Language of document : ECLI:EU:C:1998:206

JUDGMENT OF THE COURT (Fifth Chamber)

7 May 1998 (1)

(Sixth VAT Directive — Car-leasing services — Fixed establishment — Rulesgoverning reimbursement of VAT to taxable persons not established in theterritory of the State — Principle of non-discrimination)

In Case C-390/96,

REFERENCE to the Court under Article 177 of the EC Treaty by the Rechtbankvan Eerste Aanleg, Brussels, for a preliminary ruling in the proceedings pendingbefore that court between

Lease Plan Luxembourg SA

and

Belgian State

on the interpretation of Article 9(1) of the Sixth Council Directive 77/388/EEC of17 May 1977 on the harmonisation of the laws of the Member States relating toturnover taxes — Common system of value added tax: uniform basis of assessment(OJ 1977 L 145, p. 1) and of Articles 6 and 59 of the EC Treaty,

THE COURT (Fifth Chamber),

composed of: C. Gulmann, President of the Chamber, M. Wathelet, J.C. Moitinhode Almeida (Rapporteur), D.A.O. Edward and J.-P. Puissochet, Judges,

Advocate General: N. Fennelly,


Registrar: D. Louterman-Hubeau, Principal Administrator,

after considering the written observations submitted on behalf of:

—    Lease Plan Luxembourg SA, by L. De Broe and L. Vandenberghe, of theBrussels Bar,

—    the Belgian Government, by J. Devadder, General Adviser in the Ministryof Foreign Affairs, External Trade and Cooperation with DevelopingCountries, acting as Agent, and A. Destrycker, of the Brussels Bar,

—    the Luxembourg Government, by R. Heinen, Attaché de Gouvernement inthe Ministry of Finance, acting as Agent, and

—    the Commission of the European Communities, by B.J. Drijber, of its LegalService, acting as Agent,

having regard to the Report for the Hearing,

after hearing the oral observations of Lease Plan Luxembourg SA, the BelgianGovernment and the Commission at the hearing on 6 November 1997,

after hearing the Opinion of the Advocate General at the sitting on 18 December1997,

gives the following

Judgment

1.
    By judgment of 26 November 1996, received at the Court on 2 December 1996, theRechtbank van Eerste Aanleg (Court of First Instance), Brussels, referred for apreliminary ruling under Article 177 of the EC Treaty three questions on theinterpretation of Article 9(1) of the Sixth Council Directive 77/388/EEC of 17 May1977 on the harmonisation of the laws of the Member States relating to turnovertaxes — Common system of value added tax: uniform basis of assessment (OJ 1977L 145, p. 1; 'the Sixth Directive‘) and of Articles 6 and 59 of the EC Treaty.

2.
    Those questions were raised in the context of proceedings brought by Lease PlanLuxembourg SA ('Lease Plan‘), established in Luxembourg, and the Belgian Stateconcerning reimbursement of the value added tax ('VAT‘) paid by Lease Plan on

the purchase of cars in Belgium and on car maintenance and repairs carried outin Belgium.

3.
    Article 9(1) of the Sixth Directive provides:

'The place where a service is supplied shall be deemed to be the place where thesupplier has established his business or has a fixed establishment from which theservice is supplied or, in the absence of such a place of business or fixedestablishment, the place where he has his permanent address or usually resides‘.

4.
    Article 9(2) of the Sixth Directive, as amended by the Tenth Council Directive84/386/EEC of 31 July 1984 on the harmonisation of the laws of the Member Statesrelating to turnover taxes, amending Directive 77/388/EEC — Application of valueadded tax to the hiring out of movable tangible property (OJ 1984 L 208, p. 58;'the Tenth Directive‘), provides:

'However:

...

(e)    the place where the following services are supplied when performed forcustomers established outside the Community or for taxable personsestablished in the Community but not in the same country as the supplier,shall be the place where the customer has established his business or has afixed establishment to which the service is supplied or, in the absence ofsuch a place, the place where he has his permanent address or usuallyresides:

    ...

    —    the hiring out of movable tangible property, with the exception of allforms of transport.‘

5.
    Article 17(3) of the Sixth Directive sets out the principles governing the right to adeduction or refund of VAT paid on inputs.

