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Language of document : ECLI:EU:C:1997:491

JUDGMENT OF THE COURT (Fifth Chamber)

16 October 1997 (1)

[234s(Sixth VAT Directive Supply of services for consideration Definition Transport of workers by the employer)[s

In Case C-258/95,

REFERENCE to the Court under Article 177 of the EC Treaty by theBundesfinanzhof for a preliminary ruling in the proceedings pending before thatcourt between

Julius Fillibeck Söhne GmbH & Co. KG

and

Finanzamt Neustadt

on the interpretation of Articles 2(1) and 6(2) of the Sixth Council Directive77/388/EEC of 17 May 1977 on the harmonization of the laws of the MemberStates relating to turnover taxes Common system of value added tax: uniformbasis of assessment (OJ 1977 L 145, p. 1),

THE COURT (Fifth Chamber),

composed of: C. Gulmann, President of the Chamber, M. Wathelet, J.C. Moitinhode Almeida, P. Jann and L. Sevón (Rapporteur), Judges,

Advocate General: P. Léger,

Registrar: H.A. Rühl, Principal Administrator,

after considering the written observations submitted on behalf of:

Julius Fillibeck Söhne GmbH & Co. KG, by Klaus Heininger, accountantand tax adviser,
Finanzamt Neustadt, by Reinhard Preuninger, Oberregierungsrat,
the German Government, by Ernst Röder, Ministerialrat at the FederalMinistry of Economic Affairs, and Bernd Kloke, Oberregierungsrat at thesame Ministry, acting as Agents,
the United Kingdom Government, by Stephen Braviner, of the TreasurySolicitor's Department, acting as Agent, and Nicholas Paines, Barrister,
the Commission of the European Communities, by Jürgen Grunwald, LegalAdviser, acting as Agent,

having regard to the Report for the Hearing,

after hearing the oral observations of Julius Fillibeck Söhne GmbH & Co. KG,represented by Klaus Heininger, of the Finanzamt Neustadt, represented byWerner Widmann, Leitender Ministerialrat at the Ministry of Finance ofRheinland-Pfalz, and of the Commission, represented by Jürgen Grunwald, at thehearing on 5 December 1996,

after hearing the Opinion of the Advocate General at the sitting on 16 January1997,

gives the following

Judgment

By order of 11 May 1995, which was received at the Court on 31 July 1995, theBundesfinanzhof (Federal Finance Court) referred to the Court for a preliminaryruling under Article 177 of the EC Treaty three questions concerning theinterpretation of Articles 2(1) and 6(2) the Sixth Council Directive 77/388/EEC of17 May 1977 on the harmonization 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, hereinafter 'the Sixth Directive).
The questions were raised in proceedings between Julius Fillibeck Söhne GmbH& Co. KG (hereinafter 'Julius Fillibeck Söhne) and the Finanzamt [Tax Office]Neustadt, concerning the imposition of value added tax (hereinafter 'VAT) on thefree transport provided by Julius Fillibeck Söhne for its employees from theirhomes to their place of work.
From 1980 to 1985, Julius Fillibeck Söhne, which runs a building undertaking,conveyed some of its employees in company vehicles free of charge from theirhomes to the various building sites where they were required to work. During thesame period it also required one of its employees to convey other employees fromtheir homes to their various places of work in his own private vehicle.
Julius Fillibeck Söhne provided that transport pursuant to theBundesrahmentarifvertrag für das Baugewerbe (Federal Collective FrameworkAgreement for the Building Industry) where the employees' homes and their placesof work were more than a minimum distance apart.
The Finanzamt Neustadt considered that that transport was subject to tax underthe German VAT legislation.
Julius Fillibeck Söhne challenged the view that the transport was subject to VAT. Since its objection and the action it brought were unsuccessful, it appealed to theBundesfinanzhof on a point of law; that court considered that the dispute raisedquestions concerning the interpretation of Articles 2(1) and 6(2) of the SixthDirective.
Article 2(1) of the Sixth Directive provides:

'The following shall be subject to value added tax:

1. The supply of goods or services effected for consideration within theterritory of the country by a taxable person acting as such.
Article 6(2) of the Sixth Directive provides:

'The following transactions shall be treated as supplies of services forconsideration:

(a) the use of goods forming part of the assets of a business for the private useof the taxable person or of his staff or more generally for purposes otherthan those of his business where the value added tax on such goods iswholly or partly deductible;

(b) supplies of services carried out free of charge by the taxable person for hisown private use or that of his staff or more generally for purposes otherthan those of his business.

