C-174/14 Saudaçor

JUDGMENT OF THE COURT (Fourth Chamber)

29 October 2015 ( *1 )

‛Reference for a preliminary ruling — Value added tax — Directive 2006/112/EC — Article 13(1) — Treatment as a non-taxable person — Concept of ‘body governed by public law’ — Limited company which is responsible for the provision of services in respect of the planning and management of the health service of the Autonomous Region of the Azores — Determination of the detailed arrangements for those services, including their remuneration, in programme agreements concluded between that company and that region’

In Case C‑174/14,

REQUEST for a preliminary ruling under Article 267 TFEU from the Supremo Tribunal Administrativo (Supreme Administrative Court, Portugal), made by decision of 12 March 2014, received at the Court on 9 April 2014, in the proceedings

Saudaçor — Sociedade Gestora de Recursos e Equipamentos da Saúde dos Açores SA

v

Fazenda Pública,

THE COURT (Fourth Chamber),

composed of L. Bay Larsen, President of the Third Chamber, acting as President of the Fourth Chamber, J. Malenovský, M. Safjan, A. Prechal (Rapporteur) and K. Jürimäe, Judges,

Advocate General: N. Jääskinen,

Registrar: M. Ferreira, Principal Administrator,

having regard to the written procedure and further to the hearing on 19 March 2015,

after considering the observations submitted on behalf of:

Saudaçor — Sociedade Gestora de Recursos e Equipamentos da Saúde dos Açores SA, by G. Leite de Campos, M. Clemente and J. Batista Pereira, advogados,

the Portuguese Government, by L. Inez Fernandes and R. Campos Laires, acting as Agents,

the United Kingdom Government, by L. Christie, acting as Agent, and by P. Mantle, Barrister,

the European Commission, by P. Guerra e Andrade and L. Lozano Palacios, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 25 June 2015,

gives the following

Judgment

Legal context and the dispute

1This request for a preliminary ruling concerns the interpretation of Article 1(9) of Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts (OJ 2004 L 134, p. 114), and of Article 13(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1).

2The request has been made in proceedings between Saudaçor — Sociedade Gestora de Recursos e Equipamentos da Saúde dos Açores SA (‘Saudaçor’) and the Fazenda Pública (Public Treasury) concerning that company’s liability to value added tax (VAT) in respect of its activities concerning the planning and management of the health service of the Autonomous Region of the Azores (‘the RAA’).

Legal context

EU law

3Directive 2006/112 repealed and replaced, with effect from 1 January 2007, the existing Community VAT legislation, in particular the 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’).

4According to the first and third recitals in the preamble to Directive 2006/112, the recasting of the Sixth Directive was necessary in order to present all the applicable provisions in a clear and rational manner and in an improved structure and drafting which would not, in principle, bring about material change.

5Article 2(1)(c) of Directive 2006/112 states:

‘The following transactions shall be subject to VAT:

...

the supply of services for consideration within the territory of a Member State by a taxable person acting as such.’

6Under Article 9(1) of that directive:

‘“Taxable person” shall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity.

Any activity of producers, traders or persons supplying services, including mining and agricultural activities and activities of the professions, shall be regarded as “economic activity”. The exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis shall in particular be regarded as an economic activity.’

7Article 13 of that directive provides:

‘1. States, regional and local government authorities and other bodies governed by public law shall not be regarded as taxable persons in respect of the activities or transactions in which they engage as public authorities, even where they collect dues, fees, contributions or payments in connection with those activities or transactions.

However, when they engage in such activities or transactions, they shall be regarded as taxable persons in respect of those activities or transactions where their treatment as non-taxable persons would lead to significant distortions of competition.

In any event, bodies governed by public law shall be regarded as taxable persons in respect of the activities listed in Annex I, provided that those activities are not carried out on such a small scale as to be negligible.

2. Member States may regard activities, exempt under Articles 132 ..., engaged in by bodies governed by public law as activities in which those bodies engage as public authorities.’

8Pursuant to Article 1(9) of Directive 2004/18:

‘“Contracting authorities” means the State, regional or local authorities, bodies governed by public law, associations formed by one or several of such authorities or one or several of such bodies governed by public law.

A “body governed by public law” means any body:

established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character;

having legal personality; and

financed, for the most part, by the State, regional or local authorities, or other bodies governed by public law; or subject to management supervision by those bodies; or having an administrative, managerial or supervisory board, more than half of whose members are appointed by the State, regional or local authorities, or by other bodies governed by public law.

Non-exhaustive lists of bodies and categories of bodies governed by public law which fulfil the criteria referred to in (a), (b) and (c) of the second subparagraph are set out in Annex III. ...’

Portuguese Law

Legislation in respect of VAT

9Article 2(2) of the VAT Code (Código do IVA) provides that the State and other legal persons governed by public law are not taxable persons for VAT purposes where they engage in transactions in the exercise of their powers conferred by public law, even where they collect fees or other consideration in that connection, in so far as their treatment as non-taxable persons does not cause distortions of competition.

10Article 2(3) of that code provides that the State and other legal persons governed by public law are in any event taxable persons for VAT purposes where they engage in certain activities and for the ensuing taxable transactions, unless it is shown that those activities are negligible.

The legal regime for Saudaçor

11Saudaçor was created by Regional Legislative Decree No 41/2003/A of the RAA transforming the Institute of Financial Management of the Health Service of the Autonomous Region of the Azores into a limited company with exclusively public capital called SAUDAÇOR — Sociedade Gestora de Recursos e Equipamentos da Saúde dos Açores SA, and amending Regional Legislative Decree No 28/99/A of 31 July (Decreto Legislativo Regional n.° 41/2003/A, Transforma o Instituto de Gestão Financeira da Saúde da Região Autónoma dos Açores em sociedade anónima de capitais exclusivamente públicos, passando a designar-se SAUDAÇOR — Sociedade Gestora de Recursos e Equipamentos da Saúde dos Açores, SA, e altera o Decreto Legislativo Regional n.° 28/99/A, de 31 de Julho), of 17 October 2003 (Diário da República I, Series A No 257, 6 November 2003, p. 7430), that company being wholly owned by that region.

12Under Article 2(1) of that regional legislative decree, Saudaçor has the task of providing services of general economic interest in the field of health. The object of that task is the planning and management of the regional health system and associated information systems, infrastructure and facilities and the completion of construction, conservation, rehabilitation and reconstruction work on health establishments and services, in particular in areas covered by natural disasters and in areas regarded as risk areas.

13Under Article 3 of Regional Legislative Decree No 41/2003/A:

‘In the context of its task of providing services of general economic interest, Saudaçor shall have the following functions:

providing centralised supplies to the regional health service;

providing goods and services to member entities of the regional health service;

granting financing to health establishments in accordance with the health-care objectives to which each establishment has contractually committed;

defining rules and guidelines for budget management of health establishments and monitoring its implementation;

evaluating the economic and financial management of institutions and services forming part of the regional health service or financed by it and drawing up periodic reports on its financial situation and on the management of its human and material resources;

encouraging the development of information systems for institutions under the aegis of the regional health service;

carrying out works on the regional health service which are desirable in the public interest;

providing support to the services and establishments of the regional health service in areas where this proves necessary.’

14Article 4(1) of that regional legislative decree provides that Saudaçor is governed by that instrument, by the articles of association annexed thereto, by the legal regime for public undertakings as provided for by Decree-Law No 558/99 (Decreto-Lei n.° 558/99) of 17 December 1999 (Diário da República I, Series A No 292, 17 December 1999, p. 9012), and by private law. Under Article 4(2) of the same regional legislative decree, in its activities Saudaçor must respect the rules governing the organisation and operation of the regional health service of the RAA.

15Article 10 of Regional Legislative Decree No 41/2003/A provides that, in the performance of its functions, Saudaçor holds the same powers conferred by public law as the RAA and then lists, by way of example, some of those powers, including the power to carry out expropriations.

16Under Article 7(3) of Decree-Law No 558/99, as amended, public undertakings are taxed, directly and indirectly, in accordance with the common regime. An identical provision is found in Article 9(2) of Regional Legislative Decree No 7/2008/A governing public sector undertakings of the Autonomous Region of the Azores (Decreto Legislativo Regional n.o 7/2008/A, Regime do sector público empresarial da Região Autónoma dos Açores) of 5 March 2008 (Diário da República I, Series A No 58, 24 March 2008, p. 1649), in respect of regional public undertakings.

17Saudaçor performs its activities within the framework of programme agreements concluded, in accordance with Article 21(1) of its articles of association, with the Government of the RAA, which define, inter alia, the services which it must provide for the planning and management of the regional health service and the compensation, called the ‘financial contribution’, to be paid by that region in consideration for those services and designed to cover the operating costs of Saudaçor.

18Thus, a first programme agreement was concluded on 23 July 2004, covering the period 2004–2008, which provided for total compensation of EUR 15905000, including a sum of EUR 3990000 for 2007 and a sum of EUR 4050000 for 2008. Clause 5 of that agreement provided that that total amount could be revised by a joint order issued by the members of the government responsible for finance and health if, on account of a change in circumstances, that amount was manifestly insufficient to allow performance of that agreement. A second programme agreement was concluded on 1 January 2009, covering the period 2009–2012, which provided for annual compensation of EUR 8500000 and a revision clause similar to that stipulated in the previous agreement. By joint order of 8 March 2010 issued by the members of the Government of the RAA responsible for finance and health, that amount was reduced to EUR 6599147 for 2009.

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

19On 2 March 2011, the Public Treasury drew up a draft inspection report proposing corrections concerning the VAT payable by Saudaçor in respect of the financial years 2007 to 2010 totalling EUR 4 750 586.24.

20On 6 April 2011, the inspection report was adopted, after Saudaçor had been heard.

21In that report, the Public Treasury held, inter alia, that, in view of its legal regime, Saudaçor could not rely on the rule under which bodies governed by public law are not regarded as taxable persons for VAT purposes, laid down in Article 2(2) of the VAT Code, a provision which seeks to transpose the first subparagraph of Article 4(5) of the Sixth Directive, the content of which is the same as that of the first subparagraph of Article 13(1) of Directive 2006/112.