6.
    The first sentence of Article 17(4) of the Sixth Directive adds:

'The Council shall endeavour to adopt before 31 December 1977, on a proposalfrom the Commission and acting unanimously, Community rules laying down thearrangements under which refunds are to be made in accordance with paragraph3 to taxable persons not established in the territory of the country.‘

7.
    On 6 December 1979, in accordance with that provision, the Council adopted theEighth Council Directive 79/1072/EEC of 6 December 1979 on the harmonisation

of the laws of the Member States relating to turnover taxes — Arrangements for therefund of value added tax to taxable persons not established in the territory of thecountry (OJ 1979 L 331, p. 11; 'the Eighth Directive‘), Article 7(4) of whichprovides:

'Decisions concerning applications for refund shall be announced within six monthsof the date when the applications, accompanied by all the necessary documentsrequired under this Directive for examination of the application, are submitted tothe competent authority referred to in paragraph 3. Refunds shall be made beforethe end of the abovementioned period, at the applicant's request, in either theMember State of refund or the State in which he is established. In the latter case,the bank charges for the transfer shall be payable by the applicant.

The grounds for refusal of an application shall be stated. Appeals against suchrefusals may be made to the competent authorities in the Member State concerned,subject to the same conditions as to form and time-limits as those governing claimsfor refunds made by taxable persons established in the same State.‘

8.
    Lease Plan is a leasing company whose main business is the leasing of cars underhire purchase contracts.

9.
    Most of Lease Plan's contracts are with companies established in Luxembourg. The cars leased to them have been bought in Luxembourg, are insured withinsurance companies in Luxembourg and are covered by comprehensive contractsunder which the client companies pay an inclusive fee to cover financing, insurance,maintenance and repairs. The companies established in Luxembourg make thesecars available to their own employees, some of whom live in Belgium, either in thefrontier region or elsewhere. The garage operators established in Belgium used bythe employees send their invoices to Lease Plan, which pays the VAT.

10.
    Lease Plan has also leased out some 10 cars, out of its fleet of nearly 1 000, toclients established in Belgium. Those cars were bought by Lease Plan in Belgiumand, unlike those leased to the companies established in Luxembourg, are notcovered by comprehensive contracts. Maintenance, insurance, repairs and taxes areall paid for by the clients established in Belgium.

11.
    Lease Plan applied for a refund of the VAT paid on the purchase in Belgium ofthe cars leased to clients established in Belgium and on the maintenance and repairby Belgian garage operators of the cars leased to companies established inLuxembourg.

12.
    The Belgian tax authorities refused to refund VAT as sought by Lease Plan on theground that it carries out transactions in Belgium in respect of which it is liable forVAT. Those transactions included the repairs carried out on cars leased to clientsestablished in Luxembourg, which did not fall within normal maintenance. Suchrepairs were not covered by the comprehensive contracts and constituted separate

services performed at the place where the cars were situated. In addition, for theperiod subsequent to 1 January 1993, the Belgian tax authorities maintain that thefact that Lease Plan carries on an economic activity by possessing a fleet of vehiclesin Belgium for rental purposes is enough for it to have a fixed establishment inBelgium within the meaning of Article 21(2) of the Belgian Law of 3 July 1969enacting the Value Added Tax Code, as amended by the Law of 28 December1992, which came into force on 1 January 1993 ('the Code‘).

13.
    Article 4(1) of the Code provides:

'Any person who, in the exercise of an economic activity, habitually andindependently, with or without a view to profit, on a primary or ancillary basis,supplies goods or services covered by this Code, shall, irrespective of where theeconomic activity is carried on, be a taxable person‘.

14.
    Under Article 21(1) and (2) of the Code:

'1.    A service is supplied in Belgium when the place where it is deemed to takeplace in accordance with paragraphs 2 to 4 is in Belgium.

2.    The place where a service is supplied is deemed to be the place where thesupplier of the service has established his business or has a fixedestablishment from which the service is supplied or, in the absence of sucha place of business or fixed establishment, the place where he has hispermanent address or usually resides.‘

15.
    According to the Belgian tax authorities Lease Plan should, since it carries outtransactions in Belgium in respect of which it is liable to pay VAT, be registeredwith the VAT authorities as a taxable person in Belgium and should apply forrefunds in its quarterly VAT returns.

