C-106/05 L.u.P.

JUDGMENT OF THE COURT (Third Chamber)

8 June 2006 *

In Case C-106/05,

REFERENCE for a preliminary ruling under Article 234 EC from the Bundesfinanzhof (Germany), made by decision of 25 November 2004, received at the Court on 3 March 2005, in the proceedings

L.u.P. GmbH

v

Finanzamt Bochum-Mitte,

THE COURT (Third Chamber),

composed of A. Rosas, President of the Chamber, J. Malenovský, J.-P. Puissochet, U. Lõhmus and A. Ó Caoimh (Rapporteur), Judges,

* Language of the case: German.

Advocate General: M. Poiares Maduro, Registrar: M. Ferreira, Principal Administrator,

having regard to the written procedure and further to the hearing on 19 January 2006,

after considering the observations submitted on behalf of:

— L.u.P. GmbH, initially by R. Todtenhöfer and N. Bohn, tax advisors, and subsequently by W. Krieger, Rechtsanwalt,

— the Commission of the European Communities, by D. Triantafyllou, acting as Agent,

after hearing the Opinion of the Advocate General at the sitting on 7 March 2006,

gives the following

Judgment

Legal context and the dispute

1This reference for a preliminary ruling concerns the interpretation of Article 13A(1)(b) and (c) and (2)(a) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1) ('the Sixth Directive')·

2The reference was made in the context of proceedings between L.u.P. GmbH ('L.u. P.') and the Finanzamt Bochum-Mitte ('the Finanzamt') concerning the latters refusal to exempt from value added tax ('VAT') medical tests carried out by L.u.P. for companies operating laboratories with which are affiliated the general practitioners who prescribed those tests in the course of the care they provide.

Legal framework

Community legislation

3Article 13A(1)(b) and (c) of the Sixth Directive provide:

'1. Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of such exemptions and of preventing any possible evasion, avoidance or abuse:

(b) hospital and medical care and closely related activities undertaken by bodies governed by public law or, under social conditions comparable to those applicable to bodies governed by public law, by hospitals, centres for medical treatment or diagnosis and other duly recognised establishments of a similar nature;

(c) the provision of medical care in the exercise of the medical and paramedical professions as defined by the Member State concerned.'

4The third indent of Article 13A(2)(a) of the same directive provides:

'(2)(a) Member States may make the granting to bodies other than those governed by public law of each exemption provided for in (1)(b) ... subject in each individual case to one or more of the following conditions:

— [the bodies in question] shall charge prices approved by the public authorities or which do not exceed such approved prices or, in respect of those services not subject to approval, prices lower than those charged for similar services by commercial enterprises subject to value added tax'.

National legislation

5The legislation pertaining to turnover tax (Umsatzsteuergesetz 1980/1993 (Law on Turnover Tax, 'the UStG') provides, in the first sentence of Paragraph 4(14), that 'activities arising from the practice of the profession of doctor, dentist, lay medical L.UP.

practitioner, physiotherapist, midwife or similar professional medical activity for the purposes of Paragraph 18(1)(1) of the Einkommensteuergesetz [Law on Income Tax] or from the practice of the profession of clinical chemist' are exempt from tax.

6According to the national court, a medical laboratory in the form of a private limited company (Gesellschaft mit beschränkter Haftung) may fall within that provision. According to the Bundesverfassungsgericht (Federal Constitutional Court), the principle of equal treatment precludes turnover tax exemptions from being determined solely on the basis of an undertaking's legal status.

7Paragraph 4(16)(c) of the UStG provides:

'The following transactions covered by Paragraph 1(1)(1) to 1(1)(3) are exempt:

16. activities closely linked with the operation of hospitals, diagnostic clinics and other bodies providing medical care, diagnoses or tests ... , where:

(c) in the case of diagnostic clinics and other establishments providing medical care, diagnoses or tests, the services are provided under medical supervision and in the previous calendar year at least 40% of the services were provided to the persons specified in subparagraph (15)(b)'.

8The persons referred to in the latter provision are persons insured by a social security authority, persons in receipt of social assistance and persons entitled to a retirement pension (or war victims).

The dispute in the main proceedings and the questions referred for a preliminary ruling

9L.u.P. is a private limited company under German law whose sole shareholder is Dr Scharmann, a pathologist. It carries out medical tests, inter alia, for companies operating laboratories with which are affiliated the general practitioners who prescribed those tests as part of the care they provide.

10The Finanzamt found that those services were subject to VAT.

11The Finanzamtes decision was upheld by the Finanzgericht on the grounds, first, that although L.u.P. is an 'other bod[y] providing medical... tests' within the meaning of Paragraph 4(16) of the UStG, the services in question were not provided 'under medical supervision' within the meaning of that provision and, second, that L.u.P. did not establish that, for each of the previous calendar years at least 40% of its services had been provided to persons specified in Paragraph 4(15)(b) of the UStG. L. U. P.

12L.u.P. brought an appeal on a point of law ('Revision') against that decision before the Bundesfinanzhof.

13In its order for reference, the Bundesfinanzhof finds that the Finanzgericht was correct in finding that the services in question were not exempt under Paragraph 4(16)(c) of the UStG, since it has been established that those services were not provided in sufficient proportion to persons specified in Paragraph 4(15).

14That court does, however, express doubts, first, as to whether the services in question must be regarded as being 'closely related activities' to 'medical care' provided by 'hospitals' within the meaning Article 13A(1)(b) of the Sixth Directive or as being 'the provision of medical care in the exercise of the medical and paramedical professions' within the meaning of Article 13A(1)(c) ofthat directive.

15The Bundesfinanzhof states, first, that whilst medical tests assist in the diagnosis of patients and could thus be regarded as medical care within the meaning of Article 13A(1)(c) of the Sixth Directive, the laboratories carrying out those tests do not generally provide their services in the context of a relationship of trust, which precludes application of the exemption provided for in that provision (Case C-141/00 Kügler [2002] ECR I-6833, paragraph 35). That court states, second, that, although Case C-76/99 Commission v France [2001] ECR I-249, paragraph 20, indicates that medical tests are, in the Court of Justice's view, activities closely related to medical care within the meaning of Article 13A(1)(b) of that directive, the services of doctors who have prescribed those tests are, in its view, exempt under Article 13A(1)(c) of that same directive. The latter provision does not, however, apply to activities closely related to medical care.