22According to the Public Treasury, the services provided by Saudaçor in respect of the planning and management of the regional health service under the programme agreements concern areas of activity involving private initiative, which means that treatment as a non-taxable person for VAT purposes might lead to distortions of competition. That is the case, for example, with the management and maintenance of the computer system for the region’s health sector. There is, in actual fact, in the Public Treasury’s view, an activity of an economic nature, with the result that the contributions laid down in the programme agreements and paid by the regional authorities in consideration for those services are subject to VAT. Furthermore, Saudaçor had accepted that it was subject to VAT in so far as it claimed a total sum of EUR 2 300 273.17 as VAT deductions on its purchases of goods and services.

23Saudaçor brought an action before the Tribunal Administrativo e Fiscal de Ponta Delgada (Ponta Delgada Administrative and Tax Court) against the notices requiring payment of VAT and compensatory interest concerning the financial years 2007 to 2010, which demanded that it pay a total of EUR 5 157 249.72.

24By its judgment, that court dismissed that action on the ground, inter alia, that, for the purpose of interpreting the rule laid down in the first subparagraph of Article 13(1) of Directive 2006/112, under which bodies governed by public law are not regarded as taxable persons for VAT purposes, there is no need to refer to the concept of ‘body governed by public law’ defined, in the context of public procurement law, in Article 1(9) of Directive 2004/18 since the latter concept is understood in a broad sense, whereas the concept of ‘body governed by public law’ within the meaning of the first subparagraph of Article 13(1) of Directive 2006/112 must be interpreted strictly when applying the rule of treatment as a non-taxable person for VAT purposes because that rule constitutes an exception to the general rule of taxation of any economic activity.

25According to that court, that rule of treatment as a non-taxable person for VAT purposes does not cover an entity like Saudaçor which, although created by the RAA, is a limited company which is distinct from the region and subject to the rules of private law and which pursues its functions and objectives independently.

26The Tribunal Administrativo e Fiscal de Ponta Delgada (Ponta Delgada Administrative and Tax Court) also considered that the services provided by Saudaçor in connection with the programme agreements constitute an activity of an economic nature, since they are provided for consideration. According to that court, the contributions paid by the RAA represent consideration for the services provided by Saudaçor and cannot be regarded as constituting budgetary transfers between public entities.

27Hearing an appeal against that judgment, the referring court considers that the central issue in the case in the main proceedings is whether an entity such as Saudaçor can rely on the rule laid down in Article 2(2) of the VAT Code, the content of which corresponds to that of Article 13(1) of Directive 2006/112, under which bodies governed by public law are not regarded as taxable persons for VAT purposes, and whether the amounts to which the notices of payment of VAT relate constitute budgetary transfers between public entities.

28It considers that, whilst it is clearly established in the Court’s case-law that only the activities of bodies governed by public law acting as public authorities are excluded from liability to VAT, it cannot be determined on the basis of that case-law whether an entity such as Saudaçor, having regard to its legal status as a limited company originating from the transformation of a State entity, comes within that concept of body governed by public law. The question arises in particular whether the scope of that concept tallies with the scope of the concept of ‘body governed by public law’ in Article 1(9) of Directive 2004/18 in the context of the definitions of the various categories of ‘contracting authorities’.

29In those circumstances the Supremo Tribunal Administrativo (Supreme Administrative Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

Must the concept of body governed by public law within the meaning of the first paragraph of Article 13(1) of Directive 2006/112 be interpreted ... by reference to the concept of “body governed by public law” [as defined in] Article 1(9) of Directive 2004/18?

Is an entity established as a limited company, with exclusively public capital and 100% owned by the RAA, and whose object is the exercise of consultancy and management activities in matters relating to the regional health service, with the purpose of developing and reorganising it through the performance of programme agreements concluded with that region, which holds by delegation the public-authority powers conferred in those matters on the region which was originally responsible for providing the public health service, covered by the concept of a “body governed by public law” acting as a public authority for the purpose of the first subparagraph of Article 13(1) of Directive 2006/112?

In the light of the provisions of that directive, may the consideration received by that company, which consists in the making available of the financial resources necessary for the performance of those programme agreements, be regarded as payment for the services provided, for the purposes of liability to VAT?

If so, does that company satisfy the requirements necessary in order to be entitled to rely upon the rule governing not being regarded as a taxable person laid down in Article 13(1) of Directive 2006/112?’

Consideration of the questions referred

The third question

30By its third question, which it is appropriate to examine first, the referring court asks, in essence, whether Article 9(1) of Directive 2006/112 must be interpreted as meaning that an activity such as that at issue in the main proceedings, whereby a company provides a region with services in respect of the planning and management of the regional health service under the programme agreements concluded between that company and that region, constitutes an economic activity within the meaning of that provision.

31The Court has already ruled that it is clear from the scheme and purpose of that directive, as well as from the place of Article 13 of that directive in the common system of VAT established by the Sixth Directive, that any activity of an economic nature is, in principle, to be taxable. As a general rule and in accordance with Article 2(1) of Directive 2006/112, the supply of services for consideration, including those provided by bodies governed by public law, is to be subject to VAT. Articles 9 and 13 of that directive thus give a very wide scope to VAT (judgment in Commission v Netherlands, C‑79/09, EU:C:2010:171, paragraph 76 and the case-law cited).

32The possibility of classifying a supply of services as a transaction for consideration requires only that there be a direct link between that supply and the consideration actually received by the taxable person. Such a direct link is established if there is a legal relationship between the provider of the service and the recipient pursuant to which there is reciprocal performance, the remuneration received by the provider of the service constituting the actual consideration for the service supplied to the recipient (see, inter alia, judgment in Serebryannay vek, C‑283/12, EU:C:2013:599, paragraph 37 and the case-law cited).

33In view of the nature of the analysis to be carried out and as the Court has already held, it is for the national court to classify the activities at issue in the main proceedings in the light of the criteria adopted by the Court (judgment in Fazenda Pública, C‑446/98, EU:C:2000:691, paragraph 23, and order in Gmina Wrocław, C‑72/13, EU:C:2014:197, paragraph 18).

34In the present case, it is for the referring court to establish whether it is apparent from the documents in the court file and in particular from the programme agreements concluded between Saudaçor and the RAA that the activities of that company are effected for consideration and, therefore, are of an economic nature. None the less, the Court may provide the referring court, in the light of the information in the order for reference, with the points of interpretation which are likely to enable the referring court to give its ruling.

35In that regard, it is apparent from the order for reference that, in the actual wording of those agreements, the RAA is required to pay to Saudaçor, ‘as consideration’ for the services in respect of the planning and management of the regional health service to be provided by it, compensation, called the ‘financial contribution’, the amount of which is stated in those agreements.

36In the light of the permanent and continuous nature of the planning and management services provided by Saudaçor, the fact that that compensation is determined not on the basis of individualised services but on a flat-rate and annual basis to cover the operating costs of that company is not in itself such as to affect the direct link between the supply of services made and the consideration received, the amount of which is determined in advance on the basis of well-established criteria (see, to that effect, judgment in Le Rayon d’Or, C‑151/13, EU:C:2014:185, paragraphs 36 and 37).

37The existence of that direct link also does not appear to be called into question by the fact that the programme agreements concluded between Saudaçor and the RAA contain clauses which stipulate that the amount of compensation payable to Saudaçor may be adjusted where, because of a change of circumstances, that amount is manifestly insufficient to allow for the performance of those agreements.

38In so far as those clauses seek to determine in advance the level of that compensation on the basis of well-established criteria which ensure that that level is sufficient to cover the operating costs of Saudaçor, it may be held that those clauses are designed to adapt the amount of the flat-rate consideration for the services provided on a continuous and permanent basis by that company. In addition, whilst, as is apparent from the order for reference, for 2009, the annual compensation initially provided for was reduced by the RAA, the Portuguese Government explained at the hearing, without being contradicted by Saudaçor, that the sole purpose of that reduction was to correct a manifest calculation error.

39The direct link between the supply of services and the consideration received also does not appear to be called into question by the fact that, as Saudaçor maintains, its activity is intended to fulfil a constitutional obligation exclusively and directly incumbent upon the State under the Portuguese constitution, namely the obligation to implement a national health service which is universal and potentially free, to be financed, in essence, by public resources.

40Under Article 9(1) of Directive 2006/112, a taxable person means any person who, independently, carries out any economic activity, whatever the purpose or results of that activity.

41Moreover, whilst the objective of the implementation of a national health service which is universal and potentially free, which has to be financed, in essence, by public resources, is taken into account in the common system of VAT, in so far as, under Article 132(1) of that directive, certain provisions of medical care undertaken, in particular, by bodies governed by public law must be exempted from VAT, it is common ground that the activity of planning and managing the regional health service at issue in the main proceedings does not fall within one of those exemptions.

42Having regard to the foregoing considerations, the answer to the third question is that Article 9(1) of Directive 2006/112 must be interpreted as meaning that an activity such as that at issue in the main proceedings, whereby a company provides a region with services in respect of the planning and management of the regional health service under the programme agreements concluded between that company and that region, constitutes an economic activity within the meaning of that provision.

The first, second and fourth questions

43By its first, second and fourth questions, which it is appropriate to examine together, the referring court asks, in essence, whether Article 13(1) of Directive 2006/112 must be interpreted as meaning that an activity such as that at issue in the main proceedings, whereby a company provides a region with services in respect of the planning and management of the regional health service under the programme agreements concluded between that company and that region, falls under the rule of treatment as a non-taxable person for VAT purposes, laid down by that provision, in a situation where that activity constitutes an economic activity within the meaning of Article 9(1) of that directive.

44In that context, the referring court asks whether, as maintained by Saudaçor, the concept of ‘other bodies governed by public law’ within the meaning of Article 13(1) of that directive must be interpreted by reference to the definition of the concept of ‘body governed by public law’ in Article 1(9) of Directive 2004/18.