(...)
In those circumstances, the Bundesfinanzhof decided to stay the proceedings andto refer the following questions to the Court of Justice for a preliminary ruling:

'(1)    Does transport provided by an employer constitute a service effected forconsideration" within the meaning of Article 2(1) of Directive 77/388/EEC that is to say, effected for a proportion (to be estimated) of the workperformed by the employees where, pursuant to a collective agreement,the employer conveys employees (without specially agreed and calculatedconsideration) from their homes to the workplace where they are more thana specified distance apart, and the work performed which has no actualconnection with such transport services is already to be carried out inreturn for the agreed money wages as in the case of the other employees?

(2)    Does Article 6(2) of Directive 77/388/EEC cover the use of goods formingpart of the assets of the business or a service carried out free of chargeeven where as in the case of free transport for employees from theirhomes to the workplace and back in a company vehicle it does not servepurposes other than those of the business as far as the employer isconcerned, but does serve the employees' private purposes and theemployees are not charged turnover tax in this respect (on account of theiruse free of charge of the transport service)?

(3)    In the event that Question 2 is answered in the affirmative: Does Article6(2) of Directive 77/338/EEC also cover a case where the employer doesnot convey the employees in its own vehicles, but commissions a third party(in this case, one of its own employees) to effect the transport?

The first question
In the first question, the national court asks whether Article 2(1) of the directiveis to be interpreted as meaning that transport provided by an employer foremployees free of charge from their homes to the workplace where they are morethan a specified distance apart, in the absence of any real connection with eitherthe work performed or the wages received, constitutes a supply of services effectedfor consideration within the meaning of that provision.
Article 2(1) of the Sixth Directive provides that VAT is chargeable on the supplyof services effected for consideration within the territory of the country by a taxableperson.
It is apparent from the case-law of the Court that the concept of the supply ofservices effected for consideration within the meaning of Article 2(1) of the SixthDirective presupposes the existence of a direct link between the service providedand the consideration received (see, in particular, the judgment in Case 102/86Apple and Pear Development Council [1988] ECR 1443, paragraph 12).
It is also settled case-law that the taxable amount for the supply of goods orservices is represented by the consideration actually received for them. Thatconsideration is thus the subjective value, that is to say, the value actually received,and not a value estimated according to objective criteria (see judgments in Case154/80 Coöperatieve Aardappelenbewaarplaats [1981] ECR 445, paragraph 13; Case230/87 Naturally Yours Cosmetics [1988] ECR 6365, paragraph 16; Case C-126/88Boots Company [1990] ECR I-1235, paragraph 19; Case C-38/93 Glawe [1994] ECRI-1679, paragraph 8; Case C-33/93 Empire Stores [1994] ECR I-2329, paragraph 18,and Case C-288/94 Argos Distributors [1996] ECR I-5311, paragraph 16).
Furthermore, according to the same case-law, that consideration must be capableof being expressed in money (judgments in Coöperatieve Aardappelenbewaarplaats,paragraph 13; Naturally Yours Cosmetics, paragraph 16, and Argos Distributors,paragraph 17).
It is clear from the order for reference that Julius Fillibeck Söhne providestransport for its employees from their homes to their workplace when they aremore than a certain distance apart and that the employees do not make anypayment, nor is any sum deducted from their wages in respect of that service.
Furthermore, since the work to be performed and the wages received areindependent of the use or otherwise by employees of the transport provided tothem by their employer, it is not possible to regard a proportion of the workperformed as being consideration for the transport services.
In those circumstances, there is no consideration which has a subjective value anda direct link with the service provided. Consequently, the requirements relating toa supply of services effected for consideration are not satisfied.
The reply to the first question is therefore that Article 2(1) of the Sixth Directiveis to be interpreted as meaning that an employer who provides transport foremployees free of charge from their homes to the workplace where they are morethan a specified distance apart, in the absence of any real connection either withthe work performed or the wages received, does not effect a supply of services forconsideration within the meaning of that provision.

