C-165/11 Profitube

JUDGMENT OF THE COURT (First Chamber)

8 November 2012 ( *1 )

‛Sixth VAT Directive — Applicability — Community customs code — Goods from a non-member State placed under the customs warehousing procedure in the territory of a Member State — Processing of the goods under inward processing arrangements in the form of a system of suspension — Goods sold and placed once again under the customs warehousing procedure — Goods kept in the same customs warehouse during all the transactions — Supply of goods effected for consideration in national territory — Chargeable event for VAT’

In Case C‑165/11,

REFERENCE for a preliminary ruling under Article 267 TFEU from the Najvyšší súd Slovenskej republiky (Slovakia), made by decision of 22 March 2011, received at the Court on 4 April 2011, in the proceedings

Daňové riaditeľstvo Slovenskej republiky

v

Profitube spol. s r.o.,

THE COURT (First Chamber),

composed of A. Tizzano, President of the Chamber, A. Borg Barthet, E. Levits and J.‑J. Kasel and M. Safjan (Rapporteur), Judges,

Advocate General: P. Mengozzi,

Registrar: A. Calot Escobar,

after considering the observations submitted on behalf of:

Daňové riaditeľstvo Slovenskej republiky, by V. Paňko, acting as Agent,

Profitube spol. s r.o., by M. Čižmárik, advokát,

the Slovak Government, by B. Ricziová, acting as Agent,

the Czech Government, by M. Smolek and J. Vláčil, acting as Agents,

European Commission, by L. Lozano Palacios and P. Pecho, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 22 May 2012,

gives the following

Judgment

Legal context and the dispute

1This reference for a preliminary ruling concerns the interpretation of Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code (OJ 1992 L 302, p. 1), as amended by European Parliament and Council Regulation (EC) No 648/2005 of 13 April 2005 (OJ 2005 L 117, p. 13; ‘the customs code’) and 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), as amended by Council Directive 2004/66/EC of 26 April 2004 (OJ 2004 L 168, p. 35; ‘the Sixth Directive’).

2The reference was submitted in the context of a dispute between the Daňové riaditeľstvo Slovenskej republiky (Tax Directorate of the Slovak Republic; ‘the Daňové riaditeľstvo’) and Profitube spol. s r.o. (‘Profitube’), a company established in Košice (Slovakia), concerning the payment of value added tax (‘VAT’) in respect of the sale of goods originating in a non-member State and placed in a customs warehouse situated in the territory of the Slovak Republic, successively under the arrangements of customs warehousing and inward processing in the form of a system of suspension.

Legal context

EU law

The customs code

3The customs code was repealed and replaced by Regulation (EC) No 450/2008 of the European Parliament and of the Council of 23 April 2008 laying down the Community Customs Code (Modernised Customs Code) (OJ 2008 L 145, p. 1). However, given the date of the facts of the dispute in the main proceedings, the latter remains governed by the customs code.

4Article 3 of the customs code stated:

‘1. The customs territory of the Community shall comprise:

...

the territory of the Slovak Republic,

...

3. The customs territory of the Community shall include the territorial waters, the inland maritime waters and the airspace of the Member States, and the territories referred to in paragraph 2, except for the territorial waters, the inland maritime waters and the airspace of those territories which are not part of the customs territory of the Community pursuant to paragraph 1.’

5Article 84(1) of the customs code read:

‘In Articles 85 to 90:

where the term “procedure” is used, it is understood as applying, in the case of non-Community goods, to the following arrangements:

...

customs warehousing;

inward processing in the form of a system of suspension;

...’

6Article 98(1) and (2) of the customs code provided:

‘1. The customs warehousing procedure shall allow the storage in a customs warehouse of:

non-Community goods, without such goods being subject to import duties or commercial policy measures;

...

2. “Customs warehouse” means any place approved by and under the supervision of the customs authorities where goods may be stored under the conditions laid down.’

7Article 99, first and second subparagraphs, of the customs code provided:

‘A customs warehouse may be either a public warehouse or a private warehouse.

“Public warehouse” means a customs warehouse available for use by any person for the warehousing of goods;

“Private warehouse” means a customs warehouse reserved for the warehousing of goods by the warehousekeeper.’

8Article 114(1) and (2)(a) of the customs code provided:

‘1. Without prejudice to Article 115, the inward processing procedure shall allow the following goods to be used in the customs territory of the Community in one or more processing operations:

non-Community goods intended for re-export from the customs territory of the Community in the form of compensating products, without such goods being subject to import duties or commercial policy measures;

...

2. The following expressions shall have the following meanings:

suspension system: the inward processing relief arrangements as provided for in paragraph 1 (a).’

The Sixth Directive

9The Sixth Directive was repealed and replaced by Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1). However, given the date of the facts of the dispute in the main proceedings, the latter remains governed by the Sixth Directive.

10Article 2 of the Sixth Directive provided:

‘The following shall be subject to [VAT]:

1the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such;

2the importation of goods.’