45Such an interpretation of Article 13(1) of Directive 2006/112 cannot be accepted.

46By defining in broad terms the concept of ‘body governed by public law’ and, as a result, the concept of ‘contracting authorities’, Article 1(9) of Directive 2004/18 seeks to define the scope of that directive in a sufficiently extensive manner so as to ensure that the rules on, in particular, transparency and non-discrimination which are required in connection with the award of public contracts apply to all State entities which do not form part of the public administration but which are nevertheless controlled by the State, in particular by means of their financing or their management.

47However, the context of the concept of ‘other bodies governed by public law’ referred to in Article 13(1) of Directive 2006/112 is fundamentally different.

48That concept is not intended to define the scope of VAT but, on the contrary, makes an exception to the general rule on which the common system of that tax is based, namely the rule that the scope of that tax is defined very broadly as covering all supplies of services for consideration, including those provided by bodies governed by public law (see, to that effect, judgment in Commission v Netherlands, C‑79/09, EU:C:2010:171, paragraphs 76 and 77).

49As an exception to the general rule that any activity of an economic nature be subjected to VAT, Article 13(1) of Directive 2006/112 is to be interpreted strictly (see, inter alia, judgment in Isle of Wight Council and Others, C‑288/07, EU:C:2008:505, paragraph 60, and order in Gmina Wrocław, C‑72/13, EU:C:2014:197, paragraph 19).

50It follows that, in the absence of any guidance in the wording of Article 13(1) of Directive 2006/112, it is necessary to take into account the scheme and purpose of that directive, as well as the place of that provision in the common system of VAT established by it (see, by analogy, judgment in Isle of Wight Council and Others, C‑288/07, EU:C:2008:505, paragraph 25).

51As the Court has consistently held, it is clear from Article 13(1) of Directive 2006/112, when examined in the light of the aims of the directive, that two conditions must both be fulfilled for the rule of treatment as a non-taxable person to apply: the activities must be carried out by a body governed by public law and they must be carried out by that body acting as a public authority (see to that effect, inter alia, order in Mihal, C‑456/07, EU:C:2008:293, paragraph 16 and the case-law cited, and judgment in Commission v Netherlands, C‑79/09, EU:C:2010:171, paragraph 79).

52In addition, the Court has also consistently held that it follows both from the need for uniform application of EU law and from the principle of equality that the terms of a provision of EU law which makes no express reference to the law of the Member States for the purpose of determining its meaning and scope must normally be given an autonomous and uniform interpretation throughout the European Union, which must take into account the context of that provision and the objective pursued by the legislation in question (see, inter alia, judgment in Fish Legal and Shirley, C‑279/12, EU:C:2013:853, paragraph 42).

53It must be noted that Article 13(1) of Directive 2006/112 makes no express reference to the law of the Member States.

54It follows that the concepts referred to in that provision, including that of ‘other bodies governed by public law’, must be given an autonomous and uniform interpretation throughout the European Union.

55Moreover, since, as has been noted in paragraph 49 of the present judgment, Article 13(1) of Directive 2006/112 must, as an exception, be interpreted strictly, it must be held that the list in that provision is exhaustive, the concept of ‘other bodies governed by public law’ constituting a residual category of bodies falling within the public authority other than those specifically mentioned in that provision.

56As regards, specifically, the first of the two conditions laid down in Article 13(1) of that directive, namely the condition that the body be governed by public law, the Court has already held that a person which, not being part of the public administration, independently performs acts falling within the powers of the public authority cannot be classified as a body governed by public law within the meaning of that provision (see to that effect, inter alia, order in Mihal, C‑456/07, EU:C:2008:293, paragraph 18 and the case-law cited).

57The Court has also made it clear that the status as a ‘body governed by public law’ cannot stem from the mere fact that the activity at issue consists in the performance of acts falling within powers conferred by public law (see to that effect, inter alia, order in Mihal, C‑456/07, EU:C:2008:293, paragraph 17 and the case-law cited).

58Nevertheless, whilst the fact that the body in question has, under the applicable national law, powers conferred by public law is not decisive for the purposes of that classification, it does constitute, in so far as it is an essential characteristic specific to any public authority, a factor of definite importance in determining that the body must be classified as a body governed by public law.

59Article 10 of Regional Legislative Decree No 41/2003/A provides that, in the performance of its functions, Saudaçor holds the same powers conferred by public law as the RAA and then lists, by way of example, some of those powers, including the power to carry out expropriations.

60In addition, in the light of the Court’s case-law cited in paragraph 56 of the present judgment and having regard to the applicable national law, it does not seem, subject to verification by the referring court, that it can be ruled out that Saudaçor is to be considered to be part of the public administration of the RAA.

61In that regard, as is apparent from the documents submitted to the Court, in so far as it was established by the State as a limited company following a process of transformation by decentralising the functions of an existing State body, Saudaçor resembles in some respects a legal person governed by private law and enjoys a degree of autonomy vis-à-vis the State in its operation and day-to-day management.

62However, and still subject to verification by the referring court, some of the characteristics of Saudaçor seem to support its classification as a body governed by public law within the meaning of Article 13(1) of Directive 2006/112.

63Genuine autonomy on the part of Saudaçor seems limited because of the fact that its capital, which is not open to equity investments by individuals, is 100% owned by the RAA, which, with the exception of services provided to third parties in connection with so-called ‘ancillary’ activities, which, it is undisputed, are of marginal importance, is in addition its only ‘client’. Those considerations are capable of showing that the RAA is in a position to exercise decisive influence over the activities of Saudaçor.

64This is also confirmed by the fact that, in accordance with Clause 3(a) of the first of the programme agreements concluded between Saudaçor and the RAA and Clause 3(1)(a) of the second of those agreements, Saudaçor is to accomplish its task in accordance with the guidelines set by the RAA and that, pursuant to Clause 3(h) of the first of those agreements and Clause 3(1)(g) of the second of those agreements, Saudaçor is subject to supervision by the RAA.

65Moreover, Article 4(1) of Regional Legislative Decree No 41/2003/A provides that Saudaçor is governed by that instrument, by the articles of association annexed thereto, by the legal regime for public undertakings as provided for by Decree-Law No 558/99 and by private law. It is apparent that, within that framework, private law is secondary in relation to the rules establishing the legal regime for Saudaçor as a public undertaking.

66Furthermore, whilst the detailed arrangements for the supply of services in respect of the planning and management of the regional health service must be covered by programme agreements, in particular regarding the compensation payable in respect of those services, which might suggest that Saudaçor operates on the market in question in competition with other private operators, the fact remains that, in the RAA, those services are performed exclusively by Saudaçor in accordance with its task provided for in Article 2(1) of Legislative Decree No 41/2003/A and that they are not awarded to private operators by means of, for example, a tender procedure.

67In addition, an organisational link seems to exist between Saudaçor and the RAA, if only due to the fact that that company was established by a legislative act adopted by the legislature of the RAA for the purpose of providing that region with ‘services of general economic interest in the field of health’, as is apparent from Article 2(1) of Regional Legislative Decree No 41/2003/A.

68Subject to the verification of that information by the referring court, it cannot therefore be ruled out that, in the light of an overall assessment taking account of the provisions of national law applicable to Saudaçor, that court will conclude that Saudaçor may be classified as a body governed by public law within the meaning of Article 13(1) of Directive 2006/112.

69However, as has been noted in paragraph 51 of the present judgment, if the rule of treatment as a non-taxable person for VAT purposes laid down in that provision is to apply, a second condition laid down in that provision must also be satisfied, namely the condition that only activities carried out by a body governed by public law acting as a public authority are to be exempted from VAT.

70The Court has consistently held that such activities are activities carried out by those bodies under the special legal regime applicable to them and do not include activities pursued by them under the same legal conditions as those that apply to private economic operators.

The Court has also made it clear that the subject-matter or purpose of the activity is in that regard irrelevant and that the fact that the pursuit of the activity at issue in the main proceedings involves the use of powers conferred by public law shows that that activity is subject to a public law regime (see to that effect, inter alia, judgment in Fazenda Pública, C‑446/98, EU:C:2000:691, paragraphs 17, 19 and 22).

71In that context, the Court has stated that the exemption provided for in the first subparagraph of Article 13(1) of Directive 2006/112 covers principally activities engaged in by bodies governed by public law acting as public authorities, which, while fully economic in nature, are closely linked to the exercise of powers conferred by public law (judgment in Isle of Wight Council and Others, C‑288/07, EU:C:2008:505, paragraph 31).

72However, that second condition laid down in the first subparagraph of Article 13(1) of that directive would not be satisfied if, as the Portuguese Government submitted and subject to verification by the referring court, the powers conferred by public law available to Saudaçor under Article 10 of Regional Legislative Decree No 41/2003/A did not amount to an instrument that could be used by Saudaçor in order to carry out the activities at issue in the main proceedings, namely the activities concerning the planning and management of the regional health service, the liability of which to VAT is disputed, since they are used for carrying out other activities.

73Moreover, even if it were to be concluded that Saudaçor is a body governed by public law and it were held that it exercises the economic activity at issue in the main proceedings as a public authority, it follows from the second subparagraph of Article 13(1) of Directive 2006/112 that an entity such as Saudaçor would not, however, be exempted from VAT if it were to be found that its treatment as a non-taxable person would lead to significant distortions of competition.

74In that regard, the Court has stated that the significant distortions of competition to which treatment as non-taxable persons of bodies governed by public law acting as public authorities would lead must be evaluated by reference to the activity in question, as such, without such evaluation relating to any local market in particular, and by reference not only to actual competition, but also to potential competition, provided that the possibility of a private operator entering the relevant market is real, and not purely hypothetical (judgment in Commission v Netherlands, C‑79/09, EU:C:2010:171, paragraph 91).