16.
    Following the Belgian tax authorities' decision, Lease Plan brought proceedingsagainst the Belgian State before the Rechtbank van Eerste Aanleg, seekingrepayment of the sum of BFR 7 669 095, together with interest thereon at thestatutory rate.

17.
    Lease Plan claimed that it was entitled to the payment of interest at the statutoryrate in the same way as a taxable person established in Belgium, in the event of adelay in refunding VAT. Where a taxable person established in Belgium makes arequest, Article 76(1) of the Code provides for the excess amount still outstandingat the end of the year to be refunded within three months from the request. If theVAT is not refunded within the three-month period provided for in Article 76(1),the taxable person established in Belgium receives interest under Article 91(3) ofthe Code at the rate of 0.8% per month as from the expiry of the three-monthperiod.

18.
    Where the application for a refund is made by a taxable person not established inBelgium, however, Article 91(4) of the Code specifies that interest on arrears 'ispayable at the rate fixed for civil matters and according to the rules governing suchmatters‘. It appears from the observations submitted to the Court that until 31August 1996 the annual rate of interest applicable to such requests was 8% andthat it was not due until formal notice to pay had been served on the Belgian Stateafter the expiry of the six-month period laid down in Article 7(4) of the EighthDirective.

19.
    Lease Plan does not challenge the six-month refund period which, for taxablepersons not established in the territory of the country for the purposes of Article7(4) of the Eighth Directive, is longer than the three-month period provided inArticle 91(3) of the Code for taxable persons established in the territory of thecountry. In its view, such a difference may be justified by the fact that verificationand repayment take longer for refunds to taxable persons not established in theterritory of the country than for those established there.

20.
    In view of the uncertainty as to whether a pool of cars belonging to Lease Plan anddriven in Belgium may be regarded as a fixed establishment within the meaning ofthe Sixth Directive and of the disagreement concerning the rate of interestapplicable to the amount of VAT whose refund is sought, the Rechtbank decidedto stay proceedings and seek a preliminary ruling by the Court on the followingquestions:

'(1)    Must the term ”fixed establishment” in Article 9(1) of the Sixth VATDirective be interpreted as meaning that an undertaking from one MemberState which hires or leases out a number of cars to customers establishedin another Member State has ipso facto, by virtue of that hiring, a fixedestablishment in that other Member State?

(2)    If the answer to the preceding question is in the affirmative: must Article9(1) of the Sixth VAT Directive be interpreted as meaning that servicesconsisting in the leasing out of vehicles can be regarded as being suppliedfrom a fixed establishment in Belgium in the case where the supplier of theservices has its established place of business in Luxembourg and wherealmost all contracts are negotiated and concluded from this place ofestablishment in Luxembourg with customers established in Luxembourgand only a limited number of vehicles (approximately 10 cars out of a fleetof almost 1 000 vehicles) are purchased in Belgium and maintained orrepaired within Belgium?

(3)    Must Articles 6 and 59 of the EEC Treaty be interpreted as meaning thatforeign taxable persons, who receive goods or services in Belgium andsubsequently request VAT refunds in respect of such goods or servicespursuant to the Eighth VAT Directive, cannot, in the event of latereimbursement, be granted a lower rate of interest, which, moreover, begins

to accrue only from the moment at which such foreign taxable persons serveformal notice on the Belgian State, whereas in the event of latereimbursement to Belgian taxable persons, the latter are granted a higherrate of interest which, automatically and without serving formal notice,begins to accrue as soon as the statutory time-limit for reimbursement hasexpired?‘

The first question

21.
    It must first be noted that, following the judgment of 17 July 1997 in Case C-190/95ARO Lease v Inspecteur der Belastingdienst Grote Ondernemingen, Amsterdam [1997]ECR I-4383, the parties to the main proceedings accepted at the hearing thatLease Plan did not, during the period to which the refund of VAT sought relates,have any fixed establishment in Belgium from which it supplied services.

22.
    It must next be pointed out that, as the Court noted at paragraph 12 of itsjudgment in ARO Lease, the fourth recital in the preamble to the Tenth Directivestates '... as regards the hiring out of forms of transport, Article 9(1) [of the SixthDirective] should, for reasons of control, be strictly applied, the place where thesupplier has established his business being treated as the place of supply of suchservices‘. Such a consideration is, moreover, confirmed by Article 9(2)(e) of theSixth Directive, as amended by the Tenth Directive.