11Article 3(1) to (3) of the Sixth Directive provided:

‘1. For the purposes of this Directive:

“territory of a Member State” shall mean the territory of the country as defined in respect of each Member State in paragraphs 2 and 3;

“Community” and “territory of the Community” shall mean the territory of the Member States as defined in respect of each Member State in paragraphs 2 and 3;

“third territory” and “third country” shall mean any territory other than those defined in paragraphs 2 and 3 as the territory of a Member State.

2. For the purposes of this Directive, the “territory of the country” shall be the area of application of the [EC Treaty] as defined in respect of each Member State in Article [299 EC].

3. The following territories of individual Member States shall be excluded from the territory of the country:

Federal Republic of Germany:

the Island of Heligoland,

the territory of Büsingen,

Kingdom of Spain:

Ceuta,

Melilla,

Republic of Italy:

Livigno,

Campione d'Italia,

the Italian waters of Lake Lugano.

The following territories of individual Member States shall be excluded from the territory of the country:

Kingdom of Spain:

the Canary Islands,

French Republic:

the overseas departments,

Hellenic Republic:

Άγιο Όπος.’

12According to Article 5(1) of the Sixth Directive, ‘[s]upply of goods’ shall mean the transfer of the right to dispose of tangible property as owner.

13Article 7(1) to (3), first subparagraph, of the Sixth Directive provided:

‘1. Importation of goods’ shall mean:

the entry into the Community of goods which do not fulfil the conditions laid down in Articles [23 EC and 24 EC] or, where the goods are covered by the Treaty establishing the [ECSC Treaty], are not in free circulation;

the entry into the Community of goods from a third territory, other than the goods covered by (a).

2. The place of import of goods shall be the Member State within the territory of which the goods are when they enter the Community.

3. Notwithstanding paragraph 2, where goods referred to in paragraph 1(a) are, on entry into the Community, placed under one of the arrangements referred to in Article 16(1)(B)(a), (b), (c) and (d), under arrangements for temporary importation with total exemption from import duty or under external transit arrangements, the place of import of such goods shall be the Member State within the territory of which they cease to be covered by those arrangements.’

14According to Article 10(1) to (3), first subparagraph, of the Sixth Directive:

‘1. ...

“Chargeable event” shall mean the occurrence by virtue of which the legal conditions necessary for tax to become chargeable are fulfilled;

The tax becomes “chargeable” when the tax authority becomes entitled under the law at a given moment to claim the tax from the person liable to pay, notwithstanding that the time of payment may be deferred.

2. The chargeable event shall occur and the tax shall become chargeable when the goods are delivered or the services are performed.

...

3. The chargeable event shall occur and the tax shall become chargeable when the goods are imported. Where goods are placed under one of the arrangements referred to in Article 7(3) on entry into the Community, the chargeable event shall occur and the tax shall become chargeable only when the goods cease to be covered by those arrangements.’

15In its version arising from Article 28c(E)(1) of the Sixth Directive, Article 16 of the latter, headed ‘Special exemptions linked to international goods traffic’, provided:

Without prejudice to other Community tax provisions, Member States may, subject to the consultations provided for in Article 29, take special measures designed to exempt all or some of the following transactions, provided that they are not aimed at final use and/or consumption and that the amount of [VAT] due on cessation of the arrangements on situations referred to at A to E corresponds to the amount of tax which would have been due had each of these transactions been taxed within the territory of the country:

...

supplies of goods which are intended to be:

...

placed under customs warehousing arrangements or inward processing arrangements;

...

The places referred to in (a), (b), (c) and (d) shall be as defined by the Community customs provisions in force.

...

supplies of goods and of services carried out:

in the places listed in B(a), (b), (c) and (d) and still subject to one of the situations specified therein;

in the places listed in B(e) and still subject, within the territory of the country, to the situation specified therein.

Where they exercise the option provided for in (a) for transactions effected in customs warehouses, Member States shall take the measures necessary to ensure that they have defined warehousing arrangements other than customs warehousing which permit the provisions in (b) to be applied to the same transactions concerning goods listed in Annex J which are effected in such warehouses other than customs warehouses.

...’

National law

16According to Article 46(1) of the Constitution of the Slovak Republic, any person may claim his rights, in accordance with the law, before an independent and impartial tribunal.

17Law No 222/2004 of 6 April 2004 on value added tax (No 1/2004 Z. z), in the version applicable to the dispute in the main proceedings (‘the law on VAT’), is designed to transpose the Sixth Directive into Slovak law.

18Article 2(1)(a) of that law provides that the supply of goods for consideration in national territory by a taxable person is subject to VAT.

19Article 2(2)(a) of the same law states that, for VAT purposes, ‘national territory’ means that of the Slovak Republic.

20Article 8(1)(a) of the law on VAT provides that ‘supply of goods’ is to be understood as the supply of a chattel which involves a modification of property rights.