75In the light of all of the foregoing considerations, the answer to the first, second and fourth questions is that Article 13(1) of Directive 2006/112 must be interpreted as meaning that an activity such as that at issue in the main proceedings, whereby a company provides a region with services in respect of the planning and management of the regional health service under the programme agreements concluded between that company and that region, falls under the rule of treatment as a non-taxable person for VAT purposes, laid down by that provision, in a situation where that activity constitutes an economic activity within the meaning of Article 9(1) of that directive, if, which it is for the referring court to ascertain, it can be considered that that company must be classified as a body governed by public law and that it carries out that activity as a public authority, in so far as the referring court finds that the exemption of that activity is not such as to lead to significant distortions of competition.

In that context, the concept of ‘other bodies governed by public law’ within the meaning of Article 13(1) of that directive must not be interpreted by reference to the definition of ‘body governed by public law’ in Article 1(9) of Directive 2004/18.

Costs

76Since 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 (Fourth Chamber) hereby rules:

Article 9(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that an activity such as that at issue in the main proceedings, whereby a company provides a region with services in respect of the planning and management of the regional health service under the programme agreements concluded between that company and that region, constitutes an economic activity within the meaning of that provision.

Article 13(1) of Directive 2006/112 must be interpreted as meaning that an activity such as that at issue in the main proceedings, whereby a company provides a region with services in respect of the planning and management of the regional health service under the programme agreements concluded between that company and that region, falls under the rule of treatment as a non-taxable person for value added tax purposes, laid down by that provision, in a situation where that activity constitutes an economic activity within the meaning of Article 9(1) of that directive, if, which it is for the referring court to ascertain, it can be considered that that company must be classified as a body governed by public law and that it carries out that activity as a public authority, in so far as the referring court finds that the exemption of that activity is not such as to lead to significant distortions of competition.

In that context, the concept of ‘other bodies governed by public law’ within the meaning of Article 13(1) of that directive must not be interpreted by reference to the definition of ‘body governed by public law’ in Article 1(9) of Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts.

Signatures

[Signatures]

( *1 ) Language of the case: Portuguese.

OPINION OF ADVOCATE GENERAL

JÄÄSKINEN

delivered on 25 June 2015 ¹

‛Reference for a preliminary ruling — VAT — Directive 2006/112/EC — Article 13(1) — Treatment as a non-taxable person — Concept of ‘other bodies governed by public law’ — Autonomous Region of the Azores — Entity created by the region in the form of a wholly-owned limited company which is responsible for providing the region with services of general economic interest relating to the management of the region’s health service — Determination of the detailed arrangements for those services, including their remuneration, in programme agreements concluded between the entity and the region’

I – Introduction

1The present case concerns the interpretation of Article 13(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax ² and, more specifically, the interpretation of the concept of ‘other bodies governed by public law’. That article provides that certain transactions engaged in by bodies governed by public law are exempt from VAT.

2The applicant in the main proceedings, Saudaçor — Sociedade Gestora de Recursos e Equipamentos de Saúde dos Açores SA (‘Saudaçor’), is a limited company with exclusively public capital, being 100% owned by the Autonomous Region of the Azores (RAA). Its specific regime, which has both public and private characteristics, has led the Supremo Tribunal Administrativo (Supreme Administrative Court, Portugal) to have doubts as to its classification as a body governed by public law within the meaning of Article 13(1) of Directive 2006/112.

3The Court’s case-law concerning that provision (previously Article 4(5) 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 ³) is plentiful, but it mainly relates to the second cumulative criterion set out by that article, in particular the condition concerning activities and transactions engaged in by bodies governed by public law ‘as public authorities’. By contrast, the concept of ‘other bodies governed by public law’ as such has been examined less often.

II – Legislative framework

A – Union law

1. Directive 2004/18

4Under Article 1(9) of Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts. ⁴

‘“Contracting authorities” means the State, regional or local authorities, bodies governed by public law, associations formed by one or several of such authorities or one or several of such bodies governed by public law.

A “body governed by public law” means any body:

established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character;

having legal personality; and

financed, for the most part, by the State, regional or local authorities, or other bodies governed by public law; or subject to management supervision by those bodies; or having an administrative, managerial or supervisory board, more than half of whose members are appointed by the State, regional or local authorities, or by other bodies governed by public law.

Non-exhaustive lists of bodies and categories of bodies governed by public law which fulfil the criteria referred to in (a), (b) and (c) of the second subparagraph are set out in Annex III. ...’

2. Directive 2006/112

5Directive 2006/112 repealed and replaced, with effect from 1 January 2007, the existing Community VAT legislation, in particular the Sixth Directive. ⁵

6Article 2(1)(c) of Directive 2006/112 provides:

‘The following transactions shall be subject to VAT:

...

the supply of services for consideration within the territory of a Member State by a taxable person acting as such’.

7Under Article 9(1) of that directive:

‘“Taxable person” shall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity.

Any activity of producers, traders or persons supplying services, including mining and agricultural activities and activities of the professions, shall be regarded as “economic activity”. The exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis shall in particular be regarded as an economic activity.’

8Article 13(1) of that directive provides:

‘States, regional and local government authorities and other bodies governed by public law shall not be regarded as taxable persons in respect of the activities or transactions in which they engage as public authorities, even where they collect dues, fees, contributions or payments in connection with those activities or transactions.

However, when they engage in such activities or transactions, they shall be regarded as taxable persons in respect of those activities or transactions where their treatment as non-taxable persons would lead to significant distortions of competition.

In any event, bodies governed by public law shall be regarded as taxable persons in respect of the activities listed in Annex I, provided that those activities are not carried out on such a small scale as to be negligible.’

B – Portuguese law

1. VAT legislation

9Article 2(2) of the VAT Code provides that the State and other legal persons governed by public law are not taxable persons for VAT purposes where they engage in transactions in the exercise of their public-authority powers, even where they collect fees or other consideration in that connection, in so far as their treatment as non-taxable persons does not cause distortions of competition.

10Article 2(3) of the VAT Code provides that the State and other legal persons governed by public law are in any event taxable persons for VAT purposes where they engage in certain activities and for the ensuing taxable transactions, unless it is shown that those activities are negligible.

2. The legal regime for Saudaçor

11Saudaçor was created by Regional Legislative Decree No 41/2003/A of the RAA of 17 October 2003 ⁶ as a limited company with exclusively public capital, being wholly owned by the RAA. Saudaçor was created to transform the Instituto de Gestão Financeira da Saúde da Região Autonoma dos Açores (Institute of Financial Management of the Health Service of the RAA) into a limited company.

12Under Article 2(1) of Legislative Decree No 41/2003/A, Saudaçor has the task of providing services of general economic interest in the field of health. The object of that task is the planning and management of the regional health system and associated information systems, infrastructure and facilities and the completion of construction, conservation, rehabilitation and reconstruction work on health establishments and services, in particular in regions affected by natural disasters and in areas regarded as risk areas.

13Under Article 3 of Regional Legislative Decree No 41/2003/A:

‘In the context of its task of providing services of general economic interest, Saudaçor shall have the following functions:

providing centralised supplies to the regional health sector;

providing goods and services to member entities of the regional health system [SRS];

granting financing to health establishments in accordance with the health-care objectives to which each establishment has committed under the agreements signed by them;

defining rules and guidelines for budget management of health establishments and monitoring its implementation;

evaluating the economic and financial management of institutions and services forming part of the SRS or financed by it and drawing up periodic reports on its financial situation and on the management of its human and material resources;

encouraging the development of information systems for institutions under the aegis of the SRS;

carrying out works on the SRS which are desirable in the public interest;

providing support to SRS services and establishments in areas where this proves necessary.’

14Article 4(1) of Regional Legislative Decree No 41/2003/A provides that Saudaçor is governed ‘by the provisions of the present instrument, by the articles of association annexed hereto, by the legal regime for the State-owned undertakings sector as enshrined in Decree-Law No 558/99 of 17 December 1999, ⁷ and by private law’. Under paragraph 2 of that article, in its activities Saudaçor must respect the rules governing the organisation and operation of the regional health service of the RAA.

15Article 10 of Regional Legislative Decree No 41/2003/A provides that in the performance of its functions Saudaçor holds the same public-authority powers as the RAA and then specifies, by way of example, some of those powers, including expropriation.

16Under Article 4(1) of Regional Legislative Decree No 41/2003/A, which concerns the creation of Saudaçor, that entity is governed by the legal regime for State-owned undertakings as provided for by Decree-Law No 558/99. Under Article 3 of Decree-Law No 558/99, ⁸ public undertakings are companies incorporated in accordance with the Commercial Code in which the State or other State-owned public entities individually or jointly exert a controlling influence, directly or indirectly, and entities in the form of undertakings provided for in Chapter III of the regime, known as public business entities.

17Under Article 7 of Decree-Law No 558/99, without prejudice to the provisions of the legislation applicable to regional, ⁹ intercommunal and municipal public undertakings, public undertakings are governed by private law, except as provided in the present Decree-Law and in the legislation adopting the articles of association of those undertakings. Public undertakings are taxed, directly and indirectly, in accordance with the common regime. ¹⁰

18Saudaçor performs its activities within the framework of programme agreements concluded with the RAA, in accordance with Article 20(1) of its articles of association, which define, inter alia, the services to be provided by Saudaçor for the planning and management of the regional health service and the compensation, called the ‘financial contribution’, to be paid by that region ‘in consideration for the services covered by the agreement’ and ‘considered sufficient to cover the operating costs of Saudaçor’.

19Thus, a first programme agreement was concluded on 23 July 2004, covering the period 2004–2008, which provided for total compensation of EUR 15905000, with a sum of EUR 3990000 for 2007 and a sum of EUR 4050000 for 2008. A second programme agreement was concluded with effect from 1 January 2009, ¹¹ covering the period 2009–2012, which provided for annual compensation of EUR 8500000, reduced by Joint Order of 8 March 2010 ¹² to EUR 6599147 for 2009. Under Clause 5 of these two programme agreements, those amounts may be revised where, on account of a change of circumstances, that amount is manifestly insufficient to allow performance of the programme agreement.