16According to the national court, if the services in question are exempt under Article 13A(1)(c) of the Sixth Directive, then Paragraph 4(16)(c) of the UStG does not properly transpose the provisions of that directive. Moreover, if those services fall within the scope of Article 13A(1)(b) of that directive, it queries whether the exemption of activities closely related to hospital and medical care may be refused on the basis of the conditions laid down in that paragraph and in paragraph (2) of that article, whereas the medical care itself is exempt even if it does not fulfil those conditions. The wording of Article 13A(1)(b) allows for that interpretation, but the condition laid down in that provision regarding eligible centres for treatment could also be interpreted as covering only hospital and medical care and not activities closely related thereto. Moreover, access to medical and hospital care would be made more difficult if more stringent requirements were applied to the exemption of activities closely related to that care. That situation would also be contrary to the principle of fiscal neutrality, as hospitals and other centres for medical treatment and diagnosis would be placed at a fiscal disadvantage if they did not carry out their medical tests themselves.

17In those circumstances, the Bundesfinanzhof decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling:

'Do the provisions of Article 13A(1)(b) and (2) of the [Sixth Directive] allow for the tax exemption for medical laboratory tests ordered by general practitioners to be made subject to the conditions specified in those provisions, even where medical care by such practitioners is exempt from taxation in any event?'

Grounds

The question referred

18By its question, the national court seeks to determine the conditions which, under Article 13A of the Sixth Directive, may be imposed on the granting of the VAT exemption for medical tests carried out by laboratories governed by private law outside a centre for treatment on prescription from a general practitioner.

19In order to answer that question, it is appropriate to determine first whether, as the national court assumes, that provision, like the national legislation at issue here, actually allows Member States to exempt such medical tests and, if so, which conditions may be imposed on that exemption.

The exemption of the services at issue in the main proceedings

20As observed by the national court, services of a medical nature may come within the exemptions provided for in Article 13A(1)(b) and (c) of the Sixth Directive.

21According to Article 13A(1)(b) of that directive, Member States are to exempt, inter alia, medical care and closely related activities undertaken by bodies governed by public law or, under social conditions comparable to those applicable to those bodies, by hospitals, centres for medical treatment or diagnosis and other duly recognised establishments of a similar nature. Article 13A(1)(c) provides for exemption for the provision of medical care in the exercise of the medical and paramedical professions as defined by the Member State concerned.

22According to the Court's case-law, the criterion for drawing a clear distinction between those two tax exemptions is less the nature of the service than the place where it is provided. Article 13A(1)(b) of the Sixth Directive exempts services encompassing a range of medical care in establishments pursuing social purposes such as the protection of human health, whereas letter (c) of the same provision exempts services provided outside hospitals, be they provided at the service provider's private residence, the patient's residence or at any other location (see, to that effect, Case 353/85 Commission v United Kingdom [1988] ECR 817, paragraphs 32 and 33; Kügler, paragraphs 35 and 36; and Case C-45/01 Dornier [2003] ECR I-12911, paragraph 47).

The nature of the services at issue in the main proceedings

23In the present case, although the national court, in its order for reference, as well as L.u.P. and the Commission of the European Communities, in their written observations, seem to agree that medical tests such as those at issue in the main proceedings may be activities 'closely related' to 'medical care' within the meaning of Article 13A(1)(b) of the Sixth Directive, it should be ascertained whether those tests nevertheless may be 'medical care' within the meaning of that provision or 'the provision of medical care' within the meaning of letter (c) of the same article. If that is so, those tests will be exempt under the Sixth Directive, irrespective of where they are carried out, even though the latter provision does not explicitly provide for exemption of activities closely related to medical care (see Dornier, paragraph 47).

24According to the Court's case-law, the exemptions envisaged in Article 13 of the Sixth Directive are to be interpreted strictly since they constitute exceptions to the general principle that VAT is to be levied on all supplies of services for consideration by a taxable person. However, the interpretation of the terms used in that provision must be consistent with the objectives pursued by those exemptions and comply with the requirements of the principle of fiscal neutrality inherent in the common system of VAT (Dormer, paragraph 42; and Case C-498/03 Kingscrest Associates and Montecello [2005] ECR I-4427, paragraph 29).

25As the Court has previously held, the exemptions provided for in Article 13A(1)(b) of the Sixth Directive and letter (c) of the same provision both have the objective of reducing the cost of health care (Dornier, paragraph 43; and Case C-307/01 D'Ambrumenil and Dispute Resolution Services [2003] ECR I-13989, paragraph 58).

26Regarding services of a medical nature, the case-law is to the effect that the term 'medical care' in Article 13A(1)(b) of the Sixth Directive must be interpreted as covering all provisions of medical care envisaged in letter (c) of the same provision (Dornier, paragraph 50), since those two provisions are intended to regulate all exemptions of medical services in the strict sense (Kügler, paragraph 36).

27It follows that the concept of 'medical care' in Article 13A(1)(b) of the Sixth Directive and that of 'the provision of medical care' in letter (c) of the same provision are both intended to cover services which have as their purpose the diagnosis, treatment and, in so far as possible, cure of diseases or health disorders (see, to that effect, Dornier, paragraph 48).

28In the present case, the national court expresses doubts as to whether medical tests such as those at issue in the main proceedings do constitute such care, although it acknowledges that those tests assist in the diagnosis of diseases. The Commission maintains that, on a functional and teleological interpretation of the relevant provisions of the Sixth Directive, a laboratory carrying out such tests cannot be equated with a centre for diagnosis because those tests serve merely to establish the diagnosis and, on a systematic interpretation of those same provisions, those tests could be viewed as being medical care because they serve to establish the diagnosis and are an integral part thereof.

29It should be borne in mind that, whilst 'medical care' and 'the provision of medical care' must have a therapeutic aim, it does not necessarily follow that the therapeutic purpose of a service must be confined within a particularly narrow compass. The Court's case-law is to the effect that medical services effected for prophylactic purposes may benefit from the exemption under Article 13A(1)(c) of the Sixth Directive. Even in cases where it is clear that the persons who are the subject of examinations or other medical interventions of a prophylactic nature are not suffering from any disease or health disorder, the inclusion of those services within the meaning of 'medical care' and 'the provision of medical care' is consistent with the objective of reducing the cost of healthcare, which is common to both the exemption under Article 13A(1)(b) and that under (c) of that paragraph. Accordingly, medical services effected for the purpose of protecting, including maintaining or restoring, human health may benefit from the exemption under Article 13A(1)(b) and (c) of that directive (see, to that effect, Case C-212/01 Unterpertinger [2003] ECR I-13859, paragraphs 40 and 41; and D'Ambrumenil and Dispute Resolution Services, paragraphs 58 and 59).