The second question
In the second question, the national court is asking essentially whether transportprovided for employees free of charge between their homes and their workplaceby the employer in a company vehicle for purposes which are not other than thoseof the business but which, at the same time, serve the employees' private purposes,is to be treated as a supply of services for consideration within the meaning ofArticle 6(2) of the Sixth Directive.
First of all, it should be noted that the national court refers to Article 6(2)(a) and(b) without, however, establishing which of those two provisions applies to the casebefore it. The parties to the main proceedings consider that, in the present case,it is not necessary to determine whether subparagraph (a) or (b) applies. Furthermore, it is clear from the question that the requested interpretation of thoseprovisions concerns, more specifically, the concepts of 'private use of the taxableperson or of his staff and 'purposes other than those of his business, whichappear in both provisions. The two provisions should, consequently, be consideredtogether.
The national court pointed out that the transport provided by Julius FillibeckSöhne is for travel between the employees' homes and the company's variousbuilding sites where those employees are required to work.
At the hearing, Julius Fillibeck Söhne explained, in particular, that it has a numberof building sites which are some distance apart, that it is often not possible to reachthose building sites by public transport and that employees are moved between thedifferent sites.
It also pointed out that, since the carriage of the employees directly serves thepurposes of the business and consequently falls within the employment relationship,it does not concern the private domain of employees. Furthermore, the transportis provided pursuant to a collective agreement.
In contrast, the other parties who submitted observations claim that the transportprovided by the employer free of charge falls within Article 6(2) of the SixthDirective. The United Kingdom Government and the Commission pointed out,however, that certain circumstances may justify regarding the transport providedfor the employees as serving the purposes of the business.
It should be recalled that the purpose of Article 6(2) of the Sixth Directive is toensure equal treatment as between taxable persons and final consumers (see thejudgment in Case C-230/94 Enkler [1996] ECR I-4517, paragraph 35). It isdesigned to prevent the non-taxation of business goods used for private purposesand of services provided free of charge by a taxable person for private purposes(see, to that effect, the judgments in Case 50/88 Kühne [1989] ECR 1925,paragraph 8, and Case C-193/91 Mohsche [1993] ECR I-2615, paragraph 8).
In that respect, it should be noted that it is normally for the employee to decidewhere his home will be with regard, where appropriate, to his place of work, andto determine the distance between the two and the means of transport he intendsto use. The employer is not involved in those decisions, since the employee's onlyobligation is to be present at his place of work at the agreed times. Consequently,under normal circumstances, the transport services provided to employees are forthe private use of the employee within the meaning of Article 6(2) of the SixthDirective.
The fact that an employee must travel between his home and the workplace inorder to be present at work and, consequently, to perform his duties, is notconclusive evidence that transport provided for an employee from his home to hisworkplace is not to be considered as being for the employee's private use withinthe meaning of Article 6(2). Indeed, it would be contrary to the purpose of thatprovision if such an indirect link were sufficient, in itself, to prevent such travelbeing treated as a supply for consideration.
Article 6(2) of the Sixth Directive must be interpreted thus in the usual situationwhere an employee travels between his home and his fixed place of work, and hasthe possibility of using ordinary means of transport.
It should be acknowledged, however, that in certain circumstances the requirementsof the business may make it necessary for the employer to provide transport foremployees between their homes and the workplace. The fact that only theemployer is able to provide suitable transport or that the workplace is not alwaysthe same but is liable to change may mean that the employer is obliged to providetransport for its employees.
In such special circumstances, the transport is organized by the employer forpurposes which are not other than those of the business. The personal benefitderived by employees from such transport appears to be of only secondaryimportance compared to the needs of the business.
As regards the fact that the transport is provided pursuant to a collectiveagreement, even though such an obligation is not in itself sufficient to determinethe character of the supply of those services for the purposes of Article 6(2) of theSixth Directive, it indicates that the transport is provided for purposes which arenot other than those of the business.
The special characteristics of building firms, as described in particular by JuliusFillibeck Söhne in the present case, suggest that the transport may be organized forpurposes which are not other than those of the business.
It is for the national court to establish whether, in the light of the interpretationsgiven by the Court, the particular characteristics of the case before it make itnecessary, having regard to the requirements of the business, for the employer toprovide transport for employees between their homes and the workplace.
The answer to the second question is therefore that Article 6(2) of the SixthDirective is to be interpreted as meaning that transport provided for employeesfree of charge by the employer between their homes and the workplace in acompany vehicle serves, in principle, the employees' private purposes and thusserves purposes other than those of the business. However, that provision does notapply when, having regard to certain circumstances, such as the difficulty of findingother suitable means of transport and changes in the place of work, therequirements of the business make it necessary for the employer to providetransport for employees, in which case the supply of those transport services is noteffected for purposes other than those of the business.

