Case C‑42/14

Minister Finansów

v

Wojskowa Agencja Mieszkaniowa w Warszawie

(Request for a preliminary ruling from the Naczelny Sąd Administracyjny)

‛Reference for a preliminary ruling — Taxation — Common system of value added tax — Letting of immovable property — Supply of electricity, heating, water and refuge collection — Agreements between the landlord and the suppliers of those goods and services — Supplies provided to the tenant considered to be provided by the landlord — Service charges — Determination of the taxable amount — Possibility of including service charges in the taxable amount of rental services — Transaction composed of a single supply or several independent supplies’

Summary — Judgment of the Court (Third Chamber), 16 April 2015

1. Harmonisation of tax legislation — Common system of value added tax — Supply of goods — Supply of services — Contract for the supply of electricity, heating, water and refuge collection in the context of the letting of immovable property — Supplies provided by third-party suppliers for the tenant — Supplies provided by the landlord

   (Council Directive 2006/112, Art. 14(1), 15(1) and 24(1))

2. Harmonisation of tax legislation — Common system of value added tax — Supply of services — Transactions comprising several elements — Transaction having to be regarded as a single supply — Criteria of determination

   (Council Directive 2006/112)

3. Harmonisation of tax legislation — Common system of value added tax — Supply of services — Transactions comprising several elements — Letting of immovable property — Supply of services linked to the letting of immovable property — Single transaction composed of distinct supplies — Conditions — Assessment by the national court

   (Council Directive 2006/112)

1.  Articles 14(1), 15(1) and 24(1) of Directive 2006/112 on the common system of value added tax, as amended by Directive 2009/162, must be interpreted as meaning that, in the context of the letting of immovable property, the provision of electricity, heating and water and refuse collection, provided by third-party suppliers for the tenant directly using those goods and services must be regarded as being supplied by the landlord where he has concluded agreements for the provision of those supplies and simply passes on the costs thereof to the tenant.

   (see para. 28, operative part 1)

2.  See the text of the decision.

   (see paras 30, 31)

3.  Directive 2006/112 on the common system of value added tax, as amended by Directive 2009/162, must be interpreted as meaning that the letting of immovable property and the provision of water, electricity and heating as well as refuse collection accompanying that letting must, in principle, be regarded as constituting several distinct and independent supplies which need to be assessed separately for VAT purposes, unless the elements of the transaction, including those indicating the economic reason for concluding the contract, are so closely linked that they form, objectively, a single, indivisible economic supply which it would be artificial to split.

   It is for the national court to make the necessary assessments taking into account all the circumstances of the letting and the accompanying supplies and, in particular, the content of the agreement itself.

   In order to determine whether the services supplied constitute independent services or a single service it is necessary to examine the characteristic elements of the transaction concerned.

   The elements which reflect the interests of the contracting parties, such as, for example, the way in which invoicing and pricing are carried out, may be taken into account to determine the characteristic elements of the transaction concerned. It needs to be assessed, in particular, whether, under the contract, the tenant and the landlord seek, above all, respectively, to obtain and let immovable property, and whether the fact that one party obtains other services provided by the other party is of only secondary importance to them, even if they are necessary for the enjoyment of the property.

   Accordingly, account should be taken of the following circumstances which make it possible to distinguish two main types of scenario.

   First, if the tenant has the right to choose his suppliers and/or the terms of use of the goods or services at issue, the supplies relating to those goods or services may, in principle, be considered to be separate from the letting. In particular, if the tenant can determine his own consumption of water, electricity or heating, which can be verified by the installation of individual meters and billed according to their consumption, supplies relating to those goods or services may, in principle, be considered to be separate from the letting. As regards services, such as the cleaning of the common parts of a building under joint ownership, such services should be regarded as separate from the letting if they can be organised by each tenant individually or by the tenants collectively and if, in all cases, the supply of those goods and services is itemised separately from the rent on invoices addressed to the tenant.

   In this scenario, the mere fact that the non-payment of rental charges allows the landlord to terminate the rental agreement does not prevent the services to which those charges relate from constituting services separate from the letting.

   Furthermore, the fact that the tenant has the right to obtain those services from the provider of his choice is also not in itself decisive, since the possibility that elements of a single supply may, in other circumstances, be supplied separately is inherent in the concept of a single composite transaction.

   Second, if an immovable property offered for letting appears objectively, from an economic point of view, to form a whole with the supplies that accompany it, they can be considered to constitute a single supply with the letting. The same may apply to the letting of turnkey offices, ready for use with the provision of utilities and certain other supplies, and the immovable property which is let for short periods, in particular for holidays or for professional reasons, and offered with those supplies, which are not separable from it.

   Moreover, if the landlord himself is not able to choose freely and independently, particularly of other landlords, the suppliers and the terms of use of the goods or services provided with the letting, the supplies at issue are generally inseparable from the letting and may also be regarded as forming a whole, and thereby a single supply, with the latter. This is particularly so where the landlord, who owns part of a multi-dwelling building is required to use suppliers designated by the co-proprietors collectively and to pay his share of the costs related to such supplies, which he then passes on to the tenant.

   In this second scenario, to separately assess for VAT purposes the provision of supplies for the letting would constitute an artificial split of a single economic transaction.