20The programme agreements set out Saudaçor’s contractual obligations in Clause 3 and the services of general interest provided by Saudaçor in Annex III. Those services of general interest include three kinds of services, namely support for the Regional Health Service Plan, assistance and funding for the regional health service and implementation, management and maintenance of the information and computer system supporting the health sector of the RAA.

III – The dispute in the main proceedings, the questions referred for a preliminary ruling and the procedure before the Court

21On 2 March 2011, the Portuguese tax authority drew up a draft inspection report proposing corrections concerning the VAT payable by Saudaçor in respect of its activities for the period from 2007 to 2010 in a total amount of EUR 4750586.24.

22On 6 April 2011, that inspection report was adopted, after Saudaçor had been heard.

23According to the report, cited in the decision referring the case, in the tax years examined, Saudaçor recorded the consideration received from the RAA as grants exempt from VAT. However, during the proceedings, Saudaçor abandoned the ‘grant’ classification and wished to be designated as a ‘legal person governed by public law’ within the meaning of Article 2(2) of the VAT Code, a provision which seeks to transpose the first subparagraph of Article 4(5) of the Sixth Directive, the content of which is the same as that of the first subparagraph of Article 13(1) of Directive 2006/112.

24In that inspection report, the tax authority stated, among other things, that in view of its legal regime Saudaçor came under the normal VAT regime and could not rely on the rule laid down in Article 2(2) of the VAT Code under which bodies governed by public law are not regarded as taxable persons. Furthermore, Saudaçor had accepted that it was subject to VAT because it claimed a total sum of EUR 2300273.17 as VAT deductions on purchases of goods and services without, however, paying VAT on the amounts received from the RAA.

25The tax authority referred to Binding Opinion No 1271 of 21 March 2006, ¹³ according to which Article 2(2) of the VAT Code limits exclusion from VAT, subject to the conditions laid down therein, to the State and to legal persons governed by public law. Other entities may not benefit from exclusion even if they are public undertakings for the purposes of the legal regime for the State-owned undertakings sector, as is the case here with a limited company with exclusively public capital, and even though it has been entrusted with certain operations falling within the exercise of delegated public-authority powers which do not create a distortion of competition.

26In addition, according to the tax authority, the services provided by Saudaçor in respect of planning and management of the regional health service under the programme agreements concern areas of activity involving private initiative, which also means that treatment as a non-taxable person might lead to distortions of competition. That would be the case, for example, with the implementation, management and maintenance of the computer system for a region’s health sector.

27Saudaçor was then served recovery notices. On 27 July 2011, it was called to appear in the tax execution procedure for the recovery of VAT and compensatory interest.

28Saudaçor brought an action at the Tribunal Administrativo e Fiscal de Ponta Delgada (Administrative and Tax Court, Ponta Delgada) against the recovery notices for VAT and compensatory interest concerning the tax years 2007 to 2010, which claimed that it should pay a total amount of EUR 5157249.72.

29That court dismissed the action at first instance on the ground, inter alia, that the rule laid down in the first subparagraph of Article 13(1) of Directive 2006/112, under which bodies governed by public law are not regarded as taxable persons, does not cover an entity like Saudaçor which, although created by the RAA, is a limited company which is distinct from the region and subject to the rules of private law and which pursues its functions and objectives independently.

30Hearing an appeal against that judgment, the referring court considers that the central issue in the present case is whether an entity like Saudaçor can rely on the rule laid down in Article 2(2) of the VAT Code, the content of which corresponds to Article 13(1) of Directive 2006/112, under which bodies governed by public law are not regarded as taxable persons, and whether the amounts to which the contested VAT recovery notices relate constitute budget transfers between public entities.

31It considers that whilst it is clearly established in the Court’s case-law that only the activities of bodies governed by public law acting as public authorities are excluded from liability to VAT, it cannot be determined on the basis of that case-law whether an entity like Saudaçor, having regard to its legal status as a limited company originating from the transformation of a State entity, comes within that concept of body governed by public law and whether, in that context, the scope of that concept tallies with the scope of the concept of body governed by public law as defined in Article 1(9) of Directive 2004/18, as is claimed by Saudaçor.

32Since it has doubts as to the interpretation of Article 13(1) of Directive 2006/112, by decision of 12 March 2014, the Supremo Tribunal Administrativo decided to stay the main proceedings and to refer the following questions to the Court for a preliminary ruling:

Must the concept of “body governed by public law” within the meaning of the first paragraph of Article 13(1) of [Directive 2006/112] be interpreted by reference to the concept of “body governed by public law” in Article 1(9) of [Directive 2004/18]?

Is an entity established as a limited company, with exclusively public capital and 100% owned by the Autonomous Region of the Azores, and whose object is the exercise of consultancy and management activities in matters relating to the regional health service, with the purpose of developing and reorganising it through the performance of programme agreements concluded with the Autonomous Region of the Azores, which holds by delegation the public-authority powers conferred in those matters on the Autonomous Region which was originally responsible for providing the public health service, covered by the concept of a “body governed by public law” acting as a public authority for the purpose of the first subparagraph of Article 13(1) of [Directive 2006/112]?

In the light of the provisions of that directive, may the consideration received by that company, which consists in the making available of the financial resources necessary for the performance of those programme agreements, be regarded as payment for the services provided, for the purposes of liability to VAT?

If so, does that company satisfy the requirements necessary in order to be entitled to rely upon the rule governing not being regarded as a taxable person laid down in Article 13(1) of [Directive 2006/112]?’

33Written observations were submitted by Saudaçor, the Portuguese and United Kingdom Governments and the European Commission, which were all represented at the hearing held on 19 March 2015.

IV – Analysis

A – Preliminary remarks

34Before beginning to examine the questions referred, I will consider the order in which they should be dealt with. Saudaçor has suggested first examining the third question, which asks whether the consideration paid by the RAA is payment for the services provided. According to Saudaçor, this is a question concerning the nature of its activities, which are not ‘economic’ within the meaning of Article 9(1) of Directive 2006/112.

35Articles 9 and 13 of Directive 2006/112 are part of Title III of that directive, entitled ‘Taxable persons’. Title III contains rules concerning treatment as a taxable person in general and specific cases, such as the VAT grouping and rules concerning the public authorities.

36I note in this regard that Article 9 of Directive 2006/112 lays down the general rule, while Article 13 is an exemption. ¹⁴ According to the Court’s case-law, the application of Article 13(1) of Directive 2006/112 implies a prior finding that the activity considered is of an economic nature. ¹⁵

37The notion of economic activity in Article 9(1) of Directive 2006/112 is linked to Article 2 of that directive as, for an activity to be classified as economic, it must be effected for consideration. Where a person’s activity consists exclusively in providing services for no direct consideration, there is no basis of assessment and the services are therefore not subject to VAT. The economic activities of taxable persons are necessarily activities which are carried on with the object of obtaining payment of consideration or which are likely to be rewarded by the payment of consideration. ¹⁶

38Consequently, in my view, the Court has to resolve just two legal questions in order to be able to give helpful answers to the national court.

39The outcome of the dispute in the main proceedings hinges, first, on the question whether an entity like Saudaçor should be regarded as a taxable person, and the answer to that question hinges in turn on whether or not its activities are economic within the meaning of Article 9(1) of Directive 2006/112. In order to answer that question, it must be examined whether the remuneration paid by the RAA constitutes the consideration received for the services provided by Saudaçor.

40Second, if Saudaçor must be regarded as a taxable person, it must be examined whether it was nevertheless exempt from VAT pursuant to Article 13(1) of Directive 2006/112 as a body governed by public law engaging in the transactions in question as a public authority.

41That is the order in which I therefore propose that the questions asked by the Supremo Tribunal Administrativo be dealt with.

42Furthermore, I note that the Portuguese Government supported its claim that Article 13(1) of Directive 2006/112 is not relevant to the main proceedings by arguing that because Saudaçor performed transactions which, by its own admission, allowed it to deduct VAT in respect of its acquisitions, it can no longer rely on the right not to make those same transactions subject to VAT. In this regard, the Portuguese Government made reference to Cantor Fitzgerald International ¹⁷ and MDDP. ¹⁸ However, it seems to me that the information contained in those judgments cannot be applied directly to the present case and is not even relevant to the outcome of the dispute in the main proceedings.

43In my view, the notion of economic activities within the meaning of Article 9(1) of Directive 2006/112 and the concept of other bodies governed by public law within the meaning of Article 13(1) of that directive are concepts based on objective elements. The conduct of a person, whether a taxable person or not, cannot alter the meaning and scope of those articles. ¹⁹

B – The economic nature of Saudaçor’s activities and its treatment as a taxable person for the purposes of VAT

44The referring court’s doubts over the nature of the services provided by Saudaçor, as expressed in its third question, stem from Saudaçor’s claim that the remuneration paid to it by the RAA corresponds to a budget appropriation of revenue between two legal persons governed by public law which is intended to permit Saudaçor to provide non-market services relating to the implementation and management of the regional health service.

45On the other hand, according to the other parties which submitted observations, the amounts paid by the RAA to Saudaçor have a direct link with the services that Saudaçor is required to provide to the RAA.

46It should be recalled that Saudaçor has the task of providing services of general economic interest in the field of health, the object of which is the planning and management of the regional health system and associated information systems, infrastructure and facilities and the completion of construction, conservation, rehabilitation and reconstruction work on health establishments and services. ²⁰

47The Portuguese Government has pointed out that the case in the main proceedings concerns only the payments referred to in Clauses 2(a) and 5(1) and Annex I of the programme agreements for the 2004–2008 and 2009–2012 periods in relation to the services which Saudaçor undertook to provide to the RAA, because the VAT recovery notices contested in the main proceedings relate only to those payments. ²¹ In addition, according to the Portuguese Government, the services in question are only technical and administrative support services, often known as ‘back office’ services.

