Keywords
Summary

Keywords

Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Member States’ right to apply a reduced rate to certain supplies of goods and services

(Council Directive 2006/112, Arts 96 and 98(1) and (2), and Annex III)

Summary

A Member State which makes the transportation of a body by vehicle subject to a reduced value added tax rate, which differs from the rate applicable to other supplies which may be made by undertakers, does not fail to fulfil its obligations under Articles 96 and 98(1) and (2) of Directive 2006/112 on the common system of value added tax.

When a Member State decides to make use of the opportunity given by Article 98(1) and (2) of Directive 2006/112 of applying a reduced rate of value added tax to a category of supply in Annex III to that directive, it may, subject to the requirement to observe the principle of fiscal neutrality inherent in the common system of value added tax, limit the application of that reduced rate to concrete and specific aspects of that category. Making use of that opportunity is subject to a twofold condition: first, it may isolate, for the purposes of the application of the reduced rate, only concrete and specific aspects of the category of supply at issue and, secondly, it must observe the principle of fiscal neutrality. Those conditions are intended to ensure that the Member States make use of that opportunity only on conditions ensuring the correct and straightforward application of the reduced rate chosen and the prevention of any possible evasion, avoidance or abuse. Since, first, the transportation of a body by vehicle constitutes a concrete and specific element in the supply of services by undertakers and since, second, similar supplies involving transportation of a body by vehicle, which may be in competition with those subject to a reduced rate, are not treated differently for value added tax purposes, legislation making the transportation of a body by vehicle subject to a reduced rate of value added tax fulfils the conditions required by Directive 2006/112.

(see paras 28, 30, 39, 42, 46)