C-163/91 Van Ginkel

Judgment of the Court (Third Chamber) of 12 November 1992. - Van Ginkel Waddinxveen BV, Reis- en Passagebureau Van Ginkel BV and others v Inspecteur der Omzetbelasting Utrecht. - Reference for a preliminary ruling: Gerechtshof Amsterdam - Netherlands. - Value added tax - Sixth directive - Article 26 - Travel agent - Tour operator - Letting of holiday accomodation. - Case C-163/91. European Court reports 1992 Page I-05723

Summary Parties Grounds Decision on costs Operative part

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Tax provisions ° Harmonization of laws ° Turnover taxes ° Common system of value added tax ° Special scheme for travel agents ° Field of application ° Service limited to provision of accommodation ° Included

(Council Directive 77/388, Art. 26)

Article 26 of Directive 77/388: Sixth Directive, which concerns the special scheme applicable to travel agents in the matter of imposition of value added tax, must be interpreted as meaning that the fact that the transport of the traveller is not arranged by a travel agent or tour operator and that the latter merely provides the traveller with holiday accommodation is not such as to exclude the services provided by such undertakings from the field of application of that provision.

In Case C-163/91,

REFERENCE to the Court under Article 177 of the EEC Treaty by the Gerechtshof te Amsterdam for a preliminary ruling in the proceedings pending before that court between

Fiscal group Beheersmaatschappij Van Ginkel Waddinxveen BV, Reis- en Passagebureau Van Ginkel BV and Others

and

Inspecteur der Omzetbelasting te Utrecht

on the interpretation of Article 26 of Directive 77/388/EEC: Sixth Council Directive of 17 May 1977 on the harmonization 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 COURT (Third Chamber),

composed of: M. Zuleeg, President of Chamber, J.C. Moitinho de Almeida and F. Grévisse, Judges,

Advocate General: C. Gulmann,

Registrar: H.A. Ruehl, Principal Administrator,

after considering the written observations submitted on behalf of:

° Van Ginkel, by T. Braakman, of Moret Ernst and Young, tax consultants;

° the Netherlands Government, by B.R. Bot, Secretary General of the Ministry of Foreign Affairs, acting as Agent;

° the German Government, by Ernst Roeder and Claus-Dieter Quassowski, of the Federal Ministry for the Economy, acting as Agents;

° the United Kingdom, by S. Lucinda Hudson, of the Treasury Solicitor' s Department, acting as Agent;

° the Commission of the European Communities, by Johannes Foens Buhl, Legal Adviser, and Berend Jan Drijber, of the Legal Service, acting as Agents,

having regard to the Report for the Hearing,

after hearing the oral observations of Van Ginkel, of the Netherlands Government, represented by J. W. de Zwaan, Assistant Legal Adviser at the Ministry of Foreign Affairs, acting as Agent, of the United Kingdom, represented by D. Pannick, barrister, acting as Agent, and of the Commission at the hearing on 17 September 1992,

after hearing the Opinion of the Advocate General at the sitting on 1 October 1992,

gives the following

Judgment

Grounds

1By judgment of 4 June 1991, received at the Court on 19 June 1991, the Gerechtshof te Amsterdam (Regional Court of Appeal, Amsterdam) referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty two questions on the interpretation of Article 26 of Directive 77/388/EEC: Sixth Council Directive of 17 May 1977 on the harmonization 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").

2Those questions arose in proceedings between the fiscal group Beheersmaatschappij Van Ginkel Waddinxveen BV, Reis- en Passagebureau Van Ginkel BV and Others ("Van Ginkel") on the one hand and the Inspecteur der Omzetbelasting te Utrecht (inspector of turnover taxes, Utrecht) on the other, regarding a notice of adjustment of turnover tax addressed to Van Ginkel.

3Van Ginkel trades as a tour operator and also operates travel agencies. It offers its customers what its catalogue refers to as "motoring holidays", where the customer uses his own vehicle and Van Ginkel arranges only the travel accommodation.

4As regards more particularly "motoring holidays" in the Netherlands, travellers are accommodated in bungalows, most of which are owned by third parties.

5The terms on which Van Ginkel may use these bungalows for its customers are laid down by agreements with the owners. Van Ginkel charges a commission equivalent to 20% of the letting price.

6When the reservation is made through a travel agent other than Van Ginkel, the commission paid by Van Ginkel to that agent is between 5 and 8% of the letting price.

