Joined Cases C‑250/14 and C‑289/14

Air France-KLM

and

Hop!-Brit Air SAS

v

Ministère des Finances et des Comptes publics

(Requests for a preliminary ruling from the Conseil d’État (France))

‛Value added tax — Chargeable event and chargeability — Air transport — Ticket purchased but not used — Provision of the transport service — Issue of the ticket — Time of payment of the tax’

Summary — Judgment of the Court (First Chamber), 23 December 2015

1. Harmonisation of fiscal legislation — Common system of value added tax — Taxable transactions — Supply of services effected for consideration — Concept — Passenger air transport — Included — Conditions — Tickets issued by an airline which are unused by the passengers and non-refundable — No effect — Issue of tickets subject to value added tax

   (Council Directive 77/388, as amended by Directive 1999/59 and Directive 2001/115, Arts 2(1) and 10(2))

2. Harmonisation of fiscal legislation — Common system of value added tax — Chargeable event and chargeability of the tax — Purchase of an air ticket by a passenger — Ticket subsequently unused — Chargeability of the tax on receipt of the payment of the price of the ticket — Receipt by the airline via a third party acting in its name and on its behalf, or by a third party acting in its own name — No effect

   (Council Directive 77/388, as amended by Directive 1999/59 and Directive 2001/115, Arts 2(1) and 10(2), first and second paras)

3. Harmonisation of fiscal legislation — Common system of value added tax — Taxable transactions — Supply of services effected for consideration — Concept — Passenger air transport — Included — Marketing by a third party of an airline’s tickets on behalf of the latter in the context of a franchise agreement — Lump sum paid by the third party to the airline, in respect of tickets issued and no longer valid, calculated as a percentage of the annual turnover from the corresponding flight routes — Taxable amount as consideration for those tickets

   (Council Directive 77/388, as amended by Directive 1999/59 and Directive 2001/115, Arts 2(1) and 10(2))

1.  Articles 2(1) and 10(2) of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment, as amended by Directive 1999/59, then by Directive 2001/115, must be interpreted as meaning that the issue by an airline of tickets is subject to value added tax where the tickets issued have not been used by passengers and the latter are unable to obtain a refund for those tickets.

   A supply of services, such as air passenger transport, is subject to value added tax where, first, the sum paid by a passenger to an airline, in the context of the legal relationship constituted by the transport contract, is directly linked with an identifiable service for which it constitutes the remuneration and, secondly, that service is performed.

   However, it is possible to perform the services provided in performance of obligations arising from a contract to transport passengers by air only if the passenger of the airline turns up on the agreed date and at the agreed place of boarding, the customer’s right to performance of those services being given by the airline until the time of boarding, according to the conditions set out in the contract to transport passengers concluded when the ticket was purchased.

   Therefore, the consideration for the price paid when the ticket was purchased consists of the passenger’s right to benefit from the performance of obligations arising from the transport contract, regardless of whether the passenger exercises that right, since the airline fulfils the service by enabling the passenger to benefit from those services.

   (see paras 25-28, 35, operative part 1)

2.  Articles 2(1) and the first and second subparagraph of 10(2) of Sixth Council Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, as amended by Directive 1999/59, then by Directive 2001/115, must be interpreted as meaning that the value added tax paid when the air ticket was purchased by a passenger who has not used it becomes chargeable on receipt of payment of the ticket price, whether by the airline itself, by a third party acting in its name and on its behalf, or by a third party acting in its own name but on behalf of the airline.

   (see para. 43, operative part 2)

3.  Articles 2(1) and 10(2) of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, as amended by Directive 1999/59, then by Directive 2001/115, must be interpreted as meaning that, in the event that a third party sells an airline’s tickets on behalf of that company in the context of a franchise agreement and pays that company, in respect of tickets issued and no longer valid, a lump sum calculated as a percentage of the annual turnover from the corresponding flight routes, that sum constitutes a sum that is taxable as consideration for those tickets.

   Under Article 21(1)(a) of the Sixth Directive and the amended Sixth Directive, it is the airline which performs the transport service that is the person liable to pay value added tax on the price of the ticket sold.

   If a third party acts in its own name and on behalf of the airline when the tickets were sold, the latter is required to pay the value added tax on the tickets.

   The lump sum paid by the third party to the airline in respect of tickets sold which are no longer valid cannot be regarded as a compensatory sum paid by the third party for harm suffered by the airline resulting from the fact that the ‘no-show’ passenger did not turn up at the time of boarding. That passenger pays the price of the transport service when the ticket is purchased. The airline performs the service it was required to perform solely by virtue of the fact that the passenger had the right to benefit from the fulfilment of the obligations under the contract to transport passengers by air.

   It follows that the ticket price retained by the airline constitutes remuneration for the transport service offered by the company to the customer, even where the latter does not use the service.

   In those circumstances, the lump sum is the remuneration received by the airline as consideration for tickets which were issued by the third party on behalf of that company, but which were not used by the purchasers. There is therefore a direct link between the performance of the services provided and the remuneration received in that regard.

   (see paras 45, 47-52, operative part 3)