Case C‑251/16
Edward Cussens and Others
v
T.G. Brosnan
(Request for a preliminary ruling from the Supreme Court (Ireland))
(Reference for a preliminary ruling — Common system of value added tax (VAT) — Sixth Directive 77/388/EEC — Article 4(3)(a) and Article 13B(g) — Exemption of the supply of buildings, and of the land on which they stand, other than as described in Article 4(3)(a) — Principle that abusive practices are prohibited — Applicability in the absence of national provisions transposing that principle — Principles of legal certainty and of the protection of legitimate expectations)
Summary — Judgment of the Court (Fourth Chamber), 22 November 2017
1. Harmonisation of fiscal legislation — Common system of value added tax — Exemptions provided for in the Sixth Directive — Exemption of the supply of buildings and of the land on which they stand — Principle that abusive practices are prohibited — Direct applicability — No national legislation transposing that principle into domestic law — Irrelevant — Temporal effects in respect of transactions carried out before the establishment of that principle in the sphere of taxation — Retroactive effect — Infringement of the principles of legal certainty and of the protection of legitimate expectations — No such infringement
(Council Directive 77/388, Art. 13B(g))
2. Harmonisation of fiscal legislation — Common system of value added tax — Exemptions provided for in the Sixth Directive — Exemption of the supply of buildings and of the land on which they stand — Principle that abusive practices are prohibited — Redefinition of transactions pursuant to that principle — Possibility of the transactions not constituting an abusive practice being liable to value added tax on the basis of the relevant provisions of national legislation
(Council Directive 77/388, Art. 13B(g))
3. Harmonisation of fiscal legislation — Common system of value added tax — Exemptions provided for in the Sixth Directive — Exemption of the supply of buildings and of the land on which they stand — Principle that abusive practices are prohibited — Scope — Transactions whose essential aim is the accrual of a tax advantage contrary to the objective of the Sixth Directive — Criteria — Tax advantage resulting from leases entered into before the sale of the properties leased — Identification of the substance and real significance of the transactions in question — Taking into account of their purely artificial nature and the links of a legal, economic and/or personal nature between the operators at issue
(Council Directive 77/388, Art. 13B(g))
4. Harmonisation of fiscal legislation — Common system of value added tax — Exemptions provided for in the Sixth Directive — Exemption of the supply of buildings and of the land on which they stand — Principle that abusive practices are prohibited — Scope — Properties not having yet been actually used before their sale — Included — Condition — Accrual of a tax advantage contrary to the purpose of the relevant provisions — Verification a matter for the national court
(Council Directive 77/388, Art. 13B(g))
5. Harmonisation of fiscal legislation — Common system of value added tax — Exemptions provided for in the Sixth Directive — Exemption of the supply of buildings and of the land on which they stand — Principle that abusive practices are prohibited — Scope — Properties not having yet been actually used before their sale — Included
(Council Directive 77/388, Art. 13B(g))
1. The principle that abusive practices are prohibited must be interpreted as being capable, regardless of a national measure giving effect to it in the domestic legal order, of being applied directly in order to refuse to exempt from value added tax sales of immovable goods, such as the sales at issue in the main proceedings, carried out before the judgment of 21 February 2006, Halifax and Others (C‑255/02, EU:C:2006:121), was delivered, and the principles of legal certainty and of the protection of legitimate expectations do not preclude this.
The principle that abusive practices are prohibited, as applied to the sphere of VAT by the case-law stemming from the judgment in Halifax, thus displays the general, comprehensive character which is naturally inherent in general principles of EU law (see, by analogy, judgment of 15 October 2009, Audiolux and Others, C‑101/08, EU:C:2009:626, paragraph 50).
It should also be added that, according to the Court’s case-law, refusal of a right or an advantage on account of abusive or fraudulent acts is simply the consequence of the finding that, in the event of fraud or abuse of rights, the objective conditions required in order to obtain the advantage sought are not, in fact, met, and accordingly such a refusal does not require a specific legal basis (see, to that effect, judgment of 14 December 2000, Emsland-Stärke, C‑110/99, EU:C:2000:695, paragraph 56; judgment in Halifax, paragraph 93; and judgment of 4 June 2009, Pometon, C‑158/08, EU:C:2009:349, paragraph 28).