7Value added tax ("VAT") is calculated solely on the basis of the amount of the commission charged by Van Ginkel, from which the amount of any commission paid to another travel agent who made the booking is deducted.

8The inspector of turnover tax took the view that the services provided by Van Ginkel should be regarded as a letting of holiday accommodation. VAT should therefore be calculated on the basis of the total amount of the price invoiced to the customer.

9Van Ginkel brought an action against the decision of the inspector of turnover tax before the Gerechtshof te Amsterdam, which decided to stay the proceedings and to refer to the Court for a preliminary ruling the following questions:

"1. Where a taxable person lets holiday dwellings to customers who arrange their own transport to and from the dwellings and for that purpose enters into agreements with third parties under which the dwellings are made available to him, can such acts be regarded as the provision of travel facilities for the purposes of Article 26(1) of the Sixth Directive or as transactions performed in respect of a journey for the purposes of Article 26(2)?

2. Does the answer to the question differ if the taxable person is a tour operator and, in addition to performing the acts described in Question 1, also provides travel facilities which include transport to and from the accommodation?"

10Reference is made to the Report for the Hearing for a fuller account of the facts of the main proceedings, the course of the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.

11To begin with, it is appropriate to specify the content and aims of the provisions of Article 26 of the Sixth Directive.

12Article 26 of the Sixth Directive defines the special system of VAT applicable to travel agents and tour operators.

13The services provided by these undertakings most frequently consist of multiple services, particularly as regards transport and accommodation, either within or outside the territory of the Member State in which the undertaking has established its business or has a fixed establishment.

14The application of the normal rules on place of taxation, taxable amount and deduction of input tax would, by reason of the multiplicity of services and the places in which they are provided, entail practical difficulties for those undertakings of such a nature as to obstruct their operations.

15In order to adapt the applicable rules to the specific nature of such operations, the Community legislature set up a special VAT scheme in Article 26(2), (3) and (4) of the Sixth Directive. Those provisions are as follows:

"2. All transactions performed by the travel agent in respect of a journey shall be treated as a single service supplied by the travel agent to the traveller. It shall be taxable in the Member State in which the travel agent has established his business or has a fixed establishment from which the travel agent has provided the services. The taxable amount and the price exclusive of tax, within the meaning of Article 22(3)(b), in respect of this service shall be the travel agent' s margin, that is to say, the difference between the total amount to be paid by the traveller, exclusive of value added tax, and the actual cost to the travel agent of supplies and services provided by other taxable persons where these transactions are for the direct benefit of the traveller.

3. If transactions entrusted by the travel agent to other taxable persons are performed by such persons outside the Community, the travel agent' s service shall be treated as an exempted intermediary activity under Article 15(14). Where these transactions are performed both inside and outside the Community, only that part of the travel agent' s service relating to transactions outside the Community may be exempted.

4. Tax charged to the travel agent by other taxable persons on the transactions described in paragraph 2 which are for the direct benefit of the traveller shall not be eligible for deduction or refund in any Member State."

16The conditions to which the application of these special provisions is subject are laid down by Article 26(1) of the Sixth Directive, which provides:

"1. Member States shall apply value added tax to the operations of travel agents in accordance with the provisions of this Article, where the travel agents deal with customers in their own name and use the supplies and services of other taxable persons in the provision of travel facilities. This Article shall not apply to travel agents who are acting only as intermediaries and accounting for tax in accordance with Article 11A(3)(c). In this Article travel agents include tour operators."

17The national court' s questions seek, essentially, to establish whether it is necessary to take into account, in determining whether the above provisions of Article 26 of the Sixth Directive are applicable:

° the fact that the transport of the traveller to the destination and from the place of accommodation is not arranged by the travel agent, who provides the traveller only with holiday accommodation;

° the fact that the taxable person is a tour operator.

The fact that the travel agent does not arrange transport for the traveller but provides him only with holiday accommodation

18Van Ginkel points out that neither the Sixth Directive nor the case-law of the Court gives a precise definition of the concept of "journey" and contends ° relying on the expression "travel facilities" used in the English version of Article 26(1) of the Sixth Directive, on the definition of "journey" generally accepted in the Community, on business practice, on the provisions of Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours (OJ 1990 L 158, p. 59), on the objectives which the Sixth Directive seeks to achieve and on the practical difficulties which a contrary interpretation would involve ° that the concept of "journey" covers holidays offered to the public by travel agents, where the agent merely reserves accommodation for the traveller.