21According to Article 12 of that law, ‘importation of goods’ means the introduction of goods from the territory of non-member States into the territory of the European Union and, in the case of the importation of goods into national territory, the provisions of the customs regulations apply save where that law provides otherwise.

22According to Article 13(1)(a) of the same law, the place of supply of goods, if the supply is linked to a delivery or transport of goods, is the place where the item is situated at the time of the departure of the delivery or transport towards the acquirer, subject to the exception referred to in Article 13(1)(b), Article 13(2) and Article 14 of that law.

23Article 18(2) of the law on VAT provides that if imported goods, on their introduction to Union territory, are in temporary storage or placed in a customs-free area or customs-free warehouse, or are placed under the customs warehousing procedure, the inward processing procedure, under arrangements for temporary importation with total exemption from import duty or where they are admitted on the territorial sea, the place of import of such goods shall be the Member State within the territory of which they cease to be covered by those arrangements.

24Article 19(1) of that law provides that VAT becomes chargeable on the day of delivery of the goods, that day being the day on which the acquirer acquires the right to dispose of the goods as owner.

25Article 69(1) of the same law provides that the taxable person who supplies goods or provides services in national territory is liable to VAT.

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

26It is apparent from the order for reference and the observations submitted to the Court that the Daňový úrad pre vybrané daňové subjekty (Tax administration for certain taxpayers; ‘the Daňový úrad’) carried out a VAT audit for Profitube for the months of July, August, September and October 2005 and January, February, April, May and December 2006.

27That tax audit revealed that, during the period under inspection, the company SSIM a.s., established in Košice, brought in from Ukraine semi-finished steel goods, namely hot-rolled coils, which it sold to Profitube. Those coils, stored in a public customs warehouse used by the latter and situated in the territory of the Slovak Republic, were placed under the customs warehousing procedure, within the meaning of Article 98 of the customs code.

28The hot-rolled coils were then placed under inward processing arrangements in the form of a system of suspension, within the meaning of Article 114 of the customs code, to be processed into steel sections.

29Profitube sold those steel sections (‘the goods at issue’) to the company Mercurius s r.o., established in Košice and registered for VAT (‘the sale at issue’). The goods at issue were again placed under the customs warehousing procedure. Profitube took the view that the sale at issue was not subject to VAT.

30During all those transactions carried out during the tax years 2005 and 2006, the goods at issue remained in the same public customs warehouse.

31By decisions of 27 June 2006, the Daňový úrad ruled that, by not paying VAT on the sale at issue, Profitube had infringed Article 69(1) of the law on VAT, read in combination with Articles 2(1)(a), 2(2)(a), 8(1)(a), 13(1)(a) and 19(1) of that law.

32In that regard, the Daňový úrad took the view that, by the sale of goods stored in a public customs warehouse situated in the territory of the Slovak Republic, Profitube had made a supply of goods which, pursuant to Article 2(1)(a) of the law on VAT, was subject to the tax.

33By decisions of 25 October 2007, the Daňové riaditeľstvo confirmed the decisions of the Daňový úrad.

34By judgment of 23 July 2008, the Krajský súd v Bratislave (Regional Court, Bratislava) upheld the action brought by Profitube against the decisions of the Daňové riaditeľstvo and referred the matter back to the latter. The Krajský súd v Bratislave took the view, in particular, that goods from a non-member country had to be placed in free circulation to be subject to VAT.

35The Daňové riaditeľstvo having appealed against that judgment, the Najvyšší súd Slovenskej republiky (Supreme Court of the Slovak Republic), by judgment of 20 October 2009, varied the judgment of the Krajský súd v Bratislave by holding that a customs warehouse situated in the territory of a Member State legally forms part of that territory. The Daňové riaditeľstvo was therefore right to hold that the sale at issue constituted a supply of goods for consideration in national territory, for the purposes of Article 2(1)(a) of the law on VAT. Moreover, the goods at issue had not been the subject on an importation, within the meaning of Article 12 of that law.

36Profitube lodged an appeal against the judgment of the Najvyšší súd Slovenskej republiky before the Ústavný súd Slovenskej republiky (Constitutional Court of the Slovak Republic). By judgment of 27 October 2010, the latter court annulled the judgment of the Najvyšší súd Slovenskej republiky and referred the matter back before the latter for a fresh ruling.

37The Ústavný súd Slovenskej republiky took the view that the Najvyšší súd Slovenskej republiky had infringed Profitube’s fundamental right to legal protection, for the purposes of Article 46(1) of the Constitution of the Slovak Republic, and its right to a fair trial, within the meaning of Article 6(1) of the European Convention for the Protection of Human Rights and Fundamental Freedoms signed in Rome on 4 November 1950. The Ústavný súd Slovenskej republiky took the view, in particular, that the Najvyšší súd Slovenskej republiky had not examined the question of the application of Article 12 of the law on VAT, according to which, in the case of an importation, customs rules must take priority over that law.