Therefore, the principle that abusive practices are prohibited may be relied on against a taxable person to refuse him, inter alia, the right to exemption from VAT, even in the absence of provisions of national law providing for such refusal (see, to that effect, judgment of 18 December 2014, Schoenimport ‘Italmoda’ Mariano Previti and Others, C‑131/13, C‑163/13 and C‑164/13, EU:C:2014:2455, paragraph 62).
Such application of EU law is consistent with the principles of legal certainty and of the protection of legitimate expectations (see to that effect, inter alia, judgments of 22 January 2015, Balazs, C‑401/13 and C‑432/13, EU:C:2015:26, paragraphs 49 and 50 and the case-law cited, and of 19 April 2016, DI, C‑441/14, EU:C:2016:278, paragraphs 38 to 40).
The interpretation which the Court, in the exercise of the jurisdiction conferred upon it by Article 267 TFEU, gives to EU law clarifies and defines, where necessary, the meaning and scope of that law as it must be, or ought to have been, understood and applied from the date of its entry into force. It follows that, unless there are truly exceptional circumstances, which is not however claimed to be the case here, EU law as thus interpreted must be applied by the courts even to legal relationships which arose and were established before the judgment ruling on the request for interpretation, provided that in other respects the conditions for bringing a dispute relating to the application of that law before the courts having jurisdiction are satisfied (see, inter alia, judgments of 29 September 2015, Gmina Wrocław, C‑276/14, EU:C:2015:635, paragraphs 44 and 45 and the case-law cited, and of 19 April 2016, DI, C‑441/14, EU:C:2016:278, paragraph 40).
(see paras 31-33, 40, 41, 44, operative part 1)
2. 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 must be interpreted as meaning that, if the transactions at issue in the main proceedings should be redefined pursuant to the principle that abusive practices are prohibited, those of the transactions which do not constitute such a practice may be subject to value added tax on the basis of the relevant provisions of national legislation providing for such liability.
(see para. 51, operative part 2)
3. The principle that abusive practices are prohibited must be interpreted as meaning that, in order to determine, on the basis of paragraph 75 of the judgment of 21 February 2006, Halifax and Others (C‑255/02, EU:C:2006:121), whether the essential aim of the transactions at issue in the main proceedings is to obtain a tax advantage, account should be taken of the objective of the leases preceding the sales of immovable property at issue in the main proceedings in isolation.
It should be pointed out at the outset that, contrary to what the appellants in the main proceedings contend in their written observations submitted to the Court, the case-law stemming from the judgment in Halifax does not require it to be established that the accrual of a tax advantage is the only objective of the transactions at issue. Whilst transactions pursuing exclusively such an objective may fulfil the requirement resulting from that case-law, the Court explained in paragraph 45 of its judgment of 21 February 2008, Part Service (C‑425/06, EU:C:2008:108), that the same is true when the accrual of a tax advantage constitutes the essential aim of the transactions at issue.
In order to determine the substance and real significance of the leases at issue in the main proceedings, the referring court may, in particular, take account of the purely artificial nature of those transactions and the links of a legal, economic and/or personal nature between the operators at issue (see, to that effect, judgment in Halifax, paragraphs 75 and 81). Such aspects are capable of demonstrating that the accrual of a tax advantage constitutes the essential aim pursued, notwithstanding the possible existence, in addition, of economic objectives (judgment of 21 February 2008, Part Service, C‑425/06, EU:C:2008:108, paragraph 62).
(see paras 53, 60, 62, operative part 3)
4. The principle that abusive practices are prohibited must be interpreted as meaning that supplies of immovable property such as those at issue in the main proceedings are liable to result in the accrual of a tax advantage contrary to the purpose of the relevant provisions of Sixth Directive 77/388 where the properties had, before their sale to third party purchasers, not yet been actually used by their owner or their tenant. It is for the referring court to verify whether that is the case in the main proceedings.
Thus, the exemption laid down in Article 13B(g) of the Sixth Directive relates to supplies of immovable property occurring after the property has actually been used by its owner or its tenant. By contrast, the first supply of a new property to the final consumer is not exempt.
(see paras 72, 75, operative part 4)
5. The principle that abusive practices are prohibited must be interpreted as being applicable in a situation such as that at issue in the main proceedings, which concerns the possible exemption of a supply of immovable property from value added tax.
(see para. 80, operative part 5)