30Moreover, medical tests which, as in the present case, are prescribed by general practitioners as part of the care they provide may contribute towards maintaining human health because, like any medical service effected for prophylactic purposes, they allow for the observation and examination of patients before it becomes necessary to diagnose, care for or heal a potential illness.

31In those circumstances, as maintained by L.u.P. at the hearing, and as acknowledged as being possible by the national court and the Commission, the Court finds that, in the light of the objective of reducing healthcare costs pursued by the abovementioned exemptions, medical tests such as those at issue in the main proceedings, which have as their purpose the observation and examination of patients for prophylactic purposes, may constitute 'medical care' within the meaning of Article 13A(1)(b) of the Sixth Directive or 'the provision of medical care' within the meaning of letter (c) of the same paragraph (see, to that effect, Commission v France, paragraph 30).

32This interpretation is, moreover, consistent with the principle of fiscal neutrality, which precludes treating similar supplies of services, which are thus in competition with each other, differently for VAT purposes (Case C-109/02 Commission v Germany [2003] ECR I-12691, paragraph 20; and Kingscrest Associates and Montecello, paragraph 54). It would be contrary to that principle to make medical tests prescribed by general practitioners subject to a different VAT scheme depending on where they are carried out when they are equivalent from a qualitative point of view in the light of the professional qualifications of the service providers in question (see, to that effect, Dornier, paragraph 49; and Joined Cases C-443/04 and C-444/04 Solleveld and van den Hout-van Eijnsbergen [2006] ECR I-3617, paragraphs 40 and 41).

The type of establishments providing the services at issue in the main proceedings

33In the present case, the order for reference indicates that the medical tests at issue in the main proceedings are carried out outside the surgery of the general practitioner who prescribed them. In those circumstances, it is appropriate to ascertain whether those tests may come within the scope of Article 13A(1)(b) of the Sixth Directive.

34According to the Commission, a laboratory such as that at issue in the main proceedings is not a hospital or a 'centre for medical treatment or diagnosis' within the meaning of Article 13A(1)(b) of the Sixth Directive. Nor is it another establishment 'of a similar nature' because the scheme of that provision refers to establishments equipped with a fully-developed organisational structure. Lastly, it cannot be regarded as being a centre for diagnosis because the tests serve merely to enable a diagnosis to be made.

35That line of argument cannot be accepted. As the medical tests, in the light of their therapeutic purpose, come within the concept of 'medical care' as referred to in Article 13A(1)(b) of the Sixth Directive, a laboratory such as that at issue in the main proceedings must be regarded as being an establishment 'of a similar nature' as the 'hospitals' and the 'centres for medical treatment or diagnosis' within the meaning of that provision.

36Furthermore, as indicated in paragraphs 31 and 32 of this judgment, both the objective of reducing health care costs contemplated in Article 13A(1)(b) and (c) of the Sixth Directive and the principle of fiscal neutrality preclude medical tests from being subject to a different VAT scheme depending on where they are carried out when they are equivalent from a qualitative point of view in the light of the professional qualifications of the service providers in question.

37The Commission's argument that it follows from the case-law concerning exemptions that activities carried out upstream from those provided by the ultimate service provider are not exempt (Case 107/84 Commission v Germany [1985] ECR 2655, paragraph 20; Case C-240/99 Skandia [2001] ECR I-1951, paragraphs 40 and 41; Case C-235/00 CSC Financial Services [2001] ECR I-10237, paragraphs 39 and 40; and Case C-472/03 Arthur Andersen [2005] ECR I-1719, paragraph 39), so that only medical tests carried out by laboratories on behalf of patients in the context of a direct contractual relationship with those patients comes within the scope of Article 13A(1)(b) of the Sixth Directive, must also be rejected, as that case-law relates to the interpretation of other exemptions, the wording and objectives of which are different from those pursued by that provision (see, to that effect, Case 107/84 Commission v Germany, paragraph 13).

38The Court has held previously with respect to the exemption of samples taken by laboratories for the purpose of medical analysis that it is irrelevant, for the application of Article 13A(1)(b) of the Sixth Directive, whether the laboratory which takes the sample also carries out the analysis, or subcontracts it to another laboratory but remains responsible to the patient for the analysis, or, because of the nature of the analysis at issue, is obliged to send the sample to a specialised laboratory (Commission v France, paragraph 28). Likewise, paragraph 67 of D'Ambrumenil and Dispute Resolution Services indicates that medical checks intended principally to enable the prevention or detection of illness or the monitoring of the health of workers or insured persons may satisfy the conditions for exemption under Article 13A(1)(c) of the Sixth Directive, even if they take place at the request of third parties.

39It thus follows that medical tests carried out by a laboratory governed by private law, such as the one at issue in the main proceedings, which have as their purpose the observation and examination of patients for prophylactic purposes, may come within the exemption for medical care provided for in Article 13A(1)(b) of the Sixth Directive.

40Accordingly, it is appropriate to consider the conditions which that provision may impose on such an exemption.

The conditions for exemption

41Under Article 13A(1)(b) of the Sixth Directive, laboratories governed by private law, such as the one at issue in the main proceedings, which come within the concept of 'other ... establishments of a similar nature' provided for in that provision, must, in order to be exempt, be 'duly recognised'.

42As has been held previously, Article 13A(1)(b) of the Sixth Directive does not specify the conditions and procedures for that recognition. It is thus, in principle, for the national law of each Member State to lay down the rules according to which such recognition may be granted to establishments which request it. The Member States enjoy a discretion in this regard (Dornier, paragraphs 64 and 81).

43Moreover, under Article 13A(2)(a) of the Sixth Directive, Member States may make the grant of the exemption provided for in Article 13A(1)(b) to bodies other than those governed by public law subject to one or more of the conditions referred to therein (see, to that effect, Dornier, paragraph 65). Those optional conditions may also be imposed freely and additionally by Member States for the grant of that exemption (see, to that effect, Kingscrest Associates and Montecello, paragraph 38).

44According to the wording of the question referred for a preliminary ruling, the national court inquires as to whether those provisions allow for the exemption of medical tests such as those at issue in the main proceedings to be made subject to conditions to which care provided by the general practitioners who prescribed those tests is not subject in order to qualify for the exemption.