38In those circumstances, the Najvyšší súd Slovenskej republiky decided to stay the proceedings and refer the following questions to the Court of Justice for a preliminary ruling:

In a situation where, in 2005 and 2006, goods from a non-Member State of the European Union (Ukraine) were placed in a public customs warehouse in the territory of a Member State of the European Union by an importer from that Member State, were subsequently processed in an inward processing suspension procedure in that customs warehouse, and the resulting product was not immediately exported within the meaning of Article 114 of Regulation No 2913/92 but instead was sold in that same warehouse by the processor of the goods to another company from that Member State, which did not to release it from the customs warehouse for free circulation, but subsequently returned it to the customs warehousing procedure, is the said sale of goods within the same customs warehouse still subject solely to Community customs rules, or has the legal situation been changed by the said sale to the extent that the transaction is now subject to the system under the [Sixth Directive], i.e. is it possible, for the purpose of the system of [VAT] under the Sixth Directive, to regard a public customs warehouse located in the territory of a Member State as part of the territory of the Community, or the territory of that Member State, in accordance with the definitions provided in Article 3 of the Sixth Directive?

In the light of the doctrine of abuse of rights developed by the Court of Justice of the European Union and concerning the application of the Sixth Directive [Case C-255/02 Halifax and Others [2006] ECR I-1609], is it possible to treat the above as a situation where the applicant, by selling goods in a public customs warehouse located in the territory of the Slovak Republic, has already made supply for consideration in the Slovak Republic?

If the reply to the first question is in the affirmative, in that the transaction in question is now subject to the system under the Sixth Directive, is that transaction then a chargeable event:

under Article 10(1) and (2) of the Sixth Directive, with the tax becoming chargeable as a result of the delivery of the goods in the customs warehouse located in the territory of the Slovak Republic; or

on the ground that, after the goods were imported from a third country (Article 10(3) of the Sixth Directive), the customs procedure ended while the goods were held in storage in that customs warehouse upon sale thereof to another person from the Member State?

Are the objectives of the Sixth Directive as expressed in the preamble thereof, or the objectives [of the General Agreement on Tariffs and Trade 1994 (GATT)] [Agreement appearing in Annex 1A of the Agreement establishing the World Trade Organization (WTO) approved by Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) (OJ 1994 L 336, p. 1) fulfilled if the sale of goods imported from a third country to a customs warehouse and then processed therein and sold to another person from that Member State in the customs warehouse in the territory of the Member State of the European Community is not subject to [VAT] in that Member State?’

The questions referred for a preliminary ruling

The first and third questions

39By its first and third questions, which it will be convenient to examine together, the national court asks, in essence, whether, when goods from a non-member country are placed under the customs warehousing procedure in a Member State, and are then processed under inward processing arrangements in the form of a system of suspension and have subsequently been sold and placed once again under the customs warehousing procedure, remaining throughout the whole of those transactions in the same customs warehouse situated in the territory of that Member State, the sale of such goods is subject to VAT and, if so, what is the chargeable event.

40As a preliminary observation, it should be noted that, under Article 2 of the Sixth Directive, VAT is charged on the importation of goods and the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such.

41It needs to be verified, first, whether goods such as those at issue in the main proceedings have been subject to importation within the meaning of Article 2(2) of the Sixth Directive.

42According to Article 7(1)(a) of the Sixth Directive, ‘importation of goods’ means the entry into the Community of goods which do not fulfil the conditions laid down in Articles 23 EC and 24 EC.

43Article 7(3) of the Sixth Directive provides that, where such goods are, on entry into the Community, placed under one of the arrangements referred to in Article 16(1)(B)(a), (b), (c) and (d) of that directive, their importation is effected in the Member State within the territory of which they cease to be covered by those arrangements.

44In this case, the goods in question, coming from a non-member country, were placed under the customs warehousing procedure of a Member State, then under inward processing arrangements in the form of a system of suspension, and were sold before being once again placed under the customs warehousing procedure of that same Member State.

45Consequently, those goods have been placed since their entry into the Community under the two arrangements referred to in Article 16(1)(B)(c) of the Sixth Directive.

46Since the goods at issue had not yet left those arrangements at the date of the sale at issue, even though they had been physically introduced into the territory of the Union, they cannot have been the subject-matter of an ‘importation’ within the meaning of Article 2(2) of the Sixth Directive (see, to that effect, Case C-305/03 Commission v United Kingdom [2006] ECR I-1213, paragraph 41).

47In that respect, the fact that those goods changed customs arrangement does not confer on them the status of imported goods, the two customs arrangements concerned being referred to in Article 7(3) of the Sixth Directive.

48Consequently, in the absence of importation at the date of the facts of the dispute in the main proceedings, the goods at issue were not subject to VAT under Article 2(2) of the Sixth Directive.

49In those circumstances, it needs to be examined, secondly, whether the sale of goods such as those at issue in the main proceedings constitutes a supply of goods effected for consideration within the territory of the country by a taxable person acting as such, within the meaning of Article 2(1) of the Sixth Directive.