23.
    As the Court stressed at paragraph 14 of the same judgment, since forms oftransport may easily cross frontiers, it is difficult, if not impossible, to determine theplace of their utilisation and in each case a practical criterion must therefore belaid down for charging VAT. Consequently, for the hiring out of all forms oftransport, the Sixth Directive provided that the service should be deemed to besupplied not at the place where the goods hired out are used but, with a view tosimplification and in conformity with the general rule, at the place where thesupplier has established his business (Case 51/88 Hamann v FinanzamtHamburg-Eimsbüttel [1989] ECR 767, paragraphs 17 and 18).

24.
    The Court further pointed out, at paragraph 15 of the ARO Lease judgment, thatthe place where the supplier has established his business is a primary point ofreference inasmuch as there is no purpose in referring to another establishmentfrom which the services are supplied unless reference to the main place of businessdoes not lead to a rational result for tax purposes or creates a conflict with anotherMember State. Consequently, as the Court held at paragraph 16 of the samejudgment, for a supply of services, reference to an establishment other than themain place of business is possible only if that establishment possesses a sufficientdegree of permanence and a structure adequate, in terms of human and technicalresources, to supply the services in question on an independent basis.

25.
    In that regard, the Court noted at paragraph 18 of ARO Lease that the servicessupplied in the leasing of vehicles consist principally in negotiating, drawing up,signing and administering the relevant agreements and in making the vehiclesconcerned, which remain the property of the leasing company, physically availableto customers.

26.
    At paragraph 19 of the same judgment, the Court concluded that when a leasingcompany does not possess in a Member State either its own staff or a structurewhich has a sufficient degree of permanence to provide a framework in whichagreements may be drawn up or management decisions taken and thus to enablethe services in question to be supplied on an independent basis, it cannot beregarded as having a fixed establishment in that State.

27.
    That is also the situation in the main proceedings in the present case, as Lease Plandoes not possess in Belgium either its own staff or a structure which has a sufficientdegree of permanence.

28.
    Moreover, as the Court stated at paragraph 20 of the ARO Lease judgment, it isclear from both the wording and the aim of Article 9(1) and 9(2)(e) of the SixthDirective, as amended, and from the judgment in Hamann, cited above, thatneither the physical placing of vehicles at customers' disposal under leasingagreements nor the place at which they are used can be regarded as a clear, simpleand practical criterion, in accordance with the spirit of the Sixth Directive, on whichto base the existence of a fixed establishment.

29.
    The answer to the first question must therefore be that the term 'fixedestablishment‘ in Article 9(1) of the Sixth Directive must be interpreted in such away that an undertaking established in one Member State which hires out or leasesa number of vehicles to clients established in another Member State does notpossess a fixed establishment in that other State merely by engaging in that hiringout or leasing.

The second question

30.
    In view of the answer to the first question, it is unnecessary to answer the secondquestion.

The third question

31.
    By its third question, the national court wishes to know whether it is contrary toArticles 6 and 59 of the Treaty for national rules to provide that taxable personsnot established in a Member State, who apply for a refund of VAT in accordancewith the Eighth Directive, are entitled to interest only from such time as notice topay was served on that Member State and at a lower rate than that applied to the

interest paid to taxable persons established in the territory of that Stateautomatically on the expiry of the statutory time-limit for reimbursement.

32.
    Rules such as those in issue in the main proceedings give taxable persons notestablished in the territory of the Member State concerned, on the expiry of thestatutory time-limit for reimbursement, interest at a rate lower than that of theinterest paid to taxable persons established in the territory of that State. Inaddition, whilst the latter receive interest automatically in the event of a delay inrepayment, taxable persons who are not established in the territory of the MemberState concerned are obliged, in order to obtain interest after the expiry of thestatutory time-limit for reimbursement, to serve formal notice to pay on that Stateand to bear the cost of that additional formality.

33.
    Such rules, which treat taxable persons differently depending on whether they areestablished in the territory of the Member State concerned or not, are such as toconstitute discrimination prohibited by Article 59 of the Treaty.

34.
    However, it is settled law that discrimination can arise only through the applicationof different rules to comparable situations or the application of the same rule todifferent situations (see, inter alia, Case C-279/93 Finanzamt Köln-Altstadt vSchumacker [1995] ECR I-225, paragraph 30).