45Suffice it to note that the wording of Article 13A(2) of the Sixth Directive makes it clear that the conditions laid down in letter (a) thereof may be applied only to medical services coming within Article 13A(1)(b) and not to care exempt under Article 13A(1)(c). The latter provision, moreover, makes the exemption of that care contingent not on the public law status of the care-providing organisation or establishment or its recognition by the Member State concerned, but on the condition that that care must be provided in the exercise of the medical and paramedical professions as defined in national legislation (Solleveld and van den Hout-van Eijnsbergen, paragraph 23).

46It is thus inherent in those provisions that the exemption of medical tests may be made subject to conditions which are not imposed with respect to the doctors who prescribed those tests.

47Moreover, and contrary to the suggestion made by the national court, it follows from both the discretion conferred on the Member States for the recognition of establishments governed by private law for the purposes of application of Article 13A(1)(b) of the Sixth Directive and from Article 13A(2)(a) thereof, which does not require the Member States to impose the conditions laid down therein but rather allows them to impose such conditions on a case-by-case basis, that those same States may, in principle, make the exemption of medical tests as medical care subject to conditions other than those used for the exemption of activities closely related to such care.

48However, it is also clear from the case-law that it is for the national courts to examine whether the Member States, in imposing such conditions, have observed the limits of their discretion in applying Community principles, in particular the principle of equal treatment (see, to that effect, Dornier, paragraph 69; Kingscrest Associates and Montecello, paragraph 52; and Solleveld and van den Hout-van Eijnsbergen, paragraph 36).

49In the present case, the order for reference indicates that the exemption of medical tests carried out by a laboratory such as that at issue in the main proceedings is subject to two conditions under national law: first, they must be provided under the supervision of a doctor and, second, at least 40% of those services must relate to persons insured by a social security authority.

50It may be stated at the outset that compliance with the principle of fiscal neutrality requires, first, that all of the categories of establishments governed by private law referred to in Article 13A(1)(b) of the Sixth Directive be subject to the same conditions for the purpose of their recognition for the provision of similar services. In the present case, therefore, it is for the national court to ascertain whether the national legislation complies with that requirement or whether, on the contrary, it restricts the application of the conditions in question to certain types of establishments whilst excluding others.

51Next, in so far as the national legislation makes the exemption of medical care such as that at issue in the main proceedings subject to those conditions, which it is for the national court to determine, it should be borne in mind that the Court has held previously that the condition requiring that the treatment be provided under medical supervision, in so far as it is intended to preclude the exemption from applying to treatment given under the sole responsibility of members of paramedical professions, goes beyond the limits of the discretion allowed to the Member States under Article 13A(1)(b) of the Sixth Directive. The term 'medical care' in that provision covers not only treatment provided directly by doctors or other health professionals under medical supervision, but also paramedical services given in hospitals under the sole responsibility of persons who are not doctors (Dornier, paragraph 70).

52It follows that, for the purposes of the exemption provided for in Article 13A(1)(b) of the Sixth Directive, a Member State may not validly make recognition of establishments governed by private law subject to a condition requiring that the tests carried out by those establishments be done under medical supervision (see, to that effect, Dornier, paragraphs 71 and 82).

53As to the second condition, it is also apparent from the case-law that, in order to determine whether establishments governed by private law may be recognised for the purpose of the application of the exemption provided for in Article 13A(1)(b) of the Sixth Directive, the national authorities may, in accordance with Community law and subject to review by the national courts, take into consideration, inter alia and in addition to the public interest of the activities of the taxable person in question and the fact that other taxable persons carrying on the same activities already have similar recognition, the fact that the costs incurred for the treatment in question may be largely met by health insurance schemes or other social security bodies (Dornier, paragraphs 72 and 73).

54Accordingly, in requiring, for the purpose of recognition as laboratories governed by private law for the application of that exemption, that at least 40% of the medical tests carried out by the laboratories concerned must be intended for persons insured by a social security authority, the Member State in question did not go beyond the limits of the discretion allowed to it by that provision.

55In the light of the foregoing, the answer to the question referred must be as follows:

— Article 13A(1)(b) of the Sixth Directive is to be interpreted as meaning that medical tests which have as their purpose the observation and examination of patients for prophylactic purposes, carried out, like those at issue in the main proceedings, by a laboratory governed by private law outside a centre for treatment on prescription from general practitioners, may come within the exemption provided for by that provision as medical care provided by another duly recognised establishment of a similar nature within the meaning of that provision.

— Article 13A(1)(b) and (2)(a) of that directive does not preclude national legislation which makes the exemption of such medical tests subject to conditions which, first, do not apply to the exemption of care provided by the general practitioners who prescribed them and, second, are different from those applicable to closely related activities to medical care within the meaning of the first-mentioned provision.

— Article 13A(1)(b) of the same directive precludes national legislation which makes the exemption of medical tests carried out by a laboratory governed by private law outside a centre for treatment subject to the condition that they be carried out under medical supervision. However, that provision permits such legislation to make the exemption of those tests subject to the condition that at least 40% of those services must be intended for persons insured by a social security authority.

Costs

56Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds, the Court (Third Chamber) hereby rules:

Article 13A(1)(b) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment is to be interpreted as meaning that medical tests which have as their purpose the observation and examination of patients for prophylactic purposes, carried out, like those at issue in the main proceedings, by a laboratory governed by private law outside a centre for treatment on prescription from general practitioners, may come within the exemption provided for by that provision as medical care provided by another duly recognised establishment of a similar nature within the meaning of that provision.

Article 13A(1)(b) and (2)(a) of that directive does not preclude national legislation which makes the exemption of such medical tests subject to conditions which, first, do not apply to the exemption of care provided by the general practitioners who prescribed them and, second, are different from those applicable to closely related activities to medical care within the meaning of the first-mentioned provision.

Article 13A(1)(b) of the same directive precludes national legislation which makes the exemption of medical tests carried out by a laboratory governed by private law outside a centre for treatment subject to the condition that they be carried out under medical supervision. However, that provision permits such legislation to make the exemption of those tests subject to the condition that at least 40% of those services must be intended for persons insured by a social security authority.

[Signatures]

OPINION OF ADVOCATE GENERAL

POIARES MADURO delivered on 7 March 2006 1

Introduction

1In the present reference for a preliminary ruling, the Bundesfinanzhof (Federal Finance Court), Germany, refers to the Court of Justice a question on the interpretation of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment 2 (the 'Sixth Directive').