50In that respect, first, it should be noted that, according to Article 5(1) of the Sixth Directive, ‘supply of goods’ means the transfer of the right to dispose of tangible property as owner. The case‑law of the Court of Justice states that that term covers any transfer of tangible property by one party who empowers the other party actually to dispose of it as if he were the owner of the property (see, in particular, Case C-320/88 Shipping and Forwarding Enterprise Safe [1990] ECR I-285, paragraph 7; Joined Cases C-497/09, C-499/09, C-501/09 and C-502/09 Bog and Others [2011] ECR I-1457, paragraph 59).

51Second, a supply of goods or services ‘for consideration’, within the meaning of Article 2(1) of the Sixth Directive, presupposes the existence of a direct link between the goods or service provided and the consideration received (Case 102/86 Apple and Pear Development Council [1988] ECR 1443, paragraph 12; Case C-53/09 and C-55/09 Loyalty Management UK and Baxi Group [2010] ECR I-9187, paragraph 51).

52Third, the supply of goods must be effected by a ‘taxable person acting as such’. A taxable person acts in that capacity where he carries out transactions in the course of his taxable activity (Case C‑587/10 VSTR [2012] ECR, paragraph 49). In this case, it is apparent from the order for reference that Profitube is a taxable person registered for VAT.

53It follows that a sale such as that at issue constitutes a supply of goods effected for consideration by a taxable person acting as such. In the case at issue in the main proceedings, the place of supply was the place where the goods were located at the date of that sale, namely the public customs warehouse used by Profitube, situated in Slovak territory.

54Fourth, the referring court asks, more particularly, whether a customs warehouse situated in the territory of a Member State is located ‘within the territory of the country’ within the meaning of Article 2(1) of the Sixth Directive.

55In that regard, it should be recalled that, according to Article 3(2) of the Sixth Directive, ‘within the territory of the country’ corresponds to the territorial scope of the EC Treaty, as defined, for each Member State, in Article 299 EC.

56Article 299 EC lists, in paragraph 1, the Member States to which the Treaty is to apply, while providing, in the following paragraphs, special provisions for certain specific territories.

57Article 3(3) of the Sixth Directive expressly excludes certain national territories from the scope of that directive.

58In this case, none of the provisions mentioned in paragraphs 56 and 57 of this judgment or any other provision of the Sixth Directive provides that customs warehouses, be they public or private, are not ‘within the territory of the country’ if they are situated in the territory of a Member State, as specified by Article 3(1) of the Sixth Directive. The customs code, with regard to its scope, does not establish a special status for customs warehouses.

59Consequently, for the purposes of Article 2(1) of the Sixth Directive, a customs warehouse is ‘within the territory of the country’ where it is situated in the territory of a Member State.

60Moreover, it should be noted that Article 2(1) of the Sixth Directive does not make any distinction according to whether a supply concerns Community goods or not. Therefore, contrary to what Profitube maintains in its written pleadings, the fact that the goods in question have not given rise to an importation did not, in itself, exclude the existence of a supply in the territory of a Member State.

61Having regard to the foregoing, it must be held that, in principle, a sale such as that at issue is subject to VAT under Article 2(1) of the Sixth Directive, the chargeable event taking place at the date on which the supply of goods is effected, in accordance with Article 10(2) of that directive.

62However, Article 16(1) of the Sixth Directive, with regard to the arrangements referred to in (B) and (D) of that paragraph, provides that Member States may exempt from VAT supplies of goods intended to be placed under a customs warehousing procedure or inward processing arrangements, or supplies carried out at the places listed in (B), (a) to (d), where one of those situations is maintained, provided those transactions are not aimed at final use and/or consumption and that the amount of VAT due on cessation of the arrangement corresponds to the amount of tax which would have been due had each of those transactions been taxed within the territory of the country.

63Member States may therefore exempt certain transactions carried out within the country in respect of goods placed under the arrangements or situations referred to in Article 16(1), (B) and (D), including the customs warehousing procedure, inward processing arrangements and transactions carried out in a customs warehouse (see, to that effect, Commission v United Kingdom, paragraph 40).

64As the Advocate General has pointed out in points 29 and 30 of his Opinion, Article 16(1) of the Sixth Directive clearly confirms the interpretation that, in principle, a supply of goods placed under a suspensory customs arrangement, effected for consideration by a taxable person in a customs warehouse situated in the territory of a Member State, is subject to VAT under Article 2(1) of the Sixth Directive.

65In this case, as the applicant in the main proceedings, the Member States who have submitted written observations and the European Commission have maintained, the sale at issue is subject to VAT, unless the Slovak Republic has used the facility opened to it under Article 16(1) of the Sixth Directive to exempt that sale from VAT.

66It is for the national court to verify whether the Slovak Republic has made use of that facility.