48With regard to the reduction of the financial contribution for 2009 by order of 8 March 2010, the Portuguese Government explained that this was a correction of a material error vitiating the programme agreement for 2009–2012 ²² and not the unilateral fixing by the RAA of the remuneration to be paid to Saudaçor, which has its own autonomous board of directors and full powers of negotiation and contractual powers.

49It should be noted, first of all, that under the second subparagraph of Article 9(1) of Directive 2006/112, any activity of producers, traders or persons supplying services is to be regarded as ‘economic activity’ and, in particular, the exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis. According to case-law, an analysis of those definitions shows that the scope of the term ‘economic activities’ is very wide and that the term is objective in character, in the sense that the activity is considered per se and without regard to its purpose or results. An activity is thus, as a general rule, categorised as economic where it is permanent and is carried out in return for remuneration which is received by the person carrying out the activity. ²³

50According to settled case-law, the possibility of classifying a transaction as a transaction for consideration requires only that there be a direct link between the supply of goods or the provision of services and the consideration actually received by the taxable person. Consequently, a supply of services is effected for consideration, and hence is taxable, only if there is a legal relationship between the provider of the service and the recipient pursuant to which there is reciprocal performance, the remuneration received by the provider of the service constituting the actual consideration for the service supplied to the recipient. ²⁴

51The fact that the activity of an operator consists in the performance of duties which are conferred and regulated by law in the public interest is irrelevant. ²⁵ Thus, a payment made by a public authority in the general interest can constitute consideration for a supply of services for the purposes of Directive 2006/112. The concept of a supply of services does not depend on the use made of a service by the person who pays for it. Only the nature of the undertaking given is to be taken into consideration, with the result that for such an undertaking to be covered by the common system of VAT it must imply consumption. ²⁶

52In addition, it is not even a requirement that, for a supply of services to be effected for consideration within the meaning of Directive 2006/112, the consideration for that supply must be obtained directly from the person to whom those services are supplied, since it may be obtained from a third party. ²⁷ However, that is not the case in the main proceedings because the person to whom the services are provided by Saudaçor is the RAA, the public entity responsible for the Azores’ regional health system, which makes the payment and is the recipient of those services.

53Finally, it is clear from the Court’s case-law that where the supply of services in question is characterised, in particular, by the permanent availability of the service provider to supply, at the appropriate time, the services required, it is not necessary, in order to recognise that there is a direct link between that service and the consideration received, to establish that a payment relates to a particular supply of services at a specific time. ²⁸

54In my view, it is readily apparent from the programme agreements, which expressly provide for compensation ‘in consideration for the services covered by the agreement’, that there is a direct link between the payments made by the RAA and the services of general interest provided by Saudaçor. I note that the fact that a payment is made by a public authority in the general interest does not mean that it cannot constitute consideration for a supply of services for the purposes of Directive 2006/112. ²⁹

55In addition, according to the Court’s case-law, consideration of economic and commercial realities is a fundamental criterion for the application of the common system of VAT. In order to satisfy the requirements of legal certainty, since the contractual position reflects, in principle, the economic and commercial reality of the transactions, the relevant contractual terms normally constitute a factor to be taken into consideration unless it becomes apparent that those contractual terms constitute a purely artificial arrangement which does not correspond with the economic and commercial reality of the transactions. ³⁰ This does not appear to be the case in the main proceedings. The contractual terms are therefore a factor to be taken into consideration.

56There is also nothing in the present case to indicate that the contribution received by Saudaçor does not manifestly correspond to the actual value of the service provided. ³¹ On the other hand, under the programme agreements, the amount of the contribution may be revised where it is insufficient to allow performance of the programme agreement. It appears that such revisions increasing the amount were not made in the period from 2007 to 2010. However, the revision of the financial contribution for 2009, in the form of a reduction of that contribution, was made in circumstances where the amounts already charged by Saudaçor, when the programme agreement for the year in question was signed, were almost EUR 2 million less than the amount stipulated in the programme agreement signed in 2010.

57Saudaçor’s activities, consisting in planning, management and consultancy services, are permanent and Saudaçor receives remuneration in consideration for its services. Consequently, Saudaçor’s contested activities are of an economic nature and constitute the supply of services for consideration. In addition, it should be stressed that Saudaçor does not provide any public health services for the residents of the Azores. Such services are provided by the member entities of the regional health system.

58As the services at issue in the main proceedings supplied by Saudaçor must be considered to be of an economic nature, Saudaçor must be regarded as a taxable person for VAT purposes under Article 9(1) of Directive 2006/112. Accordingly, the concept of body governed by public law in the first subparagraph of Article 13(1) of Directive 2006/112 must be interpreted in order to be able to examine whether Saudaçor may nevertheless be exempt from VAT as a body governed by public law acting as a public authority.

C – The possibility of applying the exemption provided for in Article 13(1) of Directive 2006/112 to Saudaçor’s economic activities

1. The irrelevance of the concept of ‘body governed by public law’ within the meaning of Directive 2004/18 for the interpretation of the first subparagraph of Article 13(1) of Directive 2006/112

59In the main proceedings, Saudaçor proposed, for reasons relating to the internal coherence of the system, that the concept of ‘other bodies governed by public law’ within the meaning of the first subparagraph of Article 13(1) of Directive 2006/112 be interpreted by reference to the concept of ‘body governed by public law’ within the meaning of Article 1(9) of Directive 2004/18. According to Saudaçor, the concept of body governed by public law is a concept that applies across EU law. By its first question, the referring court is seeking to ascertain whether such an interpretation is conceivable.

60Like the Portuguese and United Kingdom Governments and the Commission, I take the view that such an interpretation cannot be accepted for the reasons set out below.

61Articles 9 and 13 of Directive 2006/112 give a very wide scope to VAT. The Court has ruled on several occasions that it is clear from the scheme and purpose of Directive 2006/112, as well as from the place of Article 13 thereof in the common system of VAT established by the Sixth Directive, that any activity of an economic nature is, in principle, to be taxable. ³²

62The Union legislature intended to limit the scope of the treatment of bodies governed by public law as non-taxable persons, so that the general rule is observed. ³³ The objective of Article 13(1) of Directive 2006/112 is thus to exempt from VAT only the exercise of economic activities engaged in by bodies governed by public law as public authorities, to the exclusion of situations where exemption would cause ‘significant distortions of competition’. ³⁴

63Article 13 has been regarded in the Court’s case-law as an exemption which should be placed in the general context of the common system of VAT. ³⁵ Thus, as a derogation from the principle that any activity of an economic nature must be subjected to VAT, the first subparagraph of Article 13(1) of Directive 2006/112 must be interpreted strictly. ³⁶ Obviously, this also holds for the interpretation of the concept of ‘other bodies governed by public law’ in the first subparagraph of Article 13(1).

64By contrast, in the light of the objectives pursued by the provisions of Union law on the coordination of the procedures for the award of public contracts, and in particular the dual objective of opening up competition and transparency, the concept of ‘body governed by public law’ within the meaning of Article 1(9) of Directive 2004/18 should be given a broad and functional interpretation. ³⁷

65It should be stated that the meanings of, on the one hand, ‘body governed by public law’ for the purposes of Directive 2004/18 and, on the other, ‘other bodies governed by public law’ for the purposes of Directive 2006/112 cannot be the same, as those two directives have very different objectives. As the Portuguese Government has stressed, the objectives of the common system of VAT would be undermined if, for the purposes of VAT, it were possible to adopt a broad interpretation of the concept of ‘other bodies governed by public law’ like that which has been adopted for ‘body governed by public law’ in Directive 2004/18 for functional reasons relating to observance of the rules on the award of public contracts. Such a parallel would effectively lead to an unjustified exemption from VAT of economic activities engaged in by the public and private persons mentioned in Article 1(9) of Directive 2004/18.

66It should be added that, as was rightly pointed out by the United Kingdom Government, the Union legislature made the deliberate choice not to make reference in Directive 2006/112 to the concept of ‘body governed by public law’ which appears in Directive 2004/18. In other contexts, where it considered that a link should be made between two instruments of EU law, the Union legislature chose to adopt the definition used in Directive 2004/18 by means of a cross-reference. ³⁸

67Consequently, the concept of ‘other bodies governed by public law’ in the first subparagraph of Article 13(1) of Directive 2006/112 should be interpreted solely by reference to the scheme and purpose of that directive, as well as the place of that provision in the common system of VAT established by the Sixth Directive. ³⁹

2. The interpretation of the concept of ‘other bodies governed by public law’ and the legal classification of Saudaçor in this regard

68With regard to the second and fourth questions, the main issue for the purposes of the interpretation of the concept of ‘other bodies governed by public law’ within the meaning of the first subparagraph of Article 13(1) of Directive 2006/112 is whether it is an autonomous concept of EU law, as the United Kingdom Government claims, or an implicit reference to the domestic laws of the Member States.

69I would point out, first of all, that the Union legislature opted not to define that concept in Directive 2006/112 and not to make a reference to the concept of body governed by public law which appears, inter alia, in Directive 2004/18, as I have already explained in point 66 of this Opinion.

70The concept of ‘other bodies governed by public law’ already appeared in the first subparagraph of Article 4(5) of the Sixth Directive, which has the same wording as the first subparagraph of Article 13(1) of Directive 2006/112. That previous article, in its French version, mentioned ‘les États, les régions, les départements, les communes et les autres organismes de droit public’.

71Article 13(1) of Directive 2006/112 and the first subparagraph of Article 4(5) of the Sixth Directive also retained the same wording in this regard in the German and English versions. In German, the list is as follows: ‘Staaten, Länder, Gemeinden und sonstige Einrichtungen des öffentlichen Rechts’, whilst the English version reads as follows: ‘states, regional and local government authorities and other bodies governed by public law’.

72It should be noted, however, that the various language versions are not completely the same, as the French version lists, in addition to ‘autres organismes de droit public’, four levels of bodies governed by public law, whereas the German and English versions list only three. As far as the other original language versions of the article are concerned, the Danish and Italian versions list four categories of bodies, like the French version, whilst the Dutch version lists five: ‘de Staat, de regio’s, de gewesten, de provincies, de gemeenten en de andere publiekrechtelijke lichamen’.

