Opinion of Advocate General Hogan delivered on 25 June 2020.

• Jurisdiction: European Union
• Celex Number: 62019CC0459
• ECLI: ECLI:EU:C:2020:496
• Date: 25 June 2020
• Court: Court of Justice (European Union)

OPINION OF ADVOCATE GENERAL

HOGAN

delivered on 25 June 2020(1)

Case C‑459/19

The Commissioners for Her Majesty’s Revenue & Customs

v

Wellcome Trust Ltd

(Request for a preliminary ruling from the Upper Tribunal (Tax and Chancery Chamber) (United Kingdom))

(Reference for a preliminary ruling — Taxation — Value Added Tax —Directive 2006/112 — Articles 43, 44 and 45 — Place of supply of services to a taxable person acting as such — Place of supply of investment management services received by a charitable organisation for non-economic business activity from suppliers established outside the European Union)

I. Introduction

1. This request for a preliminary ruling concerns inter alia the interpretation of Article 44 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, (2) as amended by Council Directive 2008/8/EC of 12 February 2008 amending Directive 2006/112/EC as regards the place of supply of services (3) (‘the VAT Directive’).

2. The request has been made in a dispute between the Commissioners for Her Majesty’s Revenue & Customs (‘HMRC’) and Wellcome Trust Ltd (‘WTL’), a taxable person, concerning the place of supply of investment management services received by WTL from suppliers established outside the European Union. (4)

3. WTL is a charitable organisation of long standing which is extremely generously endowed. As might be expected, WTL uses the services of investment managers to assist it in managing that large endowment portfolio. Those endowments generate very significant annual income which is then disbursed by WTL by way of grants for the purposes of medical and pharmaceutical research.

4. It was in this context that WTL used the investment management services of suppliers established outside the European Union for certain investment activities, activities which the Court has already held, in a case involving WTL, amount to non-economic activities for VAT purposes. (5) It is accepted that WTL did not use those services for taxable supplies within the meaning of Article 2(1)(c) of the VAT Directive, essentially because it was simply an investor, rather than a professional trader. It is also accepted that WTL is not ‘a taxable person acting as such’ for the purposes of Article 2(1)(c) of the VAT Directive, when it itself engages in investment activities.

5. The key question posed by the referring court is whether, in such circumstances, WTL is nonetheless ‘a taxable person acting as such’ within the meaning of Article 44 of the VAT Directive, even if it is not such for the purposes of Article 2(1)(c). An answer to this question is necessary in order to determine the place of supply of the services in question and whether VAT was in fact due by WTL in respect of those services.

6. In answering this question, the Court must determine, inter alia, whether or not the term ‘a taxable person acting as such’ has the same meaning when used in Article 2(1)(c) of the VAT Directive and in Article 44 of that directive. Before proceeding further, however, it is necessary first to set out the relevant legal framework.

II. Legal framework

A. European Union law

7. Article 2 of the VAT Directive provides:

‘1. 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;

…’

8. Article 9(1) of the VAT Directive provides:

‘“Taxable person” shall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity.

…’

9. Chapter 3 of Title V of the VAT Directive is entitled ‘Place of supply of services’.

10. Section 1 of that chapter, entitled ‘Definitions’, contains Article 43, which provides:

‘For the purpose of applying the rules concerning the place of supply of services:

1. a taxable person who also carries out activities or transactions that are not considered to be taxable supplies of goods or services in accordance with Article 2(1) shall be regarded as a taxable person in respect of all services rendered to him;

2. a non-taxable legal person who is identified for VAT purposes shall be regarded as a taxable person.’

11. Section 2 of that chapter, entitled ‘General rules’, provides:

‘Article 44

The place of supply of services to a taxable person acting as such shall be the place where that person has established his business. However, if those services are provided to a fixed establishment of the taxable person located in a place other than the place where he has established his business, the place of supply of those services shall be the place where that fixed establishment is located. In the absence of such place of establishment or fixed establishment, the place of supply of services shall be the place where the taxable person who receives such services has his permanent address or usually resides.

Article 45

The place of supply of services to a non-taxable person shall be the place where the supplier has established his business. However, if those services are provided from a fixed establishment of the supplier located in a place other than the place where he has established his business, the place of supply of those services shall be the place where that fixed establishment is located. In the absence of such place of establishment or fixed establishment, the place of supply of services shall be the place where the supplier has his permanent address or usually resides.’ (6)

12. Article 196 of the VAT Directive, which is contained in Title XI, entitled ‘Obligations of taxable persons and certain non-taxable persons’, provides:

‘VAT shall be payable by any taxable person, or non-taxable legal person identified for VAT purposes, to whom the services referred to in Article 44 are supplied, if the services are supplied by a taxable person not established within the territory of the Member State.’ (7)

13. Article 19 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 (8) (‘the Implementing Regulation’), entitled ‘Capacity of the customer’, provides:

‘For the purpose of applying the rules concerning the place of supply of services laid down in Articles 44 and 45 of Directive 2006/112/EC, a taxable person, or a non-taxable legal person deemed to be a taxable person, who receives services exclusively for private use, including use by his staff, shall be regarded as a non-taxable person.

Unless he has information to the contrary, such as information on the nature of the services provided, the supplier may consider that the services are for the customer’s business use if, for that transaction, the customer has communicated his individual VAT identification number.

Where one and the same service is intended for both private use, including use by the customer’s staff, and business use, the supply of that service shall be covered exclusively by Article 44 of Directive 2006/112/EC, provided there is no abusive practice.’

B. United Kingdom law

14. The relevant place of supply rules have been implemented in UK law in Section 7A of the Value Added Tax Act 1994 (‘the VATA’), which provides:

‘Place of supply of services

(1) This section applies for determining, for the purposes of this Act, the country in which services are supplied.

(2) A supply of services is to be treated as made—

(a) in a case in which the person to whom the services are supplied is a relevant business person, in the country in which the recipient belongs, and

(b) otherwise, in the country in which the supplier belongs.

…

(4) For the purposes of this Act a person is a relevant business person in relation to a supply of services if the person—

(a) is a taxable person within the meaning of Article 9 of Council Directive 2006/112/EC,

(b) is registered under this Act,

(c) is identified for the purposes of VAT in accordance with the law of a member State other than the United Kingdom, or

(d) is registered under an Act of Tynwald for the purposes of any tax imposed by or under an Act of Tynwald which corresponds to value added tax,

and the services are received by the person otherwise than wholly for private purposes.’

III. The facts of the main proceedings and the request for a preliminary ruling

15. WTL is the sole trustee of a charitable trust, the Wellcome Trust, which makes grants for medical research. It receives income from its investments and it also has a number of comparatively minor activities including sales, catering and rental of properties in respect of which it is registered for VAT. The investment income it receives is predominantly from overseas investments in relation to which WTL utilises the services of investment managers from both within and outside the European Union. That investment income is, as I have already indicated, the source of the majority of the funding for the grants that WTL provides.

16. In the judgment in Wellcome Trust, the Court held that the concept of economic activities within the meaning of Article 4(2) 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 (9) (‘the Sixth VAT Directive’) (now Article 9(1) of the VAT Directive) did not include an activity consisting in the purchase and sale of shares and other securities by a trustee in the course of the management of the assets of a charitable trust.

17. The referring court indicated in its preliminary reference that, as a consequence of the ruling of the Court in the judgment in Wellcome Trust, WTL was denied input tax recovery in respect of the entirety of the investment management service costs incurred in relation to its non-European Union portfolio.

18. WTL and HMRC both agree that WTL’s activities are substantially unchanged from those considered in...