2More specifically, the question relates to the interpretation of Article 13A(1)(b) and (c) and (2) of the Sixth Directive, in order to determine the conditions that Member States may impose for exemption from value added tax ('VAT') of medical tests provided by a private external laboratory and ordered by a medical practitioner.

1 — Original language: Portuguese.

2 — OJ 1977 L 145, p. 1.

I — Facts, relevant law, and question referred to the Court of Justice

3L.u.P. GmbH ('L.u.P.') is a private limited company incorporated under German law in which the sole shareholder is Dr Ingo Scharmann, a specialist in laboratory medicine. L.u.P. conducted medical tests requested by two laboratory associations in which general practitioners were partners. These latter ordered the tests as part of their medical-care provision.

4The Finanzamt (Tax Office) Bochum-Mitte ('Finanzamt') treated L.u.P.'s services to the laboratory associations as liable to VAT. The decision to refuse exemption from VAT was confirmed by the Finanzgericht (Finance Court) because, under Paragraph 4(16)(c) of the Umsatzsteuergesetz (Law on Turnover Tax) ('the UStG') 1980/93, although L.u.P. was one of the 'other bodies providing ... clinical results', its services were not, to the extent required, performed 'under medical supervision'. Furthermore, L.u.P. had not proved that, in the previous calendar year, at least 40% of its services were provided to the class of persons benefiting from Paragraph 4(15)(b) of the UStG.

5Paragraph 4(16)(c) of the UStG provides that:

'Amongst the transactions referred to in Paragraph 1(1)(1) to (3), transactions that are closely connected with the operation of hospitals, diagnostic clinics and other establishments providing medical care, diagnoses or tests shall be exempt ... if ...

(c) in the case of diagnostic clinics and other establishments providing medical care, diagnoses or tests, the services are provided under medical supervision and in the previous calendar year at least 40% of the services are provided to the persons specified in subparagraph (15)(b) ...'

6The persons specified in this latter provision are persons insured (by a social security authority), persons in receipt of social assistance and persons entitled (as war victims) to maintenance (paid by a social security authority).

7The first sentence of Paragraph 4(14) of the UStG provides that 'activities arising from the practice of the profession of doctor, dentist, lay medical practitioner, physiotherapist, midwife or similar professional medical activity for the purposes of Paragraph 18(1)(1) of the Einkommensteuergesetz [Law on Income Tax] or from the practice of the profession of clinical chemist' are exempt from tax.

8According to the Bundesfinanzhof, it is possible that a medical laboratory having the legal status of a private limited company may also fall within the scope of the tax exemption provided for in Paragraph 4(14) of the UStG because, according to the Bundesverfassungsgericht (Federal Constitutional Court), the principle of equal treatment precludes any difference whatever in treatment regarding exemption from VAT where that is determined solely according to the undertaking's legal status.

9L.u.P. appealed against the decision of the Finanzgericht to the Bundesfinanzhof which, in turn, decided to refer the following question to the Court of Justice:

'Do the provisions of Article 13A(1)(b) and (2) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment allow for the tax exemption for medical laboratory tests ordered by general practitioners to be made subject to the conditions specified in those provisions, even where medical care by such practitioners is exempt from taxation in any event?'

10In this question, the Court of Justice is asked to interpret the Sixth Directive and, in particular, Article 13A(1), which provides:

'Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of such exemptions and of preventing any possible evasion, avoidance or abuse:

(b) hospital and medical care and closely related activities undertaken by bodies governed by public law or, under social conditions comparable to those applicable to bodies governed by public law, by hospitals, centres for medical treatment or diagnosis and other duly recognised establishments of a similar nature;

(c) the provision of medical care in the exercise of the medical and paramedical professions as defined by the Member State concerned;

11Under Article 13A(2)(a) of the Sixth Directive, Member States may make the granting to bodies other than those governed by public law of the exemptions provided for in paragraph (1)(b) subject in each individual case 'to the fulfilment of one or more of the' conditions which it then states.

II — Analysis

12The Court of Justice has already interpreted the requirements of the Sixth Directive which are the basis of the present reference from the Bundesfinanzhof for a preliminary ruling. In any event, the Court has not yet specifically considered exactly how supplies of medical-test services fit within Article 13A(1) of the Sixth Directive, or on what terms Member States may exempt tests performed in circumstances as those in the present case.

13Firstly, it must be determined whether such tests can be exempted from VAT. For

3 — These conditions are as follows: '— ... [the bodies in question] shall not systematically aim to make a profit, but any profits nevertheless arising shall not be distributed, but shall be assigned to the continuance or improvement of the services supplied; — they shall be managed and administered on an essentially voluntary basis by persons who have no direct or indirect interest, cither themselves or through intermediaries, in the results of the activities concerned; — they shall charge prices approved by the public authorities or which do not exceed such approved prices or, in respect of those services not subiect to approval, prices lower than those charged for similar services by commercial enterprises subject to value added tax; — exemption of the services concerned shall not be likely to create distortions of competition such as to place at a disadvantage commercial enterprises liable to value added tax'. that, it has to be established whether they match any of the categories set out in Article 13A(l)(b) ('subparagraph (b)') or in Article 13A(l)(c) ('subparagraph (c)') of the Sixth Directive. Then, to the extent that the test services in question are included in either of those subparagraphs, I shall consider the problem of determining the conditions which Member States may attach to such exemption.

A — Classification of the medical-test services provided by L.u.P.

14It must be established, firstly, whether medical tests such as those in question in the present case may be classified as 'medical care' or as activities 'closely related' to m e d i c al care, as laid down in subparagraph (b).

15It must be noted here that the Court has consistently held that the exemptions provided for in subparagraphs (b) and (c) are based upon independent concepts of Community law whose purpose is to avoid divergences in the application of the VAT 4 system. Furthermore, 'the terms used to

4 — See. more recently, Joined Cases C-394/04 and C-395/04 Ygeta [2005] ECR I-10373, paragraph 15, and also Case C-349/96 CPP [1999] ECR I-973, paragraph 15, and Case 348/87 Stichting Uitvoering Financíele Acties [19891 ECR 1737, paragraph 11.

specify the exemptions envisaged by Article 13 of the Sixth Directive are to be interpreted strictly since they constitute exceptions to the general principle that turnover tax is levied on all services supplied for consideration by a taxable person'. 5

16Therefore, in order to determine which supplies may be exempted pursuant to those subparagraphs, one must consider the rationale of the VAT-exemption rules laid down in subparagraphs (b) and (c). It is established in that respect that the objective shared by the exemptions laid down in subparagraph (b) and those in subparagraph (c) is to reduce the cost of medical care and to make that care more accessible to individuals. 6 In the context of that rationale, the problem which arises is not so much whether medical-test services, in general, can be exempted pursuant to either of these subparagraphs but rather which specific scheme of exemption they will be subject to.