35.
    In that regard, the Belgian Government submits that taxable persons establishedin the Member State concerned and those established in other Member States inthe same situation are treated identically. A taxable person established in anotherMember State who submits declarations to the Belgian tax authorities is entitled,in the event of a delay in repayment, to interest at the higher rate, automaticallypayable, in accordance with Article 91(3) of the Code. Conversely, a taxableperson established in the Member State concerned who only irregularly engages intaxable economic activities and thus only very occasionally submits VAT returns isentitled, as from the service of notice to pay, to interest only at the lower rateprovided for in Article 91(4) of the Code. The same is also true of a taxableperson established in the Member State concerned who, although regularly subjectto VAT with regard to his economic activities, submits an application for a refundof VAT in relation to a transaction of a not exclusively business nature.

36.
    However, the situation of a taxable person who is established in one Member State,who pursues a regular economic activity subject to VAT in that State and whoseeks in the context of that activity a refund of the VAT paid on a transactioneffected in a second Member State cannot be compared with that of a taxpayerestablished in the second Member State and who either pursues a taxable economicactivity on an irregular basis there or seeks a refund of the VAT on a transactionof a not exclusively business nature.

37.
    The comparison must rather be drawn, as regards the rate of interest given and thedate from which that interest is calculated, with the situation of a taxable personestablished in the territory of the Member State concerned who, like Lease Plan,pursues a regular economic activity subject to VAT and seeks in the context of thatactivity a refund of excess VAT paid.

38.
    In the event of a delay in repayment, such a taxable person who regularly submitsreturns to the tax authorities would be entitled, unlike a taxable person notestablished in the Member State concerned, to interest payable automatically at ahigher rate.

39.
    As no other ground has been put forward to justify such discrimination, it must beconcluded that rules such as those in issue in the main proceedings are contrary toArticle 59 of the Treaty, inasmuch as they give taxable persons not established inthe territory of the Member State concerned interest only as from service of noticeto pay on that State and at a rate lower than that applicable to the interestreceived automatically by taxable persons established in the territory of that Stateon the expiry of the statutory time-limit for reimbursement.

40.
    Since rules of the kind in issue in the main proceedings are caught by Article 59of the Treaty, it is unnecessary to consider whether they are compatible withArticle 6 of the Treaty.

41.
    The answer to the third question must therefore be that it is contrary to Article 59of the Treaty for national rules to provide that taxable persons not established ina Member State, who apply for a refund of VAT in accordance with the EighthDirective, are entitled to interest only from such time as notice to pay was servedon that Member State and at a lower rate than that applied to the interest paid totaxable persons established in the territory of that State automatically on the expiryof the statutory time-limit for reimbursement.

Costs

42.
    The costs incurred by the Belgian and Luxembourg Governments and by theCommission, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in theaction pending before the national court, the decision on costs is a matter for thatcourt.

On those grounds,

THE COURT (Fifth Chamber),

in answer to the questions referred to it by the Rechtbank van Eerste Aanleg,Brussels, by judgment of 26 November 1996, hereby rules:

1.    The term 'fixed establishment‘ in Article 9(1) of the Sixth CouncilDirective 77/388/EEC of 17 May 1977 on the harmonisation of the laws ofthe Member States relating to turnover taxes — Common system of valueadded tax: uniform basis of assessment must be interpreted in such a waythat an undertaking established in one Member State which hires out orleases a number of vehicles to clients established in another Member Statedoes not possess a fixed establishment in that other State merely byengaging in that hiring out or leasing.

2.    It is contrary to Article 59 of the EC Treaty for national rules to providethat taxable persons not established in a Member State, who apply for arefund of VAT in accordance with the Eighth Council Directive79/1072/EEC of 6 December 1979 on the harmonisation of the laws of theMember States relating to turnover taxes — Arrangements for the refund ofvalue added tax to taxable persons not established in the territory of thecountry, are entitled to interest only from such time as notice to pay wasserved on that Member State and at a lower rate than that applied to theinterest paid to taxable persons established in the territory of that Stateautomatically on the expiry of the statutory time-limit for reimbursement.

Gulmann
Wathelet
Moitinho de Almeida

Edward

Puissochet

Delivered in open court in Luxembourg on 7 May 1998.

R. Grass

C. Gulmann

Registrar

President of the Fifth Chamber


1: Language of the case: Dutch.