The third question
In the third question, the national court asks essentially whether the answer to thesecond question also applies when the employer does not convey the employees inits own vehicles, but commissions one of its employees to provide the transportusing his own private vehicle.
In that respect, it is sufficient to note that the question whether transport servicesserve the private purposes of employees of an undertaking or, more generally,serve purposes other than those of the business, within the meaning of Article 6(2)of the Sixth Directive, is not altered by the fact that, instead of providing thetransport in its own vehicles, the employer commissions one of its employees toprovide that transport using his own private vehicle.
Consequently, the answer to the third question must be that the answer to thesecond question also applies when the employer does not convey the employees inits own vehicles, but commissions one of its employees to provide the transportusing his own private vehicle.

Costs
The costs incurred by the German Government, the United Kingdom Governmentand by the Commission of the European Communities, which have submittedobservations to the Court, are not recoverable. Since these proceedings are, forthe parties to the main proceedings, a step in the proceedings pending before thenational court, the decision on costs is a matter for that court.

On those grounds,
THE COURT (Fifth Chamber),
in answer to the questions referred to it by the Bundesfinanzhof by order of 11May 1995, hereby rules:
1. Article 2(1) of the Sixth Council Directive 77/388/EEC of 17 May 1977 onthe harmonization of the laws of the Member States relating to turnovertaxes Common system of value added tax: uniform basis of assessmentis to be interpreted as meaning that an employer who provides transportfor employees free of charge from their homes to the workplace where theyare more than a specified distance apart, in the absence of any realconnection either with the work performed or the wages received, does noteffect a supply of services for consideration within the meaning of thatprovision.
2. Article 6(2) of the Sixth Directive 77/388/EEC is to be interpreted asmeaning that transport provided for employees free of charge by theemployer between their homes and the workplace in a company vehicleserves, in principle, the employees' private purposes and thus servespurposes other than those of the business. However, that provision doesnot apply when, having regard to certain circumstances, such as thedifficulty of finding other suitable means of transport and changes in theplace of work, the requirements of the business make it necessary for theemployer to provide transport for employees, in which case the supply ofthose transport services is not effected for purposes other than those of thebusiness.
3. The answer to the second question also applies when the employer does notconvey the employees in its own vehicles, but commissions one of itsemployees to provide the transport using his own private vehicle.

Gulmann Wathelet

Moitinho de Almeida

Jann

Sevón

Delivered in open court in Luxembourg on 16 October 1997.

R. Grass

C. Gulmann

Registrar

President of the Fifth Chamber

1: Language of the case: German.