67Therefore, the answer to the first and third questions is that, where goods from a non-member State have been placed under the customs warehousing procedure in a Member State, and have then been processed under inward processing arrangements in the form of a system of suspension and subsequently sold and placed once again under the customs warehousing procedure, remaining throughout all those transactions in the same customs warehouse situated in the territory of that Member State, the sale of such goods is subject to VAT under Article 2(1) of the Sixth Directive, unless the said Member State has made use of the facility opened to it to exempt that sale from the tax under Article 16(1) of that directive, which it is for the national court to verify.

The second and fourth questions

68Having regard to the answer given to the first and third questions, there is no need to answer the second and fourth questions referred by the national court.

Costs

69Since 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 (First Chamber) hereby rules:

Where goods from a non-member State have been placed under the customs warehousing procedure in a Member State, and have then been processed under inward processing arrangements in the form of a system of suspension and subsequently sold and placed once again under the customs warehousing procedure, remaining throughout all those transactions in the same customs warehouse situated in the territory of that Member State, the sale of such goods is subject to value added tax under Article 2(1) 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, as amended by Council Directive 2004/66/EC of 26 April 2004, unless the said Member State has made use of the facility opened to it to exempt that sale from the tax under Article 16(1) of that directive, which it is for the national court to verify.

Signatures

[Signatures]

( *1 ) Language of the case: Slovak.

OPINION OF ADVOCATE GENERAL

MENGOZZI

delivered on 22 May 2012 ¹

‛Value added tax — Goods imported from a non-member state and placed under a suspension arrangement in a customs warehouse in a Member State — Sale of goods with the suspension arrangement maintained — Supply of goods — Taxable transaction’

1If a product is imported into the European Union using a suspension arrangement provided for in the customs rules, for example in order to be processed and then re-exported to a non-member state, that product does not acquire the status of Community goods. Accordingly, as far as Customs are concerned, no duty is due. What happens, however, if that product, which is in a customs warehouse, is sold by one EU business to another EU business while remaining, physically, in that same warehouse and, legally, under that suspension arrangement? In particular, must value added tax (‘VAT’) be paid on that sales transaction? That, in essence, is the question which the Slovak Supreme Court has put to the Court of Justice in its reference for a preliminary ruling.

I – Legislative framework

A – Customs legislation

2The concept of the ‘customs territory’ of the European Union is defined in Article 3 of the Customs Code. ² In particular, under that article, the customs territory is to comprise the territory of all the Member States, with the exception of those places expressly mentioned in that article.

3Article 84 of the Customs Code lists ‘[s]uspensive arrangements’: in particular, those include customs warehousing and inward processing in the form of a system of suspension. Such arrangements enable non-Community goods to be introduced into the customs territory of the European Union pursuant to Articles 98 and 114 without having to pay duties. Customs warehousing is designed to allow goods to be stored, while inward processing is designed to allow those goods to be processed.

4Under Article 98(2) of the Customs Code, a customs warehouse is ‘any place approved by and under the supervision of the customs authorities where goods may be stored under the conditions laid down’.

B – VAT legislation

5At the time when the facts concerned in the main proceedings occurred, that is, in 2005-2006, the VAT legislation applicable was that contained in the Sixth Directive. ³

6According to Article 2 of the Sixth Directive, the following are to be subject to VAT:

the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such;

2the importation of goods’.

7According to Article 5(1), the ‘[s]upply of goods’ means ‘the transfer of the right to dispose of tangible property as owner’.

8For the purposes of the Sixth Directive, the territory of the European Union is defined in Article 3. It comprises the territory of the Member States, excluding the places expressly mentioned in that article.

9Article 16 of the Sixth Directive contains some rules concerning exemptions from VAT. In particular, that article, as amended – using a curious legislative technique – by Article 28c of that directive, ⁴ provides as follows:

Without prejudice to other Community tax provisions, Member States may, subject to the consultations provided for in Article 29, take special measures designed to exempt all or some of the following transactions …

…

supplies of goods which are intended to be:

…

placed under customs warehousing arrangements or inward processing arrangements;

…

supplies of goods and of services carried out:

in the places listed in B (a), (b), (c) and (d) and still subject to one of the situations specified therein;

…’

10Thus, in essence, Article 16 of the Sixth Directive authorises the Member States to exempt from VAT the sale of goods which are subject to a customs suspension arrangement and which remain subject to that arrangement after their sale.

II – Facts of the case, main proceedings and questions referred

11The case in the main proceedings concerns some semi-finished steel products (coils) imported from Ukraine on behalf of the Slovakian company Profitube and placed under a suspension arrangement in Slovakia. More specifically, the goods were placed under a customs warehousing arrangement at first, and then under an inward processing arrangement in order to be processed into structural steel.

12The goods were then sold by Profitube to another Slovakian company, MERCURIUS, and were once again placed under the customs warehousing arrangement, without actually leaving the warehouse they had been stored in.

13The Slovakian tax authorities requested payment of the VAT relating to that sale by Profitube to MERCURIUS, considering that transaction, for the purposes of VAT, to be a normal supply of goods subject to tax.

