Case C‑344/15

National Roads Authority

The Revenue Commissioners

(Request for a preliminary ruling from the Appeal Commissioners)

(Reference for a preliminary ruling — Common system of value added tax — Directive 2006/112/EC — Article 13(1), second subparagraph — Activity of managing road infrastructure and making it available on payment of a toll — Activities engaged in by a body governed by public law acting as a public authority — Presence of private operators — Significant distortions of competition — Existence of actual or potential competition)

Summary — Judgment of the Court (Sixth Chamber), 19 January 2017

Harmonisation of fiscal legislation — Common system of value added tax — Taxable persons — Bodies governed by public law — Treatment as non-taxable persons in respect of activities in which they engage as public authorities — Exceptions — Activities taxable in the event of significant distortions of competition — Scope — Activity of managing road infrastructure and making it available on payment of a toll — Presence of private operators — Excluded

(Council Directive 2006/112, Arts 2(1), 9 and 13(1), first and second paras)

The second subparagraph of Article 13(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that, in a situation such that in the main proceedings, a body governed by public law which carries on an activity consisting in providing access to a road on payment of a toll may not be regarded as competing with private operators who collect tolls on other toll roads pursuant to an agreement with the public law body concerned under national statutory provisions.

It should be recalled that the second subparagraph of Article 13(1) of the VAT directive provides for a limitation of the rule stated in the first subparagraph of that provision that bodies governed by public law are to be treated as non-taxable persons for VAT purposes in respect of the activities or transactions in which they engage as public authorities. That second subparagraph thus aims to restore the general rule set out in Article 2(1) and Article 9 of the directive, according to which any activity of an economic nature is in principle to be subject to VAT, and cannot therefore be construed narrowly (see, by analogy, judgment of 4 June 2009, SALIX Grundstücks-Vermietungsgesellschaft, C‑102/08, EU:C:2009:345, paragraphs 67 and 68). However, that cannot mean that the second subparagraph of Article 13(1) of the directive should be interpreted in such a way that the derogation from treatment as a taxable person for VAT laid down in the first subparagraph of Article 13(1) of the directive for bodies governed by public law acting as public authorities is deprived of effectiveness (see, to that effect, judgments of 20 November 2003, Taksatorringen, C‑8/01, EU:C:2003:621, paragraphs 61 and 62, and of 25 March 2010, Commission v Netherlands, C‑79/09, not published, EU:C:2010:171, paragraph 49).

As follows from the wording of the second subparagraph of Article 13(1) of the directive and from the case-law on that provision, its application presupposes, first, that the activity in question is carried on in competition, actual or potential, with that carried on by private operators and, secondly, that the different treatment of those activities for VAT purposes leads to significant distortions of competition, which must be assessed having regard to economic circumstances. It follows that the mere presence of private operators on a market, without account being taken of matters of fact, objective evidence or an analysis of the market, cannot demonstrate the existence either of actual or potential competition or of a significant distortion of competition.

(see paras 36, 37, 43, 44, 51, operative part)