C-154/08 Commission v Spain

Judgment · Court of Justice · Spain · 12 November 2009

Land registrars acting as tax settlement agents as taxable persons

What is the case?

In Spain, land registrars (registradores de la propiedad) were appointed to run the settlement offices of mortgage districts, assessing and collecting transfer tax and stamp duty on behalf of the Autonomous Communities in return for a share of the sums collected. Spanish practice, following national case law, treated these services as outside the scope of VAT on the basis that the registrars were acting as part of the public administration rather than as independent traders. The Commission brought infringement proceedings against the Kingdom of Spain, arguing that the registrars were carrying out an independent economic activity and were therefore taxable persons.

What is the Court asked?

Whether services supplied by land registrars to an Autonomous Community, acting as settlement agents in charge of a mortgage district settlement office, constitute an economic activity carried out independently by a taxable person within Article 2 and Article 4(1) and (2) of the Sixth Directive, or fall outside VAT because the activity is carried out in connection with public duties under Article 4(5).

The Court’s decision

The Court declared that Spain had infringed Article 2 and Article 4(1) and (2) of the Sixth Directive by treating those services as not subject to VAT. The registrars act on their own account and at their own risk, remunerated out of the sums collected, and are therefore independent taxable persons. They are not integrated into the public administration so as to fall outside the scope of the tax. The Court also confirmed that an infringement of Community law attributable to a national court engages the Member State's responsibility. Confirms that VAT liability turns on the substance of how a professional is engaged and remunerated, not on the public-law label of the function performed or the public character of the recipient.

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Legislation interpreted

Article 2 of Sixth Directive 77/388/EEC
Article 4 of Sixth Directive 77/388/EEC Taxable persons

Subject matter

Failure of a Member State to fulfil obligations · Sixth VAT Directive · Article 2 and Article 4(1), (2) and (5) · Harmonisation of the laws of the Member States relating to turnover taxes · Common system of value added tax: uniform basis of assessment · Taxable persons · Activities or operations carried out by ‘registradores de la propiedad’ (land registrars) acting as settlement agents in charge of settlement offices of a mortgage district · Economic activities · Activity carried out independently · Public-law bodies carrying out activities in connection with their public duties · Infringement of Community law attributable to a national court

Topics

Taxable person · Economic activity · Activity carried out independently · Infringement of Community law attributable to a national court

Record

Court: Court of Justice
Case number: C-154/08
ECLI: ECLI:EU:C:2009:695
Official texts: Judgment of 12 November 2009 (62008CJ0154)
Cite as: Judgment of 12 November 2009, Commission v Spain, C-154/08, EU:C:2009:695

Judgment of 12 November 2009

Text as published by the Court on EUR-Lex, CELEX 62008CJ0154.

Judgment of the Court (Third Chamber) of 12 November 2009 – Commission v Spain

(Case C‑154/08)

Failure of a Member State to fulfil obligations – Sixth VAT Directive – Article 2 and Article 4(1), (2) and (5) – Harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment – Taxable persons – Activities or operations carried out by ‘registradores de la propiedad’ (land registrars) acting as settlement agents in charge of settlement offices of a mortgage district – Economic activities – Activity carried out independently – Public-law bodies carrying out activities in connection with their public duties – Infringement of Community law attributable to a national court

1. Actions for failure to fulfil obligations – Application initiating proceedings – Statement of subject-matter and pleas in law – Formal requirements – Unambiguous wording of the form of order sought by the applicant (Art. 226 EC, Statute of the Court of Justice, Art. 21; Rules of Procedure of the Court of Justice, Art. 38(1)(c)) (see paras 60, 63, 67)

2. Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Economic activities carried on independently for the purpose of Article 4 of the Sixth Directive (Council Directive 77/388, Arts 2 and 4(1) and (2)) (see paras 90, 93, 97, 103, 107, 109, 118, 127 and operative part)

3. Member States – Obligations – Failure to fulfil obligations – Liability (Art. 226 EC) (see paras 125-126)

Re:

Operative part

The Court:

Declares that, by considering that the services supplied to an Autonomous Community by ‘registradores de la propiedad’ acting as settlement agents in charge of a settlement office of a mortgage district (‘oficina liquidadora de distrito hipotecario’) are not subject to value added tax, the Kingdom of Spain has failed to fulfil its obligations under Article 2 and Article 4(1) 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;

Signatures

Orders the Kingdom of Spain to pay the costs.