73The approach taken in drawing up that list was not clarified in the explanatory memorandum for the proposal for the Sixth Directive ⁴⁰ but several language versions ⁴¹ of the initial proposal for the Sixth Directive were amended prior to the adoption of that directive to add the word ‘other’. ⁴²

74In view of the linguistic differences and the presence of the word ‘other’ in the list, it seems clear that the purpose of that list is to set out non-exhaustively the bodies which may be exempt from VAT under the first subparagraph of Article 13(1) of Directive 2006/112. Accordingly, states and regional and local government authorities are merely examples of bodies which are capable of being exempt.

75I therefore consider that the only function of the concept of ‘other bodies governed by public law’ in the provision in question is to demonstrate the illustrative nature of that provision. The existence of linguistic differences regarding the number and the designation of the bodies or entities capable of being exempt confirms that view.

76Consequently, it seems that the list in the first subparagraph of Article 13(1) of Directive 2006/112 implicitly makes reference to the laws of the Member States as regards the concept of ‘other bodies governed by public law’.

77During the hearing the United Kingdom Government argued that the concept of body governed by public law is an autonomous concept of EU law. According to the United Kingdom Government, if that concept depended solely on the laws of the Member States, this could give it too broad a scope. The classification of an entity as a body governed by public law under national legislation is not irrelevant, but it is not crucial.

78It is true that, at first sight, the Court’s case-law would seem to support this view taken by the United Kingdom Government. According to the Court, although the designation of a body by the administrative law of a Member State as a body governed by public law is certainly relevant in determining its treatment for VAT purposes, it cannot be considered to be crucial where the actual nature and the substance of the activity engaged in by that body show that the strict conditions for the application of that rule on treatment as a non-taxable person are not met. ⁴³

79However, Commission v Spain concerned a situation where the designation of a body by national legislation as a body governed by public law did not correspond to its nature or the activities actually engaged in by that body, as the operators in question were not part of the public administration and carried on their activities in the exercise of a profession comparable to a liberal profession. Thus, the interpretation adopted in that specific case was necessary to ensure a strict interpretation of any exemption, like that in Article 13(1) of Directive 2006/112. ⁴⁴

80By contrast, it seems hard to imagine that a body governed by private law in accordance with national legislation could be classified as a body governed by public law for the purposes of EU law. As there is no definition of ‘public law’ in EU law, reference has to be made to the rules of public law of each Member State.

81As I have already stated in point 63 of this Opinion, as a derogation from the principle that any activity of an economic nature must be subjected to VAT, the first subparagraph of Article 13(1) of Directive 2006/112 must be interpreted strictly. Thus, that provision, together with the cumulative criterion of engaging in activities as a public authority, may limit but not extend classification as a body governed by public law in national law, where this would lead to exemption from VAT which is not in keeping with the spirit of Directive 2006/112 or the objectives of Article 13 thereof.

82Accordingly, in my view, the first subparagraph of Article 13(1) of Directive 2006/112 cannot be interpreted as meaning that a private body for the purposes of national legislation could be classified as a body governed by public law under EU law. The Member States must be entitled to define ‘other bodies governed by public law’ strictly, without EU law being able to extend that definition to other bodies which are private under the applicable provisions of national law. I consider that the position taken by the Court in Commission v Spain ⁴⁵ does not call that conclusion into question.

83Furthermore, in the light of all the foregoing considerations, it seems that a national definition of a body governed by public law which did not reflect the actual nature and the substance of the activities of such a body could also be limited by way of the second cumulative condition required to apply the rule of treatment as a non-taxable person, namely the condition that the body in question must be acting ‘as a public authority’. Engagement in activities ‘as public authorities’ within the meaning of the first subparagraph of Article 13(1) of Directive 2006/112 is an autonomous concept of EU law. According to Commission v Spain, for that rule of treatment as a non-taxable person to apply to a body, account should be taken of, in addition to the designation of that body in national law, ‘the actual nature and the substance of the activity engaged in by that body’. ⁴⁶ In my view, the ‘substance of the activity’ may be understood as a direct reference to the condition concerning engagement in activities ‘as a public authority’.

84With regard to the cumulative criterion of engagement in activities as a public authority, it is clear from settled case-law that activities pursued as public authorities within the meaning of the first subparagraph of Article 13(1) of Directive 2006/112 are those engaged in by bodies governed by public law under the special legal regime applicable to them and do not include activities pursued by them under the same legal conditions as those that apply to private traders. It is for the national court to classify the activity at issue in the main proceedings in the light of that criterion. ⁴⁷

85In this regard, according to case-law, it is the manner in which the activities are carried out that determines the scope of the treatment of public bodies as non-taxable persons. In so far as the first subparagraph of Article 13(1) of Directive 2006/112 makes such treatment of bodies governed by public law conditional upon their acting ‘as public authorities’, it excludes therefrom activities engaged in by them as bodies governed not by public law but by private law. Consequently, the only criterion making it possible to distinguish with certainty between those two categories of activity is the legal regime applicable under national law. ⁴⁸ Thus, the classification of a transaction as an ‘activity as a public authority’ also depends, to a certain extent, on the applicable national law.

86It should be borne in mind that case-law clearly lays down the principle that traders governed by private law cannot be exempt from VAT under the first subparagraph of Article 13(1) of Directive 2006/112 even if their activities consist in the performance of acts falling within the powers of the public authority. ⁴⁹ Thus, if a certain trader is not part of the public administration, its activity is pursued not as a body governed by public law, but in the form of an activity carried out in the exercise of a profession comparable to a liberal profession. ⁵⁰ Article 13(1) of Directive 2006/112 cannot therefore be applied to a private company even if its shares are being held 100% by a body governed by public law. ⁵¹

87I would observe that under Article 4(1) of Regional Legislative Decree No 41/2003/A Saudaçor is governed, inter alia, by the legal regime for the State-owned undertakings sector and by private law. In addition, under Article 7 of Decree-Law No 558/99, which regulates the legal regime for State-owned undertakings, public undertakings are governed by private law.

88Thus, in so far as Saudaçor, as a limited company with exclusively public capital which is not part of the public administration, is governed by private law under the applicable domestic legislation, which must in any event be determined by the referring court, and is taxed in accordance with the common regime, it is clearly a trader governed by private law.

89Consequently, such a limited company cannot be classified as a body governed by public law within the meaning of the first subparagraph of Article 13(1) of Directive 2006/112 and, accordingly, its activities at issue cannot be exempt from VAT under that article. The fact that Saudaçor holds the same public-authority powers as the RAA in performing some of its tasks has no bearing on that finding.

90I note that, in order for the first subparagraph of Article 13(1) of Directive 2006/112 to apply, two conditions must both be fulfilled, namely the activities must be carried out by a body governed by public law and they must be carried out by that body acting as a public authority. ⁵² As the first condition is not fulfilled in the present case, it is not necessary to examine Saudaçor’s activities in relation to the second condition.

V – Conclusion

Conclusion

91In the light of the foregoing considerations, I suggest that the Court answer the questions referred for a preliminary ruling by the Supremo Tribunal Administrativo as follows:

With regard to the third question, in a situation like that at issue in the dispute in the main proceedings, ‘financial contributions’ paid under a programme agreement ‘in consideration for the services covered by the agreement’ by a public entity to a limited company governed by private law 100% of whose shares it holds constitute consideration for the services provided by that limited company to that public entity.

With regard to the first question, the concept of ‘other bodies governed by public law’ within the meaning of the first subparagraph of Article 13(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax may not be interpreted by reference to the concept of ‘body governed by public law’ as defined in Article 1(9) of Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts.

With regard to the second and fourth questions, pursuant to Directive 2006/112, a limited company with exclusively public capital which is not part of the public administration and which is governed by private law and taxed in accordance with the common regime under the applicable domestic legislation cannot be classified as a body governed by public law within the meaning of the first subparagraph of Article 13(1) of that directive.

¹ Original language: French.

² OJ 2006 L 347, p. 1.

³ OJ 1977 L 145, p. 1, ‘the Sixth Directive’.

⁴ OJ 2004 L 134, p. 114.

⁵ Despite a number of changes in drafting, the relevant provisions of Directive 2006/112 are essentially identical to the corresponding provisions of the Sixth Directive. See, to this effect, judgment in Le Rayon d’Or (C‑151/13, EU:C:2014:185, paragraph 6).

⁶ Diário da República 1, Series A, No 257, 6 November 2003, p. 7430.

⁷ Diário da República 1, Series A, No 292, 17 December 1999, p. 9012.

⁸ As amended. That Decree-Law was repealed with effect from 2 December 2013 by Decree-Law No 133/2013 of 3 October 2013 (Diário da República 1, Series A, No 191, of 3 October 2013, p. 5988), but the former legislation was in force at the material time of the facts of the main proceedings, namely from 2007 to 2010.

⁹ According to the observations submitted by the Portuguese Government, this reservation does not apply to undertakings created on the initiative of autonomous regions, but to undertakings formed at the initiative of administrative regions, which, at the time of the main proceedings, were not created.

¹⁰ In addition to this regime for State-owned undertakings, which is applicable to Saudaçor under Article 4(1) of Regional Legislative Decree No 41/2003/A, the European Commission made reference to the legal regime for public undertakings of the RAA, established by Regional Legislative Decree No 7/2008/A (Diário da República 1, Series A, No 58, 24 March 2008, p. 1649). Article 9 of that Regional Legislative Decree contains provisions which are, in essence, identical to those of Article 7 of Decree-Law No 558/99.

¹¹ However, this second programme agreement was not approved and signed until March 2010.

¹² Order of the Vice-President of the Regional Government of the Azores and the Regional Health Secretariat.

¹³ The information in this regard contained in the decision referring the case is not very clear, but it seems that this is a binding opinion drawn up by the tax authority in proceedings A200 2005045 on whether the exercise of Saudaçor’s activity was considered to fall within the scope of the public-authority powers under Article 2(2) of the VAT Code or, if not, under what its activity and its undertaking was classified for VAT purposes. During the hearing the Portuguese Government stated that Saudaçor had itself requested this binding opinion.