19The German and United Kingdom Governments also contend that it is not a condition for the application of Article 26 of the Sixth Directive that the journey in the strict sense, that is to say, the transport, should be arranged by the travel agent. It is enough that the service offered by the agent, even a single one, as pointed out by the Advisory Committee on VAT at its 17th meeting on 4 and 5 July 1984, is in respect of a journey. To justify such an interpretation both governments also rely on the expression "travel facilities" used in the English version of the directive and on the aims of the directive, which seeks to avoid encumbering travel agents with restraints and tax formalities in all the Member States in which services are provided.

20The Netherlands Government, whilst admitting that a contrary interpretation is possible, contends that Article 26 of the Sixth Directive, which aims to simplify tax formalities in cases in which there are several services, is not applicable where there is a single service, in this case accommodation.

21Article 26(1) of the Sixth Directive makes the application of that article subject to the condition that the travel agent shall deal with customers in his own name and not as an intermediary. It is for the national court before which a dispute concerning the application of these provisions is brought to inquire, having regard to all the details of the case, and in particular the nature of the travel agent' s contractual obligations towards the traveller, whether or not that condition is met.

22On the other hand, Article 26(1) of the Sixth Directive does not contain any provisions expressly requiring that, for the application of the special system of VAT envisaged by Article 26, the transport of the traveller to and from his accommodation shall be arranged by the travel agent.

23Such a requirement would run counter to the aims of Article 26 of the directive. As has already been indicated, those provisions adapt the rules governing VAT to the specific nature of the operations of travel agents. To meet the needs of customers, such agents offer widely differing types of holidays and journeys, allowing the traveller to combine, as he wishes, transport, accommodation and any other services which those undertakings may provide. The exclusion from the field of application of Article 26 of the Sixth Directive of services provided by a travel agent on the ground that they cover only the accommodation and not the transport of the traveller would lead to a complicated tax system in which the VAT rules applicable would depend upon the constituents of the services offered to each traveller. Such a tax system would fail to comply with the aims of the directive.

24The fact that the travel agent provides only holiday accommodation for the traveller is not, in these circumstances, sufficient to exclude that service from the field of application of Article 26 of the directive. Moreover, as the Court pointed out in Case C-280/90 Hacker [1992] ECR I-1111 with regard to the interpretation of Article 16(1) of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, the service offered by the agent, even where it is restricted to providing accommodation, need not be confined in such a case to a single service, since it may comprise, apart from the letting of the accommodation, services such as information and advice where the travel agent provides a range of holiday offers and the reservation of accommodation. There is therefore no reason to exclude such services from the field of application of Article 26 of the Sixth Directive, provided, however, that the owner or manager of the accommodation with whom the agent has concluded an agreement is himself, as required by the provisions of Article 26(1) of the Sixth Directive, a taxable person for the purpose of VAT.

The fact that the taxable person is a tour operator

25As the Commission, the German, Netherlands and United Kingdom Governments and Van Ginkel have all pointed out, the special provisions of Article 26 of the Sixth Directive apply without distinction to travel agents and tour operators. Under the last sentence of Article 26(1), travel agents includes tour operators.

26There is therefore no need to give a separate answer as regards cases in which the taxable person is a tour operator.

27Accordingly, it should be stated in answer to the questions raised that the provisions of Article 26 of the Sixth Directive must be interpreted as meaning that the fact that transport of the traveller is not arranged by a travel agent or a tour operator and that the latter merely provides the traveller with holiday accommodation is not such as to exclude the services provided by such undertakings from the field of application of Article 26.

Costs

Costs

28The costs incurred by the Kingdom of the Netherlands, the Federal Republic of Germany, the United Kingdom and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the proceedings pending before the national court, the decision on costs is a matter for that court.

Operative part

On those grounds,

THE COURT (Third Chamber),

in answer to the questions referred to it by the Gerechtshof te Amsterdam by judgment of 4 June 1991, hereby rules:

The provisions of Article 26 of Directive 77/388/EEC: Sixth Council Directive of 17 May 1977 on the harmonization 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 the fact that the transport of the traveller is not arranged by a travel agent or a tour operator and that the latter merely provides the traveller with holiday accommodation is not such as to exclude the services provided by such undertakings from the field of application of Article 26.

OPINION OF ADVOCATE GENERAL

GULMANN

delivered on 1 October 1992 ( *1 )

Mr President,

Members of the Court,

1The Gerechtshof te Amsterdam has thought it necessary, in a case pending before it, to obtain a decision on whether a given taxable activity is covered by Article 26 of the Council's Sixth Directive on VAT, ¹ which lays down a special system for travel agents. ² In that connexion it has referred two questions to the Court for a preliminary ruling.