17It is necessary to determine whether medical-test services must be classified as falling within any of the categories of subparagraph (b) or of subparagraph (c). In reality, not only does the scope of subparagraph (c) not include transactions closely connected with medical care but Member States may also, where the service providers concerned are not bodies governed by public law, opt to make the grant of exemption as permitted in subparagraph (b), unlike subparagraph (c), subject to specified conditions pursuant to Article 13A(2).

18In resolving the specific problem of how medical-test services fit within subparagraph (b) or subparagraph (c), consideration of the general intention underlying both subparagraphs is not sufficient of itself. That only makes it possible to state, as the Court has already said, that the terms used in subparagraphs (b) and (c) do not call for 'an especially narrow interpretation'. 7

19Regarding the possibility of applying subparagraph (b), firstly it must be determined whether the medical-test services in question are an integral part of 'medical care' within the meaning of that subparagraph. It is then necessary to determine whether 5 — Ygeia, paragraph 15, and Stichting Uitvoering Financiële Acties, paragraph 13.

6 — Case C-45/01 Dormer [2003) ECR I-12911, paragraph 43: Case C-76/99 Commission v France [2001] ECR I-249, paragraph 23; and Case C-141/00 Kügler [2002] ECR I-6833, paragraph 29.

7 — Commission v France, paragraph 23, and Dormer, paragraph 48.

medical-test laboratories such as L.u.P. may be covered by that subparagraph where it refers to 'hospitals, centres for medical treatment or diagnosis and other duly recognised establishments of a similar nature'.

20On the first aspect, the Court has already had occasion to rule on a similar question in its judgment in Commission v France. The point there was to determine whether transmitting samples to a laboratory which would subsequently perform the medical tests was subject to the exemption rules laid down in subparagraph (b). The Court held that 'the taking of the sample and the transmission of the sample to a specialised laboratory constitute services which are closely related to the analysis, so that they must be treated in the same way as the analysis for fiscal purposes and, accordingly, must not be subject to VAT,' 8 for they are activities closely connected with medical care, pursuant to subparagraph (b). According to the Court, the supplies of medical tests themselves therefore fell within subparagraph (b).

21As the judgment in Commission v France shows, for an activity to fall within the exemptions in subparagraph (b), it is crucial

8 — Commission v France, paragraph 30 to consider the purpose of the activity. 9 The Court has also ruled, and in the same way, in respect of subparagraph (c) that 'it is the purpose of a medical service which determines whether it should be exempt from 10 VAT'.

22The Court has held, therefore, that the 'medical-care' services referred to in subparagraph (b), and the 'provision of medical care' in subparagraph (c) are any 'for the purpose of diagnosing, treating and, in so far as possible, curing diseases or health disorders'. 11 This means that, in order to be exempt under both subparagraphs (b) and (c), the service concerned must have a 2 therapeutic aim. 1

23It must also be pointed out that, more recently, in particular in the judgments in Unterpertinger and in D'Ambrumenil and Dispute Resolution Services, on the application of subparagraph (c), the Court has explained that, because the therapeutic aim

9 — See Commission v France, paragraph 24, noting the need to consider 'the purpose for which those samples are taken', and Ygeia, paragraph 22.

10 — Case 0212/01 Unterpertinger |2003] ECR I-13859, paragraph 42. and the Opinion of Advocate General Stix-Hackl in that case, in points 66 to 68, to which the judgment expressly refers.

11 —Dormer, paragraph 48. Case C-384/98 D [20001 ECR I - 6795, paragraph 18; Kugler, paragraph 38; and, most recently, Ygeia, paragraph 24.

12 — D. paragraph 19; Kugler, paragraph 39; Unterpertinger, paragraph 40; and Case C-307/01 D'Ambrumenil and Dispute Resolution Services |2003] ECR I-13989, paragraph 58.

must not be confined within an especially narrow compass, medical services for pro 13 phylactic purposes may also be exempt: 'Even in cases where it is clear that the persons who are the subject of examinations or other medical interventions of a prophylactic nature are not suffering from any disease or health disorder, the inclusion of those services within the meaning of 'provision of medical care' is consistent with the objective of reducing the cost of healthcare, which is common to both the exemption under Article 13A(1)(b) and that under (c) of 14 that paragraph.'

24I see nothing to justify a departure from the Court's uniform and consistent reading of these two subparagraphs, as regards the nature of the activities they include. The Court's interpretation of 'provision of medical care in the exercise of the medical ... professions' as set out in subparagraph (c) must therefore correspond to the interpretation of 'medical care' in subparagraph (b). On this I would note that the Court has expressly ruled that the concept of 'medical care' as set out in subparagraph (b) covers all

13 — Unterpertinger, paragraph 40, and D'Ambrumenil and of the 'provision of medical care' as shown in 15 subparagraph (c). And, further, both subparagraphs are intended 'to regulate all exemptions of medical services in the strict sense' because they share a common pur 16 pose.

25Each subparagraph does indeed have its own different scope but 'the criterion for separating the field of application of the two forms of exemption laid down in Article 13A(1)(b) and (c) is less the type of service 17 than where it is provided'. Thus, under subparagraph (b), 'the services to be exempted encompass a whole range of medical care in establishments pursuing social purposes such as the protection of human health whilst, under subparagraph (c), the services to be exempted are those provided outside hospitals and similar establishments and within the framework of a confidential relationship between the patient 18 and the person providing the care'.

15 — Dormer, paragraph 50.

16 — Kugler, paragraph 36. See the Opinion of Advocate General Stix-Hackl in Unterpertinger, point 71, noting that 'taken Dispute Resolution Services, paragraph 58. See the Opinion of Advocate General Stix-Hackl in those cases, points 72 to 75, supporting the extension of activities with therapeutic aim so as to include 'also activity where the direct aim is not a cure but is intended only for prophylactic purposes' (point 72). See, also rather in this sense, Kügler, paragraph 40. 14 — Unterpertinger, paragraph 40, and D'Ambrumenil and Dispute Resolution Services, paragraph 58.

together, both forms of exemption are intended to promote access to medical care in general'.

