5.7.2008   

EN

Official Journal of the European Union

C 171/17

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declare that by considering that the services supplied to an Autonomous Community by land registrars acting as settlement agents in charge of a settlement office of a mortgage district are not subject to VAT, the Kingdom of Spain has failed to fulfil its obligations under Article 2 and Article 4(1) and (2) of the Sixth VAT Directive (1).

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order Kingdom of Spain to pay the costs.

1.

Land registrars are professionals appointed by the Spanish State and charged by it with the management of the land registers. They work on their own account, are free to organise their work, select their own staff and collect the payments which constitute their income themselves. Several Autonomous Communities have entrusted various tasks to them in relation to the settlement of certain taxes. For such services the land registrars receive a certain percentage of the taxes collected.

2.

The Spanish administration has traditionally taken the view that, for the purposes of VAT, when they carry out such tasks for the Autonomous Communities, the land registrars must be considered to be contractors or professionals supplying services subject to VAT. The arguments relied on in that regard by the Spanish administration were essentially based on the judgments of the Court of Justice in Case C-235/85 Commission v Netherlands  (2) and Case C-202/90 Ayuntamiento de Sevilla  (3).

3.

In its judgment of 12 July 2003, the Tribunal Supremo (Supreme Court) of Spain held that land registrars, as regards the specific activities entrusted to them by the Autonomous Communities, consisting in the settlement and collection of certain taxes, are simply public officials and form part of the public administration. Since that judgment, delivered in an appeal on a point of law, the Spanish administration has taken the view that such services are not subject to VAT.

4.

However, the Commission considers that the services supplied to the Autonomous Communities by land registrars must be subject to VAT in accordance with the general rule contained in Article 2 of the Sixth Directive. That position is derived from the fact that registrars/settlement agents act as professionals who organise autonomously and independently the human and material resources needed to supply the service, as required by Article 4(1) of that Directive, and, that being so, do not have the characteristics of subordination and dependence which are a prerequisitite if the services in question are to be considered to have been supplied by an official to the administration to which he belongs and, therefore, not subject to VAT. A registrar/settlement agent is neither an administrative body of the Autonomous Community, nor an intrinsic element, incorporated into that body or internal to it, but an independent and distinct party with which the Autonomous Community has concluded a contract for the supply of services for consideration.

5.

Similarly, the Commission considers that in the present case the requirements of the case-law are fulfilled for the Kingdom of Spain to be declared liable for a failure to fulfil obligations through an interpretation of Community law which is not consistent with its spirit or purpose or with the case-law of the Court of Justice. First, the Tribunal Supremo has the status of a higher judicial body in all orders, subject to the provisions as regards constitutional guarantees. Second, the ruling has significance and implications which are, in principle, contrary to the interpretation handed down by the Court of Justice, and which entail an absolute turnaround in the case-law of the lower courts and the practice of the Spanish administration to date, given its binding character. Third, there are damaging effects in the VAT sector which may affect the Community's own resources. Consequently, the Spanish administration may not seek protection from the judgment of the Tribunal Supremo to justify its failure to fulfil its obligations under Community law.