reduced rate of tax, including, inter alia, the ‘use of covered and uncovered sports facilities for sports activities’.

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

14 Ms Baštová is a taxable person for VAT purposes by virtue of an economic activity consisting in the operation of horse racing stables with a capacity of 25 places, in which she breeds and trains her own horses and those of other owners which have been entrusted to her to be prepared for races. In addition to the racehorses, Ms Baštová had in her stables two horses which she used for agrotourism and training young horses, and breeding mares and foals, from which she hoped to derive future income from participation in races or from sales.

15 In connection with that activity, Ms Baštová earns two types of income, which constitute the subject matter of the main proceedings in the present case. The first type consists of prizes obtained by her own horses for being placed in races and the trainer’s share of prizes won in races by the horses of other third parties. The second type of income results from the operation of racing stables and consists in payments made by horse owners for training their horses for races, and payments made for stabling and feeding the horses.

16 In her tax declaration for the fourth quarter of 2010, Ms Baštová claimed the right to full deduction of the input VAT in respect of the following supplies and costs: entrance fees and declaration fees for races, fees for the assistance of auxiliaries during races, the procurement of consumables for horses, their feed and equipment for the riders, veterinary services and purchase of medicines for the horses, consumption of electricity in the stables, consumption of fuel oil for the vehicles, the purchase of a harvester for the production of hay and forage and of tractor equipment and consultancy services in connection with the running of the stables. Those input supplies concerned both Ms Baštová’s horses and those of other owners.

17 In addition, in the same tax declaration Ms Baštová also declared output VAT at the reduced rate of 10% on the service of ‘operation of racing stables’ which she supplied to the other horse owners.

18 In its tax assessment of 26 September 2011, the Finanční úřad v Ostrově (Tax Office, Ostrov) did not accept Ms Baštová’s claim for full deduction of the VAT on the ground that she had used part of the taxable input transactions for the purposes of participation of the horses in races, which, in the view of the Ostrov Tax Office, did not constitute a taxable transaction giving rise to a right to deduct VAT. In addition, those authorities did not approve the application of the reduced rate of VAT to the service of ‘operation of racing stables’.

19 Seised on appeal by Ms Baštová, the Finanční ředitelství v Plzni (Tax Directorate, Plzeň, Czech Republic) varied the decision of the Ostrov Tax Office by a decision of 6 June 2012, finding that Ms Baštová had the right to deduct the VAT for the sale of her own horses, the supply of publicity services and agrotourism. That directorate also granted her the right to deduct the VAT charged on the percentages, received in her capacity as a trainer, of the prizes received as a reward for places for other owners’ horses in races. However, like the Ostrov Tax Office, the Plzeň Tax Directorate did not grant Ms Baštová the right to deduct the VAT paid in respect of the input transactions for her own horses which had participated in races.

20 Inasmuch as, during the tax period concerned, only some of the activities carried out by Ms Baštová were eligible for a VAT deduction, the Plzeň Tax Directorate found that she was entitled to only a partial deduction. The...