   (see paras 32, 37-44, 47, operative part 2)

Case C‑42/14

Minister Finansów

v

Wojskowa Agencja Mieszkaniowa w Warszawie

(Request for a preliminary ruling from the Naczelny Sąd Administracyjny)

‛Reference for a preliminary ruling — Taxation — Common system of value added tax — Letting of immovable property — Supply of electricity, heating, water and refuge collection — Agreements between the landlord and the suppliers of those goods and services — Supplies provided to the tenant considered to be provided by the landlord — Service charges — Determination of the taxable amount — Possibility of including service charges in the taxable amount of rental services — Transaction composed of a single supply or several independent supplies’

Summary — Judgment of the Court (Third Chamber), 16 April 2015

1. Harmonisation of tax legislation — Common system of value added tax — Supply of goods — Supply of services — Contract for the supply of electricity, heating, water and refuge collection in the context of the letting of immovable property — Supplies provided by third-party suppliers for the tenant — Supplies provided by the landlord

   (Council Directive 2006/112, Art. 14(1), 15(1) and 24(1))

2. Harmonisation of tax legislation — Common system of value added tax — Supply of services — Transactions comprising several elements — Transaction having to be regarded as a single supply — Criteria of determination

   (Council Directive 2006/112)

3. Harmonisation of tax legislation — Common system of value added tax — Supply of services — Transactions comprising several elements — Letting of immovable property — Supply of services linked to the letting of immovable property — Single transaction composed of distinct supplies — Conditions — Assessment by the national court

   (Council Directive 2006/112)

1.  Articles 14(1), 15(1) and 24(1) of Directive 2006/112 on the common system of value added tax, as amended by Directive 2009/162, must be interpreted as meaning that, in the context of the letting of immovable property, the provision of electricity, heating and water and refuse collection, provided by third-party suppliers for the tenant directly using those goods and services must be regarded as being supplied by the landlord where he has concluded agreements for the provision of those supplies and simply passes on the costs thereof to the tenant.

   (see para. 28, operative part 1)

2.  See the text of the decision.

   (see paras 30, 31)

3.  Directive 2006/112 on the common system of value added tax, as amended by Directive 2009/162, must be interpreted as meaning that the letting of immovable property and the provision of water, electricity and heating as well as refuse collection accompanying that letting must, in principle, be regarded as constituting several distinct and independent supplies which need to be assessed separately for VAT purposes, unless the elements of the transaction, including those indicating the economic reason for concluding the contract, are so closely linked that they form, objectively, a single, indivisible economic supply which it would be artificial to split.

   It is for the national court to make the necessary assessments taking into account all the circumstances of the letting and the accompanying supplies and, in particular, the content of the agreement itself.

   In order to determine whether the services supplied constitute independent services or a single service it is necessary to examine the characteristic elements of the transaction concerned.

   The elements which reflect the interests of the contracting parties, such as, for example, the way in which invoicing and pricing are carried out, may be taken into account to determine the characteristic elements of the transaction concerned. It needs to be assessed, in particular, whether, under the contract, the tenant and the landlord seek, above all, respectively, to obtain and let immovable property, and whether the fact that one party obtains other services provided by the other party is of only secondary importance to them, even if they are necessary for the enjoyment of the property.

   Accordingly, account should be taken of the following circumstances which make it possible to distinguish two main types of scenario.

   First, if the tenant has the right to choose his suppliers and/or the terms of use of the goods or services at issue, the supplies relating to those goods or services may, in principle, be considered to be separate from the letting. In particular, if the tenant can determine his own consumption of water, electricity or heating, which can be verified by the installation of individual meters and billed according to their consumption, supplies relating to those goods or services may, in principle, be considered to be separate from the letting. As regards services, such as the cleaning of the common parts of a building under joint ownership, such services should be regarded as separate from the letting if they can be organised by each tenant individually or by the tenants collectively and if, in all cases, the supply of those goods and services is itemised separately from the rent on invoices addressed to the tenant.

   In this scenario, the mere fact that the non-payment of rental charges allows the landlord to terminate the rental agreement does not prevent the services to which those charges relate from constituting services separate from the letting.

   Furthermore, the fact that the tenant has the right to obtain those services from the provider of his choice is also not in itself decisive, since the possibility that elements of a single supply may, in other circumstances, be supplied separately is inherent in the concept of a single composite transaction.

   Second, if an immovable property offered for letting appears objectively, from an economic point of view, to form a whole with the supplies that accompany it, they can be considered to constitute a single supply with the letting. The same may apply to the letting of turnkey offices, ready for use with the provision of utilities and certain other supplies, and the immovable property which is let for short periods, in particular for holidays or for professional reasons, and offered with those supplies, which are not separable from it.

   Moreover, if the landlord himself is not able to choose freely and independently, particularly of other landlords, the suppliers and the terms of use of the goods or services provided with the letting, the supplies at issue are generally inseparable from the letting and may also be regarded as forming a whole, and thereby a single supply, with the latter. This is particularly so where the landlord, who owns part of a multi-dwelling building is required to use suppliers designated by the co-proprietors collectively and to pay his share of the costs related to such supplies, which he then passes on to the tenant.

   In this second scenario, to separately assess for VAT purposes the provision of supplies for the letting would constitute an artificial split of a single economic transaction.

   (see paras 32, 37-44, 47, operative part 2)