2The background to the case is a dispute between the Netherlands tax authorities and a Netherlands tour operator (hereinafter ‘Van Ginkel’). The dispute relates to that part of Van Ginkel's operations which consists in arranging so-called ‘motoring holidays’. For such holidays the traveller himself arranges for transport to the holiday destination, where Van Ginkel makes holiday accommodation available. The dispute concerns only the case in which the holiday accommodation is owned by a third party and is situated in the Netherlands. The traveller ‘purchases’ the service, that is, a short-term stay in the holiday accommodation, direct from Van Ginkel or through another travel agent. Van Ginkel pays the owner of the house and charges in that connexion a commission of 20% of the rent. Van Ginkel paid VAT on the amount of the commission under the impression that the commission was the correct taxable amount. The tax authority demanded a supplementary payment because, in its view, the taxable amount was the full letting price.

3The special system for travel agents applies, in accordance with Article 26 of the directive, when certain conditions are met and involves on a number of points exceptions to the general rules of the directive on the calculation and levying of the VAT.

According to Article 26(1), the Member States are to apply the special system to transactions effected by travel agents and tour operators — hereinafter referred to for the sake of convenience, simply as ‘travel agents’. Article 26 applies only where ‘the travel agents deal with customers in their own name and use the supplies and services of other taxable persons in the provision of travel facilities’.

Article 26(2) provides that:

transactions peformed by the travel agent in respect of a journey shall be treated as a single service supplied by the travel agent to the traveller;

that service shall be taxable in the Member State in which the travel agent has established his business; and

the taxable amount shall be the travel agent's margin of profit, that is, the difference between the amount to be paid by the traveller and the cost to the travel agent of services provided by other taxable persons for the direct benefit of the traveller.

Article 26(3), which is not directly relevant in this case, provides that the taxable amount, that is, the margin of profit, is reduced if the services to the traveller are performed outside the Community.

Article 26(4) provides that travel agents cannot deduct VAT paid by the taxable persons from whom the agent has purchased the services provided.

Article 26 thus contains, for the travel agents concerned, a practical system for the calculation of VAT having its background partly in the problems arising from these undertakings' special position as providers of typically complex services and partly, and in particular, from the fact that it frequently involves services performed in countries other than the one in which the travel agents are established. An essential aim of the system is to avoid the problems which travel agents would have with the tax authorities in other Member States if the general rules with regard to the calculation, payment and allowance for deduction of VAT were applied. The services included in the travel agent's sale of a journey to a customer, consisting for example in accommodation, board and transport in other Member States are dealt with for tax purposes according to those countries' rules, whereas, for the travel agent's ‘independent service’ tax is paid on the agent's margin of profit in the agent's own Member State. Even though the typically cross-frontier features of a travel agent's operations therefore constitute an essential part of the reason for Article 26, that article nevertheless undoubtedly applies also to the operations of a travel agent performed exclusively in one and the same Member State.

It should also be stressed — as is done particularly by the Commission — that the application of Article 26 pre-supposes that in providing travel facilities the travel agent uses services performed by other taxable persons and that the travel agent's margin of profit represents the difference between the price the traveller is to pay the travel agent and the agent's costs in purchasing from other taxable persons services for the direct benefit of the traveller. That has two consequences. The first is that Article 26 does not apply if the travel agent uses exclusively his own services or services provided by nontaxable persons, and secondly that the margin of profit on which the agent is to pay VAT under paragraph (2) includes both his own services and services performed by nontaxable persons. Those conditions mean also that in any event it is irrelevant in a case such as this, as regards the amount of the VAT the traveller has to pay, whether or not the so-called ‘motoring holidays’ are covered by Article 26.

4The Gerechtshof te Amsterdam, in its judgment referring the questions to the Court, took as its basis the fact that Van Ginkel trades as a tour operators and operates travel agencies and that the company therefore meets that condition for the application of Article 26(1). The Gerechtshof also accepted that Van Ginkel deals with customers in its own name within the meaning of Article 26 and that the company did not act as an intermediary. However, the Gerechtshof is in doubt on a single point as to whether the conditions for the application of Article 26 are met in this specific case. On that point it states:

‘It is unclear whether a case in which a tour operator ... arranges an agreement under which a holiday dwelling is made available for a short stay but does not arrange transport for the traveller to and from the holiday dwelling may be regarded as the provision of travel facilities for these purposes, or may only be regarded as the letting of the dwelling.’

