Opinion of Advocate General Medina delivered on 27 January 2022.

• Jurisdiction: European Union
• ECLI: ECLI:EU:C:2022:60
• Date: 27 January 2022
• Celex Number: 62020CC0269
• Court: Court of Justice (European Union)

Provisional text

OPINION OF ADVOCATE GENERAL

MEDINA

delivered on 27 January 2022(1)

Case C‑269/20

Finanzamt T

v

S

(Request for a preliminary ruling from the Bundesfinanzhof (Federal Finance Court, Germany))

(Reference for a preliminary ruling – Value added tax (VAT) – VAT groups – Designation of a member of a VAT group as the taxable person – Internal supplies within the VAT group – Supplies provided by a member of a VAT group which is a national foundation governed by public law – Supplies of services carried out free of charge – Pursuit of an activity carried on in an official capacity in addition to an economic activity)

1. The present reference for a preliminary ruling from the Bundesfinanzhof (Federal Finance Court, Germany) relates to the interpretation of Article 4(4) and point (b) of the first sentence of Article 6(2) of Sixth Council Directive 77/388/EEC (2) and arose in the context of an action between S, a national foundation governed by public law, and Finanzamt T (Tax Office, T, Germany; ‘the Finanzamt’). The dispute relates: first, to the designation of S (qua its role as controlling company), together with the company providing its cleaning services, as a single taxable person for value added tax (VAT) purposes; and second, to the question as to whether a supply of services provided free of charge for a purpose falling within the sphere of the activity that S carries on in an official capacity (and incumbent upon it in the exercise of public authority) may be subject to VAT in accordance with point (b) of the first sentence of Article 6(2) of that directive.

2. This Opinion should be read together with my parallel Opinion in Case C‑141/20, Norddeutsche Gesellschaft für Diakonie which was delivered on 13 January 2022, notably because the scope of the first question referred by the Fifth Chamber of the Bundesfinanzhof (Federal Finance Court) in the present case corresponds to the first question referred by the Eleventh Chamber of that court in Case C‑141/20.

I. Legal framework

3. The Sixth Directive was replaced, from 1 January 2007, by Council Directive 2006/112/EC (3). The Sixth Directive remains applicable ratione temporis to the main proceedings.

4. Article 2 of the Sixth Directive provided that ‘the following shall be subject to value added tax: 1. the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such’.

5. Article 4 of that directive provided:

‘1. “Taxable person” shall mean any person who independently carries out in any place any economic activity specified in paragraph 2, whatever the purpose or results of that activity.

…

4. The use of the word “independently” in paragraph 1 shall exclude employed and other persons from the tax in so far as they are bound to an employer by a contract of employment or by any other legal ties creating the relationship of employer and employee as regards working conditions, remuneration and the employer’s liability.

Subject to the consultations provided for in Article 29, each Member State may treat as a single taxable person persons established in the territory of the country who, while legally independent, are closely bound to one another by financial, economic and organisational links.

5. States, regional and local government authorities and other bodies governed by public law shall not be considered 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 these activities or transactions.

However, when they engage in such activities or transactions, they shall be considered taxable persons in respect of these activities or transactions where treatment as non-taxable persons would lead to significant distortions of competition.

In any case, these bodies shall be considered taxable persons in relation to the activities listed in Annex D, provided they are not carried out on such a small scale as to be negligible.

Member States may consider activities of these bodies which are exempt under Article 13 or 28 as activities which they engage in as public authorities.’

6. Point (b) of the first sentence of Article 6(2) of the Sixth Directive stipulated that the following shall be treated as services for consideration:

‘supplies of services carried out free of charge by the taxable person for his own private use or that of his staff or more generally for purposes other than those of his business.’

II. The facts giving rise to the dispute in the main proceedings and the questions referred for a preliminary ruling

7. S, the applicant in the main proceedings, is a German foundation governed by public law and the sponsor of a university, which operates inter alia a university school of medicine. It is a taxable person and provides services for consideration (patient care). At the same time, as a legal person governed by public law, it performs tasks in an official capacity (the teaching of students) in respect of which it is not considered to be a taxable person.

8. S is the tax group parent (‘Organträgerin’), both of a university school of medicine and of U-GmbH. S is subject to VAT in respect of the economic activities that it carries out for consideration, while it is exempt from VAT in respect of activities that it carries out in the exercise of its powers as a public authority.

9. According to uncontested evidence from Finanzamt T, S is the controlling company of U-GmbH. U-GmbH provided S with cleaning, hygiene and laundry services and patient transport services. U-GmbH’s cleaning services were supplied at S’s premises, that is to say, throughout the building complex occupied by the university school of medicine, which includes, in addition to patient rooms, corridors and operating theatres, lecture rooms and laboratories. While hospital space is dedicated to patient care and falls within the sphere of S’s economic activities, lecture rooms, laboratories and so forth are used for student training and, consequently, fall within the sphere of activities carried out by S as a public authority.

10. The proportion of the total surface area to be cleaned and which was devoted to public authority activities amounted to 7.6%. For all cleaning services provided to S, U-GmbH received a total fee of EUR 76 085.48 for the year in question (2005). In the VAT returns relating to the university’s medical activities, S considered all the services provided to it by U-GmbH as non-taxable internal services supplied in the context of the single entity for tax purposes (VAT group).

11. Finanzamt T took the view, in an adjusted tax assessment for 2005 (consequent on an external audit), that S’s operations formed a single undertaking for which a common VAT return should be submitted and, consequently, only one tax assessment had to be issued. In that regard, Finanzamt T took the view that the cleaning services provided by U-GmbH to S in respect of its activities as a public authority were supplied within a single entity for tax purposes (VAT group). The cleaning services supported an activity, which was ‘other than [that] of [its] business’ and thus gave rise, in S’s case, to a benefit in kind within the meaning of point 2 of Paragraph 3(9a) of the Umsatzsteuergesetz (Law on value added tax; ‘the UStG’) (which transposes point (b) of the first sentence of Article 6(2) of the Sixth Directive). Since the total remuneration for the cleaning services provided by U-GmbH to S amounted to EUR 76 065.48 during the year at issue, Finanzamt T took the view, taking into account that the proportion of the area allocated to activities carried out by S as a public authority amounted to 7.6% of the total surface area cleaned, that EUR 5 782.50 corresponded to the cleaning of the areas used for public authority activities. After deduction of a profit mark-up, which it assessed at EUR 525.66, Finanzamt T set the taxable amount for the benefit in kind at EUR 5 257 and thus increased the turnover tax by EUR 841.12.

12. S’s objection to that assessment was rejected by that same Finanzamt. In the proceedings at first instance before the Niedersächsisches Finanzgericht (Finance Court, Lower Saxony, Germany), however, that court upheld S’s appeal. In that court’s view, it was indisputable that S as the controlling company and U-GmbH as the controlled company constituted a single entity for tax purposes (VAT group). That VAT group extended also to the...