¹⁴ See, with regard to Article 4(5) of the Sixth Directive, which corresponds to the current Article 13 of Directive 2006/112, judgment in Commission v Netherlands (235/85, EU:C:1987:161, paragraph 18).

¹⁵ See, to this effect, judgments in T-Mobile Austria and Others (C‑284/04, EU:C:2007:381, paragraph 48); Götz (C‑408/06, EU:C:2007:789, paragraph 15) and Commission v Finland (C‑246/08, EU:C:2009:671, paragraphs 34 and 39).

¹⁶ Judgments in Hong-Kong Trade Development Council (89/81, EU:C:1982:121, paragraphs 10 and 11) and Tolsma (C‑16/93, EU:C:1994:80, paragraph 12).

¹⁷ According to that judgment (C‑108/99, EU:C:2001:526, paragraph 33), a taxable person who, for the purposes of achieving a particular economic goal, has a choice between exempt transactions and taxable transactions must, in his own interest, duly take his decision while bearing in mind the neutral system of VAT. The principle of the neutrality of VAT does not mean that a taxable person with a choice between two transactions may choose one of them and avail himself of the effects of the other.

¹⁸ In that judgment (C‑319/12, EU:C:2013:778, paragraph 56 and operative part), the Court ruled that a taxable person may not claim a right to deduct input value added tax where, as a result of an exemption provided for by national law in infringement of provisions of Union law, the output services supplied are not subject to value added tax.

¹⁹ It should also be noted that it is, in any event, a matter for the national court to refuse to allow an operator’s right to deduct VAT where it is established, on the basis of objective evidence, that that right is being relied on for fraudulent or abusive ends (see, to this effect, judgment in Fini H, C‑32/03, EU:C:2005:128, paragraphs 33 and 34).

²⁰ See point 12 of this Opinion.

²¹ According to the Portuguese Government, Saudaçor can also receive other amounts from the RAA under Clauses 2, 5 and 7 of the programme agreements, in particular the grants paid by the RAA to Saudaçor in order to pursue certain specific objectives in the public interest.

²² As that programme agreement was not signed until 5 March 2010, the amount of the contribution in question indicated in the agreement did not correspond to the actual amount already charged monthly and paid for the services actually provided by Saudaçor in 2009.

²³ Judgments in Commission v Netherlands (235/85, EU:C:1987:161, paragraphs 8, 9 and 15); Commission v Greece (C‑260/98, EU:C:2000:429, paragraphs 26 and 28) and Commission v Finland (C‑246/08, EU:C:2009:671, paragraph 37 and cited case-law).

²⁴ Judgments in Apple and Pear Development Council (102/86, EU:C:1988:120); Tolsma (C‑16/93, EU:C:1994:80, paragraphs 13 and 14); Kennemer Golf (C‑174/00, EU:C:2002:200, paragraph 39); Commission v Finland (C‑246/08, EU:C:2009:671, paragraph 44); GFKL Financial Services (C‑93/10, EU:C:2011:700, paragraph 18 and 19) and Serebryannay vek (C‑283/12, EU:C:2013:599, paragraph 37 and cited case-law).

²⁵ Judgments in Commission v Netherlands (235/85, EU:C:1987:161, paragraph 10); Commission v Ireland (C‑358/97, EU:C:2000:425, paragraph 31) and Commission v United Kingdom (C‑359/97, EU:C:2000:426, paragraph 43).

²⁶ Judgment in Landboden-Agrardienste (C‑384/95, EU:C:1997:627, paragraph 20).

²⁷ Judgments in Loyalty Management UK and Baxi Group (C‑53/09 and C‑55/09, EU:C:2010:590, paragraph 56) and Le Rayon d’Or (C‑151/13, EU:C:2014:185, paragraph 34).

²⁸ Judgments in Kennemer Golf (C‑174/00, EU:C:2002:200, paragraph 40) and Le Rayon d’Or (C‑151/13, EU:C:2014:185, paragraph 36). In the present case, under the programme agreements the contribution from the RAA is paid to Saudaçor in twelfths and, according to the Portuguese Government, the services of Saudaçor are also charged monthly.

²⁹ Judgment in Landboden-Agrardienste (C‑384/95, EU:C:1997:627, paragraph 20).

³⁰ Judgment in Newey (C‑653/11, EU:C:2013:409, paragraphs 42 to 45).

³¹ See, in this regard, judgment in Commission v Finland (C‑246/08, EU:C:2009:671, paragraphs 49 and 51), according to which the link between the legal aid services provided by public legal aid offices and the payment to be made by the recipients was not, in that case, sufficiently direct for that payment to be regarded as consideration for those services and, accordingly, for those services to be regarded as economic activities, as the part payment made to the public offices by recipients depended only in part on the actual value of the services provided.

³² Judgments in Isle of Wight Council and Others (C‑288/07, EU:C:2008:505, paragraphs 25 to 28 and 38); Commission v Ireland (C‑554/07, EU:C:2009:464, paragraph 39) and Commission v Netherlands (C‑79/09, EU:C:2010:171, paragraph 76).

³³ Judgment in Isle of Wight Council and Others (C‑288/07, EU:C:2008:505, paragraph 38).

³⁴ Second subparagraph of Article 13(1) of Directive 2006/112.

³⁵ Judgment in Commission v Netherlands (235/85, EU:C:1987:161, paragraph 18).

³⁶ See in this regard judgments in Isle of Wight Council and Others (C‑288/07, EU:C:2008:505, paragraph 60); Commission v Ireland (C‑554/07, EU:C:2009:464, paragraph 42) and Commission v Spain (C‑154/08, EU:C:2009:695, paragraph 119), and order in Gmina Wrocław (C‑72/13, EU:C:2014:197, paragraph 19).

³⁷ See, inter alia, judgments in Adolf Truley (C‑373/00, EU:C:2003:110, paragraph 43) and Commission v Spain (C‑214/00, EU:C:2003:276, paragraph 53 and cited case-law).

³⁸ See, for example, Article 2(8) of Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC (OJ 2012 L 315, p. 1); Article 2(16) of Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (OJ 2013 L 347, p. 320); and Article 2(i) of Council Regulation (EC) No 1698/2005 of 20 September 2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) (OJ 2005 L 277, p. 1). The latter regulation was adopted before the adoption of Directive 2006/112 and the first two legal acts after it was adopted, which shows that the Union legislature’s practice in this regard has not changed.

³⁹ Judgment in Isle of Wight Council and Others (C‑288/07, EU:C:2008:505, paragraph 25).

⁴⁰ Explanatory Memorandum, COM(73) 950, 20 June 1973.

⁴¹ In particular, the French, German, Italian and Dutch versions.

⁴² See the Proposal for a sixth Council Directive on the harmonisation of legislation of Member States concerning turnover taxes — Common system of value added tax: uniform basis of assessment, submitted to the Council by the Commission on 29 June 1973 (OJ 1973 C 80, p. 1).

⁴³ Judgment in Commission v Spain (C‑154/08, EU:C:2009:695, paragraph 119).

⁴⁴ See point 63 of this Opinion. It should be noted, however, that a ‘strict’ interpretation does not necessarily mean a ‘restrictive’ interpretation. Exemptions from VAT should be strictly interpreted but should not be whittled away by interpretation. Limitations on VAT exemptions should not be interpreted narrowly, but nor should they be construed so as to go beyond their terms. Both the exemptions and any limitations on them must be interpreted in such a way that the exemption applies to that to which it was intended to apply and no more (see, in this regard, Opinion of Advocate General Jacobs in Zoological Society (C‑267/00, EU:C:2001:698, point 19)).

⁴⁵ C‑154/08, EU:C:2009:695.

⁴⁶ Ibid. (paragraph 119).

⁴⁷ See, inter alia, judgments in Comune di Carpaneto Piacentino and Others (231/87 and 129/88, EU:C:1989:381, paragraph 16); Comune di Carpaneto Piacentino and Others (C‑4/89, EU:C:1990:204, paragraph 8); Commission v France (C‑276/97, EU:C:2000:424, paragraph 40); Commission v Ireland (C‑358/97, EU:C:2000:425, paragraph 38); Commission v United Kingdom (C‑359/97, EU:C:2000:426, paragraph 50); Fazenda Pública (C‑446/98, EU:C:2000:691, paragraph 17) and Isle of Wight Council and Others (C‑288/07, EU:C:2008:505, paragraph 21).

⁴⁸ See, to this effect, judgments in Comune di Carpaneto Piacentino and Others (231/87 and 129/88, EU:C:1989:381, paragraph 15) and Comune di Carpaneto Piacentino and Others (C‑4/89, EU:C:1990:204, paragraph 10).

⁴⁹ Judgments in Commission v France (C‑276/97, EU:C:2000:424, paragraphs 45 and 46); Commission v Ireland (C‑358/97, EU:C:2000:425, paragraphs 43 and 44) and Commission v United Kingdom (C‑359/97, EU:C:2000:426, paragraphs 55 and 56).

⁵⁰ Idem, and judgment in Commission v Spain (C‑154/08, EU:C:2009:695, paragraph 115). In the judgment in CO.GE.P. (C‑174/06, EU:C:2007:634, paragraphs 24 and 25), the Court held that the situation of a public economic entity which acts not in the name of and on behalf of the State but on its own account, by making independent decisions, did not fulfil the cumulative conditions required to apply the rule of treatment as a non-taxable person under Article 4(5) of the Sixth Directive.

⁵¹ See, in this regard, the Commission Final Report of 1 March 2011 entitled ‘VAT in the public sector and exemptions in the public interest’, Final report for TAXUD/2009/DE/316, p. 41.

⁵² See, inter alia, the judgments in Commission v France (C‑276/97, EU:C:2000:424, paragraph 39) and Isle of Wight Council and Others (C‑288/07, EU:C:2008:505, paragraph 19).