14Profitube contested that assessment by the tax authorities in judicial proceedings, submitting that, since the goods in question are not considered Community goods under Customs law, those goods should not fall within the scope of the VAT rules either.

15Profitube’s action was successful at first instance before the Krajský súd (Regional Court) of Bratislava, which annulled the assessment by the tax authorities. On appeal, however, that position was overturned by the Najvyšší súd (Supreme Court), the referring court in the present case, which considered the transaction to be subject to VAT.

16However, Profitube brought an appeal before the Ústavný súd (Constitutional Court), which set aside the judgment of the Supreme Court and referred the case back to that court. In particular, according to the Constitutional Court, the Supreme Court had not sufficiently considered some provisions of Slovakian law that could endorse the primacy of the customs legislation over the legislation relating to VAT.

17At that point, the Supreme Court decided to stay the proceedings and submit the following questions to the Court of Justice for a preliminary ruling:

In a situation in which, in 2005 and 2006, goods from a non‑member state of the European Union (Ukraine) were placed in a public customs warehouse in the territory of a Member State of the European Union by an importer from that Member State, were subsequently processed in an inward processing suspension procedure in that customs warehouse, and the resulting product was not immediately exported within the meaning of Article 114 of Regulation No 2913/92 but instead was sold in that same warehouse by the processor of the goods to another company from that Member State, which did not release it from the customs warehouse for free circulation, but subsequently returned it to the customs warehousing procedure, is that sale of goods within the same customs warehouse still subject solely to Community customs rules, or has the legal situation been changed by that sale to the extent that the transaction is now subject to the system under the Sixth Council Directive of 17 May 1977 (77/388/EEC), i.e., is it possible, for the purpose of the system of value added tax under the Sixth Directive, to regard a public customs warehouse located in the territory of a Member State as part of the territory of the Community, or the territory of that Member State, in accordance with the definitions provided in Article 3 of the Sixth Directive?

2In light of the doctrine of abuse of rights developed by the Court of Justice of the European Union and concerning the application of the Sixth Directive (C‑255/02 Halifax and Others), is it possible to treat the above as a situation in which the applicant, by selling goods in a public customs warehouse located in the territory of the Slovak Republic, has already made supply for consideration in the Slovak Republic?

3If the reply to the first question is in the affirmative, in that the transaction in question is now subject to the system under the Sixth Directive, is that transaction then a chargeable event

under Article 10(1) and (2) of the Sixth Directive, with the tax becoming chargeable as a result of the delivery of the goods in the customs warehouse located in the territory of the Slovak Republic; or

on the ground that, after the goods were imported from a third country (Article 10(3) of the Sixth Directive), the customs procedure ended while the goods were held in storage in that customs warehouse upon sale thereof to another person from the Member State?

4Are the objectives of the Sixth Directive as expressed in the preamble thereof, or the objectives of the GATT (WTO), attained if the sale of goods imported from a third country to a customs warehouse and then processed therein and sold to another person from that Member State in the customs warehouse in the territory of the Member State of the European Community is not subject to value added tax in that Member State?’

III – Appraisal

A – The obligation to pay VAT (in particular, Questions 1 and 3)

18In general, VAT is payable on goods whenever they are imported or sold. In the present case, it is not disputed that there had been no importation from the time when the goods at issue in the main proceedings were placed under the customs suspension arrangement. Accordingly, any obligation to pay VAT may be based only on the existence of a ‘supply of goods’ displaying the characteristics mentioned in the Sixth Directive.

19More specifically, as a general rule, VAT is payable, for a supply of goods, when three cumulative conditions are met. Under Article 2 of the Sixth Directive, first, the transaction must be a supply of goods effected for consideration; second, the supply must be effected by a taxable person acting as such.

20Third, the transaction must be carried out within the territory of the European Union, as defined in Article 3 of the Sixth Directive.

21In the present case, the referring court casts no doubt on the satisfaction of the first two conditions and it is not therefore necessary to examine them further. The sale was carried out for consideration by a taxable person acting as such, and involved the transfer by the seller to the buyer of the right to dispose of property as owner. The questions referred seek rather to clarify whether the third condition has also been met. According to the interpretation given by the applicant in the main proceedings, goods which are under a suspension arrangement (and therefore have not become Community goods under customs law) should not be considered as being situated, for the purposes of VAT, within the territory of the European Union. On the other hand, all the other parties who have submitted observations in the present case have contended that the sale of the goods by Profitube to MERCURIUS was a normal economic transaction subject to VAT.

22The questions raised by the national court lend themselves to being considered together, since they concern a single underlying issue. Moreover, as will be seen, if the answer to the questions is that the Sixth Directive requires payment of VAT, there is no need to answer Questions 2 and 4.

23This is precisely my position. In my view, VAT is payable. No rule exists in EU law permitting exemption from the obligation to pay tax in a situation involving the sale of goods placed – and intended to remain – under a customs suspension arrangement.