17 — Dornier, paragraph 47, following the judgment in Case 353/85 Commission v United Kingdom [1987] ECR 817, paragraphs 32 and 33. In the same sense, see Kügler, paragraph 35. 18 — Dornier, paragraph 47; Commission v United Kingdom, paragraph 33; and Kügler, paragraph 35.

26The concept of 'medical care' that is laid down in subparagraph (b) will therefore, like subparagraph (c), include 'medical services effected for a purpose other than that of protecting, including maintaining or restor 1 ing, human health'. 9 In other words, it will include both medical-curative and prophylactic care services.

27In the field of prophylactic medical care, there will be no diagnosis of disease 20 or therapeutic action in the strict sense. A central feature is observation and examination of the user with the specific aim of preventing any future need to diagnose and treat any diseases.

28The performance of medical tests requested by a medical practitioner is an integral part of medical observation of the 21 user: without that there can obviously be no protection of the health of individuals, including both the maintenance and the restoration of health. In other words, medical care, as a range of activities functionally intended to maintain or restore health, is a process consisting of actions intended to maintain or restore health and including,

19 — Unterpertinger. paragraph 41. and D'Ainbrumetul und Dispute Resolution Services, paragraph 59.

20 — Diagnosis being action whereby the doctor identifies a disease through the knowledge of its peculiar manifestations 21 — That is so whether the medical practitioner himself carries out those examinations or tests as part of the observation or orders them to be carried out elsewhere, specifically because of the specialised nature of those tests.

firstly, observation and examination and later, where appropriate, diagnosis and treatment. In that sense, medical tests are, when ordered by a medical practitioner, medical-care services.

29That being so, medical-test services such as those performed by L.u.P. do, because of their purpose, fall within the concept of medical care within the meaning of Article 13A(1)(b) and (c) of the Sixth Directive.

30It is another matter whether such medical-care activity performed by an outside analysis laboratory is, more precisely, a part of subparagraph (b) or (c). As has been said, the answer to that question depends on whether the services in question are performed outside hospitals and similar establishments and within the framework of a confidential relationship between the patient and the person providing the care in the 22 consulting room or at home. That is, it rests more on consideration of the place where the activity is carried on than on the nature of the activity itself.

31Here, contrary to the view suggested by the Commission in its written observations, I believe that a laboratory which performs

22 — See point 25 above.

medical tests ordered by medical practitioners — and, thus, in the manner which I have described, and supplies services of 'medical care' within the meaning of subparagraph (b) — also falls subject to that subparagraph where it refers to 'centres for medical treatment or diagnosis and other duly recognised establishments of a similar nature'.

32The rationale of the exemption laid down in subparagraph (b) and also in subparagraph (c) is the same, whether the tests are performed by a hospital or similar establishment or even by a medical practitioner in his consulting room (if he has the proper qualifications and technical facilities) or, on the other hand, they are performed in other establishments specifically intended for conducting medical tests. From the view point of the objective of reducing the cost of medical care, a disparity of treatment there would be incomprehensible. The approach to interpretation suggested here is also the most compatible with the principle of fiscal neutrality, whereby economic operators carrying on the same activities must not be treated differently as far as the levying of VAT is 23 concerned.

33It must also be noted that the supplying of medical tests may fall under subparagraph

23 — Kügler, paragraph 30.

(c), instead of (b), where the supply is actually performed within the framework of a confidential relationship between the patient and the person providing the care. The order for reference appears to show, however, that the tests in the present case are not performed as part of such a confidential relationship between the patient and the person providing the care, as found in the case-law of the Court, which would allow 24 them to count as part of subparagraph (c).

34On the other hand, in its written observations and at the hearing, the Commission held the view that one would have to distinguish medical-test laboratories with a direct contractual link to patients from those which deal only with the medical practitioner who requested the test. Only in the former case could medical-test services qualify for exemption as they are intended for the end-users of those services; the latter case would cover only services performed upstream of the medical-care services, that is, where the recipient would be the supplier of medical-care services and not the end-user of such services, so that they must not enjoy exemption from VAT. The Commission bases its standpoint on the Court of Justice

24 — See the case-law referred to in point 25 above.

judgments in Commission v Germany, 26 Skandia, CSC Financial Services 27 and 28 Arthur Andersen, which regarded as taxable certain services provided in the context of subcontracted transactions ancillary to VAT-exempted supplies of services. I do not agree with the Commissions view here.

35Firstly, that view conflicts with the standpoint expressly formulated by the Court in Commission v France, where it is stated clearly that, for the purposes of applying the exemption rules laid down in subparagraph (b), it is irrelevant 'whether the laboratory which takes the sample also

25 — Case 107/84 [1985] ECR 2655, paragraph 20, which ruled that only the services provided by Deutsche Bundespost qualified for exemption as laid down in Article 13A(1)(a) of the Sixth Directive, and not the services supplied upstream and for consideration by transport undertakings on behalf of Deutsche Bundespost.

26 — Case C-240/99 [2001) ECR I-1951, paragraphs 40 and 41, where it was held that the management of insurance contracts by an entity acting on behalf of an insurance company is not exempt as being 'insurance services" for the purposes of Article 13B(a) of the Sixth Directive, since that entity has no contractual relations with the insured and bears no risk arising from the insurance activity.

27 — Case C-235/00 [2001] ECR I-10237, paragraphs 39 and 40. On the interpretation of the word 'negotiation' in the context of securities for the purposes of Article 13B(d)(5) of the Sixth Directive, the Court ruled that an intermediary will be so exempt only if it 'docs not occupy the position of any party to a contract relating to a financial product'. That being so, it is not 'negotiation where one of the parties entrusts to a subcontractor some of the clerical formalities related to the contract, such as providing information to the other party and receiving and processing applications for subscription to the securities which form the subject-matter of the contract. In such a case, the subcontractor occupies the same position as the parly selling the financial product and is not therefore an intermediary who does not occupy the position of one of the parties to the contract, within the meaning of the provision in question'.

28 — Case C-472/03 [20051 ECR I-1719, which held that certain 'back office' activities normally performed by the insurer in-house but subcontracted to an outside supplier which did not bear the insurance risk itself nor act as insurance intermediary or broker could not be exempted from tax under Article 13B(a) of the Sixth Directive.

carries out the analysis, or subcontracts it to another laboratory but remains responsible to [the patient] for the analysis, or, because of the nature of the analysis at issue, is obliged to send the sample to a specialised labora 29 tory'. Thus, to subcontract the performance of a medical test from one laboratory to another does not mean that the performance of that test by the subcontracted laboratory no longer qualifies for exemption as laid down in subparagraph (b).