In order to dispel that doubt the Gerechtshof has referred the following question to the Court for a preliminary ruling:

‘Where a taxable person lets holiday dwellings to customers who arrange their own transport to and from the dwellings and for that purpose enters into agreements with third parties under which the dwellings are made available to him, can such acts be regarded as the provision of travel facilities for the purposes of Article 26(1) of the Sixth Directive or as transactions performed in respect of a journey for the purposes of Article 26(2)?’

5The Netherlands Government claims that there are reasonable grounds for a negative answer to that question. It observes inter alia that transport represents a characteristic feature of a journey. It refers also to the fact that Article 26 must pre-suppose that the service sold to the traveller consists of a group of services. In that connexion the government refers to the fact that Article 26 speaks logically of the provision of services and must therefore pre-suppose that the travel agent supplies more than one service. The government refers also to paragraph (2), according to which ‘transactions’ performed by the travel agent are to be treated as ‘a single service’.

6Van Ginkel, the German and United Kingdom Governments and the Commission all agree that Article 26 does not pre-suppose that the services sold by the travel agent include transport. They also state that Article 26 does not involve a supposition that the service sold covers a group of services.

7In my view there can be no doubt that the answer to the question raised must be that the letting by travel agents of holiday accommodation owned by third parties to travellers providing their own transport to and from the destination are also covered by Article 26.

There is nothing in the wording of the provision to contradict that result. When the position in paragraphs (1) and (2) of the concepts ‘in the provision of travel facilities’ and ‘in respect of a journey’ are considered, it cannot be assumed that the use of the concept is intended to restrict the sphere of application of the provision. The use of the concept is probably meant simply to emphasize that the service provided must be a feature of a journey, but not that the journey, that is, the transport, is necessarily to form part of the service provided.

The aims of the provision militate against a restrictive interpretation. The aims do not suggest that special importance is given to the inclusion of travel in the service provided or that there must necessarily be more than one service. The practical problems arising for travel agents with regard to the provision of services in other Member States and which the provision aims to solve exist also with regard to the provision of one or more services not including transport. In this connexion it is clear that the provision is to be interpreted in the same way whether the provision of the service or services in a specific case is effected in other States or in the travel agent's own country.

It is probably also correct, as Van Ginkel and the United Kingdom Government mention, that a restrictive interpretation of Article 26 would raise practical difficulties in a number of cases, including a case in which the travel agent ‘purchases’ a number of nights' accommodation in other Member States without knowing whether the service subsequently to be performed for the traveller will include transport.

The fact that the Advisory Committee for Value Added Tax, ³ at a meeting in April 1984 expressed the view that Article 26 applies where the travel agent uses at least one service performed by another taxable person in the provision of travel facilities militates in favour of the abovementioned solution.

8These reasons are in my view sufficient to establish that the answer to the question referred to the Court must be that Article 26 must also apply even where the customer himself provides transport to the holiday accommodation and I do not therefore think it necessary to go into the other arguments put forward in favour of that interpretation and set out in the report for the hearing.

9The Gerechtshof has raised a further question worded as follows:

‘Does the answer to the question differ if the taxable person is a tour operator and, in addition to performing the acts described in Question 1, also provides travel facilities which include transport to and from the accommodation?’

With regard to this question it may be briefly stated, first, that the answer to the first question is based on the supposition that the taxable undertaking is a travel agent or a tour organizer, and secondly that it follows from the answer to the first question that for the application of Article 26 it is of no importance whether the relevant service for the customer also includes transport to and from the holiday accommodation.

The answer to the first question therefore makes it unnecessary to answer the second question.

Conclusion

10I therefore propose that the Court of Justice reply as follows to the questions referred to it by the Gerechtshof te Amsterdam:

Article 26 must be interpreted as including transactions performed by a travel agent or a tour operator and consisting in letting to the traveller holiday accommodation belonging to a taxable third party even if the traveller provides his own transport to and from the holiday accommodation.

( *1 ) Original language: Dutch.

¹ Directive 77/388/EEC of 17 May 1977 on the harmonization 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).

² On 15 September 1992 I delivered an Opinion in Case C-74/91 Commission v Germany, the subject of which was Article 26(3) of the Sixth Directive on VAT. This case relates particularly to the provisions of Article 26(1) and (2).

³ That committee was set up in pursuance of Article 29 of the directive. It consists of representatives of the Member States and the Commission. Its opinions are not binding.