24First, it should be noted that, in EU law, the customs rules and the rules relating to VAT are two fundamentally different bodies of legislation. That does not mean, of course, that there are no reciprocal relations between the two: for example, Article 16 of the Sixth Directive, as can be seen, governs a situation to which both the customs rules and the rules relating to VAT must be applied. What must be clearly understood, however, is that two sets of rules are concerned which, on the one hand, have the same ranking as instruments of secondary legislation – so there can be no automatic primacy of the one over the other – and which, on the other hand, pursue totally different objectives. The fact that some goods are part of a ‘special’ arrangement under customs law does not mean that they must automatically receive special treatment under VAT law, and vice versa.

25Second, for the purposes of VAT, a customs warehouse is indisputably a part of the territory of the European Union. The Sixth Directive expressly specifies those parts of the territory of the Member States to which the VAT system does not apply, and it does not mention customs warehouses. The Court itself has already found (in a case which had some similarities with the present case) that, for the purposes of VAT, a customs warehouse is part of the territory of the European Union. ⁵ More generally, as the case‑law shows, the rules laid down in the Sixth Directive ‘have binding and mandatory force throughout the national territory of the Member States’. ⁶

26Accordingly, the fact that the goods supplied in the present case were physically situated in a customs warehouse is irrelevant for the purposes of VAT, just as it is irrelevant, in that regard, that those goods were subject to a customs suspension arrangement.

27Moreover, even in customs law, customs warehouses are part of the territory of the European Union. The fact that the goods in those warehouses may have a special customs status, linked to their being easy to inspect, does not alter the fact that they are in no way extraterritorial locations: they are merely, as Article 98(2) of the Customs Code states, places approved by the customs authorities for storing goods in accordance with certain specific conditions.

28Accordingly, a sale such as the one being examined by the court in the main proceedings is a supply of goods located within the territory of the European Union and is subject to the obligation to pay VAT.

29Article 16 of the Sixth Directive also confirms, unequivocally in my view, that this interpretation is correct.

30As can be seen above, that article states that the Member States may exempt certain transactions from VAT, including the supply of goods which are under a customs suspension arrangement and remain under that arrangement following that transaction. That means that a Member State could decide to exempt a sale such as the one in question in the present case from VAT. ⁷ However, it is clear that, although the Sixth Directive states that the Member States may exempt transactions such as the one at issue in the present case from VAT, where that exemption is not granted, the VAT will have to be paid. It would make no sense to provide for the possibility of exemption from VAT if payment of that tax were not the general rule. In other words, the Sixth Directive relies on the premiss that a sale of goods which are under a customs suspension arrangement is normally subject to VAT and may be exempted only if the Member States decide to grant an exemption.

31In the present case, it is clear from the observations submitted to the Court that Slovakia has not granted an exemption: the Slovakian Government itself has expressly confirmed that fact. However, it is clearly for the national court to establish whether or not there exist any national provisions which may have introduced the exemptions allowed under Article 16 of the Sixth Directive into national law.

B – Questions 2 and 4

32In the light of the answer that I propose to give to the main question raised by the national court, it is not necessary for the Court to examine Questions 2 and 4, which have been formulated purely for examination if the Court were to affirm that, in a situation such as that at issue in the present case, VAT is not payable.

IV – Conclusion

Conclusion

33In the light of the foregoing considerations, I propose that the Court give the following answer to the questions submitted by the Najvyšší súd Slovenskej republiky:

Unless a Member State has made use of the opportunity to grant an exemption under Article 16 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, the fact that a sale involves goods placed under a customs suspension arrangement and/or placed in a customs warehouse does not alter that sale’s being subject to value added tax.

¹ Original language: Italian.

² Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Community Customs Code (OJ 1992 L 302, p. 1), as amended.

³ 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), as amended.

⁴ The part of Article 28c which amends Article 16 was inserted by Council Directive 95/7/EC of 10 April 1995 amending Directive 77/388/EEC and introducing new simplification measures with regard to value added tax – scope of certain exemptions and practical arrangements for implementing them (OJ 1995 L 102, p. 18).

⁵ Case C-305/03 Commission v United Kingdom [2006] ECR I-1213, paragraph 40. The Court observed in that case that the opportunity for exemption provided for in Article 16 of the Sixth Directive relates to ‘transactions effected within the territory of the country’.

⁶ Case C-111/05 Aktiebolaget NN [2007] ECR I-2697, paragraph 55.

⁷ Some doubt may be expressed here, claiming that the exemption set out in Article 16 should be applied only where there is a supply of goods whose customs status remains unchanged despite that transaction, whereas in the present case the goods were transferred at the moment of their supply from an inward processing arrangement to a customs warehousing arrangement. However, I maintain that such a reading would not be correct, and that the transferral from one suspension arrangement to another does not prevent that transaction from being exempted, provided that such exemption is provided for by the Member State concerned.