36The case-law relied upon by the Commission relates to other VAT-exemption rules and not the exemption benefiting activities of general public importance. And, furthermore, those cases relate to tax-exemption rules laid down for reasons other than those behind the exemptions in subparagraphs (b) and (c) for medical-care 30 activities.

37Thus 1 do not feel that one should further restrict the interpretation hitherto

29 — Commission v France, paragraph 28. And similarly, in D'Ambrunienil and Dispute Resolution Services, paragraph 67, it was held that the fact of third parties, specifically employer organisations, supervising and seeking the performance of medical examinations for an employee does not preclude those tests from being for the protection of health and, therefore, from potentially being exempt from tax. 30 — For example, on the reason for exempting insurance transactions and services carried out by insurance brokers and insurance agents, see CPP, paragraph 23. the Opinion by Advocate General Saggio m Skandia, point 23, and my own Opinion in Arthur Andersen, point 13.

applied to the exemption rules laid down in subparagraphs (b) and (c) — and perfectly clear, firstly in the judgment in Commission v France — for a conjectural need of greater consistency and unity with the case-law which the Commission mentions, regarding the subcontracting of certain activities ancillary to the supply of exempt services. As long as the provision of medical tests such as those in the case in hand counts, of itself and in the terms I have described, as the provision of 'medical care' performed by 'other ... establishments of a similar nature' within the meaning of subparagraph (b), I do not perceive any basis, in either the wording or the rationale of this requirement, for imposing a further restriction upon the exemption of such provision, such as that which the Commission suggests. The conditions which can be established are those to be found in Article 13A(1)(b) and (2).

B — Conformity with Article 13A(1)(b) and (2) of the conditions which Member States may opt to impose for exemption of the supplied under subparagraph (b) and not those under subparagraph (c). The Sixth Directive does not take the same view of these two systems of exemption laid down in subparagraphs (b) and (c), making the services covered by subparagraph (b) subject to a priori rules on exemption that are less favourable than those prescribed for services under subparagraph (c). Member States may thus impose one or more of the conditions set out in Article 13A(2)(a) for the granting of exemption of tax for the provision by private laboratories of medical tests under subparagraph (b), but that is not the case where they are provided by medical practitioners who order tests within the scope of subparagraph (c).

39 It should be noted also — for I think it is an uncertainty which underlies the question referred by the Bundesfinanzhof — that, in respect of the services described in subpara services performed by bodies other than those graph (b), the power enjoyed by the Member governed by public law

38The Member States have the option of imposing one or more of the conditions described in Article 13A(2)(a) in the case of services performed by bodies other than those governed by public law. Article 13A(2) shows clearly that such optional conditions may be imposed only in respect of services States to impose conditions on granting exemption must not require them to treat in the same way 'medical-care' services and services 'closely related' thereto and performed by bodies other than those governed by public law. The Member States have the power in each individual case to impose compliance with certain conditions for granting exemption under subparagraph (b) to bodies other than those governed by public law, subject, of course, to the general principle of non-discrimination. On this, I do not think that they are required to impose exactly the same conditions on both types of services. Firstly, a Member State may simply opt not to make exemption of supply of the health services specified in subparagraph (b) subject to any of the conditions laid down in Article 13A(2)(a) when these are performed by bodies other than those governed by public law. Next, they must also have the power to establish conditions only for the supply of health services by private operators when these are closely related to hospital and medical care. Here I believe that we must remove the uncertainties as to whether the system laid down in Paragraph 4(16) of the UStG may be incompatible with the rules on exemption set out in Article 13A(1)(b) and (2)(a) of the Sixth Directive, because those national rules apparently only prescribe conditions for VAT exemption on transactions 'closely related' to hospital or medical care.

40If the relevant German legislation requires fulfilment of the conditions set out in Paragraph 4(16)(c) of the UStG for exemption of the actual provision of 'medical care' carried out by 'other ... establishments of a similar nature' within the meaning of subparagraph (b) of the Sixth Directive, it will be helpful to examine whether the two conditions laid down in the German legislation for grant of exemption do conform to Community law.

41The condition laid down in Paragraph 4(16)(c) of the UStG, which requires that 'the services are provided under medical supervision', conflicts with Community law: none of the conditions described in Article 13A(2)(a) may be interpreted as meaning that the Member States may make grant of exemption under Article 13A(1)(b), to bodies other than those governed by public law, subject to a condition of medical supervision such as that which the German legislation requires.

42Concerning that condition, it must be noted that, in the Dornier judgment, the Court ruled expressly that 'the requirement that services be performed under medical supervision, in so far as it is intended to exclude from exemption services performed on the responsibility of paramedical professionals only, exceeds the discretion left to Member States by Article 13A(1)(b) of the Sixth Directive. The meaning of "medical care" as used in this provision covers not only services supplied by medical practitioners themselves or other health professionals under medical supervision but also paramedical services supplied in hospitals under the sole responsibility of persons 31 without the status of doctors'.

31 — Dormer, paragraphs 70 and 71.

43Concerning the other condition laid down in Paragraph 4(16)(c) of the UStG, that at least 40% of services in the previous calendar year must have been provided to persons insured (by a social security authority), persons in receipt of social assistance and persons entitled (as war victims) to maintenance (paid by a social security authority), I believe that, although not explicitly laid down in the Sixth Directive, it can be regarded as central to the discretionary condition set out in the third indent of Article 13A(2)(a) under which, in order to qualify for exemption, bodies other than those governed by public law 'shall charge prices approved by the public authorities or which do not exceed such approved prices'. Thus, if some of the users of the entity in

III — Conclusion

question are insured by a social security authority, that can where relevant ensure that the prices it charges are compatible with those approved by the public authorities. Although I think it is not clear why it will be necessary for at least 40% of the entity's users to be insured by a social security authority, I think that such a condition will be compatible with Community law, in so far as it actually does make it possible to check that the prices charged by that entity are compatible with those approved by the public authorities. It is for the national courts to consider whether that condition is a proper instrument for checking the compatibility of the prices charged by L.u.P. with those approved by the public authorities.

44In accordance with the foregoing reasoning, I propose that the Court of Justice should answer the question referred by the Bundesfinanzhof as follows:

Article 13A(1)(b) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment must be interpreted as meaning that medical-test services such as those at issue in this case are acts of 'medical care' performed by 'other ... establishments of a similar nature' within the meaning of subparagraph (b).