Keywords
Summary

Keywords

1. Tax provisions Harmonisation of laws Turnover taxes Common system of value added tax Member States' option to apply a reduced rate to certain supplies of goods and services Transport of passengers and their accompanying luggage Definition Making available of road infrastructure on payment of a toll Excluded Application of a reduced rate to tolls for road infrastructure Not permissible

(Council Directive 77/388, Art. 12(3)(a) and Annex H, category 5)

2. Actions for failure to fulfil obligations Objective nature

(EC Treaty, Art. 169 (now Art. 226 EC))

3. Member States Obligations Failure to fulfil obligations Justification Principle of protection of legitimate expectations Reliance on the principle by a Member State to preclude a finding of failure to fulfil obligations Not permissible

(EC Treaty, Art. 169 (now Art. 226 EC))

Summary

1. It follows from Article 12(3)(a) of the Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes that the application of one or two reduced rates of value added tax is an option accorded to the Member States as an exception to the principle that the standard rate applies. Moreover, according to that provision, the reduced rates may be applied only to the supplies of goods and services specified in Annex H.

Consequently, the expression transport of passengers and their accompanying luggage in Annex H, category 5, of the Sixth Directive must be interpreted strictly, as an exception to the principle that the standard rate applies, and in accordance with the usual meaning of those words. The making available of road infrastructure to users on payment of a toll does not consist in the provision of a means of transport but in permitting users who have a vehicle to make a journey in better conditions. That activity cannot therefore be treated as an activity of transport of passengers and their accompanying luggage within the meaning of Annex H.

A Member State which applies a reduced rate of value added tax to the supply of services consisting in making road infrastructure available to users on payment of a toll therefore fails to fulfil its obligations under Article 12(3)(a) of the Sixth Directive.

( see paras 17-21 and operative part )

2. The procedure for a declaration of a failure on the part of a Member State to fulfil an obligation affords a means of determining the exact nature of the obligations of the Member States in case of differences of interpretation and is based on the objective finding that a Member State has failed to fulfil its obligations under the Treaty or secondary legislation.

( see para. 23 )

3. The principle of the protection of legitimate expectations, which is the corollary of the principle of legal certainty and is generally relied on by individuals (economic operators) in a situation where they have legitimate expectations created by the public authorities, cannot be relied on by a Member State, on the ground of the length of procedures for failure to fulfil obligations initiated by the Commission against other Member States, to preclude an objective finding of a failure on its part to fulfil its obligations under the Treaty or secondary legislation, since to admit that justification would run counter to the aim pursued by the procedure under Article 169 of the Treaty (now Article 226 EC).

( see paras 24-25 )