C-258/95 Fillibeck

JUDGMENT OF THE COURT (Fifth Chamber)

16 October 1997 *

In Case C-258/95,

REFERENCE to the Court under Article 177 of the EC Treaty by the Bundesfinanzhof for a preliminary ruling in the proceedings pending before that court between

Julius Fillibeck Söhne GmbH&Co. KG

and

Finanzamt Neustadt

on the interpretation of Articles 2(1) and 6(2) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1),

THE COURT (Fifth Chamber),

composed of: C. Gulmann, President of the Chamber, M. Wathelet, J. C. Moitinho de Almeida, P. Jann and L. Sevón (Rapporteur), Judges,

* Language of the case: German.

Advocate General: P. Léger, Registrar: H. A. Rühi, Principal Administrator,

after considering the written observations submitted on behalf of:

— Julius Fillibeck Söhne GmbH&Co. KG, by Klaus Heininger, accountant and tax adviser,

— Finanzamt Neustadt, by Reinhard Preuninger, Oberregierungsrat,

— the German Government, by Ernst Röder, Ministerialrat at the Federal Ministry of Economic Affairs, and Bernd Kloke, Oberregierungsrat at the same Ministry, acting as Agents,

— the United Kingdom Government, by Stephen Braviner, of the Treasury Solicitor's Department, acting as Agent, and Nicholas Paines, Barrister,

— the Commission of the European Communities, by Jürgen Grunwald, Legal Adviser, acting as Agent,

having regard to the Report for the Hearing,

after hearing the oral observations of Julius Fillibeck Söhne GmbH&Co. KG, represented by Klaus Heininger, of the Finanzamt Neustadt, represented by Werner Widmann, Leitender Ministerialrat at the Ministry of Finance of Rheinland-Pfalz, and of the Commission, represented by Jürgen Grunwald, at the hearing on 5 December 1996, after hearing the Opinion of the Advocate General at the sitting on 16 January 1997,

gives the following

Judgment

Legal context and the dispute

1By order of 11 May 1995, which was received at the Court on 31 July 1995, the Bundesfinanzhof (Federal Finance Court) referred to the Court for a preliminary ruling under Article 177 of the EC Treaty three questions concerning the interpretation of Articles 2(1) and 6(2) the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1, hereinafter 'the Sixth Directive').

2The questions were raised in proceedings between Julius Fillibeck Söhne GmbH&Co. KG (hereinafter 'Julius Fillibeck Söhne') and the Finanzamt [Tax Office] Neustadt, concerning the imposition of value added tax (hereinafter 'VAT') on the free transport provided by Julius Fillibeck Söhne for its employees from their homes to their place of work.

3From 1980 to 1985, Julius Fillibeck Söhne, which runs a building undertaking, conveyed some of its employees in company vehicles free of charge from their homes to the various building sites where they were required to work. During the same period it also required one of its employees to convey other employees from their homes to their various places of work in his own private vehicle.

4Julius Fillibeck Söhne provided that transport pursuant to the Bundesrahmen tarifvertrag für das Baugewerbe (Federal Collective Framework Agreement for the Building Industry) where the employees' homes and their places of work were more than a minimum distance apart.

5The Finanzamt Neustadt considered that that transport was subject to tax under the German VAT legislation.

6Julius Fillibeck Söhne challenged the view that the transport was subject to VAT. Since its objection and the action it brought were unsuccessful, it appealed to the Bundesfinanzhof on a point of law; that court considered that the dispute raised questions concerning the interpretation of Articles 2(1) and 6(2) of the Sixth Directive.

7Article 2(1) of the Sixth Directive provides:

'The following shall be subject to value added tax:

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

s Article 6(2) of the Sixth Directive provides:

'The following transactions shall be treated as supplies of services for consideration:

(a) the use of goods forming part of the assets of a business for the private use of the taxable person or of his staff or more generally for purposes other than those of his business where the value added tax on such goods is wholly or partly deductible;

(b) supplies of services carried out free of charge by the taxable person for his own private use or that of his staff or more generally for purposes other than those of his business.

(···)'

9In those circumstances, the Bundesfinanzhof decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

'(1) Does transport provided by an employer constitute a service "effected for consideration" within the meaning of Article 2(1) of Directive 77/388/EEC — that is to say, effected for a proportion (to be estimated) of the work performed by the employees — where, pursuant to a collective agreement, the employer conveys employees (without specially agreed and calculated consideration) from their homes to the workplace where they are more than a specified distance apart, and the work performed — which has no actual connection with such transport services — is already to be carried out in return for the agreed money wages as in the case of the other employees?

(2) Does Article 6(2) of Directive 77/388/EEC cover the use of goods forming part of the assets of the business or a service carried out free of charge even where — as in the case of free transport for employees from their homes to the workplace and back in a company vehicle — it does not serve purposes other than those of the business as far as the employer is concerned, but does serve the employees' private purposes and the employees are not charged turnover tax in this respect (on account of their use free of charge of the transport service)?

(3) In the event that Question 2 is answered in the affirmative:

Does Article 6(2) of Directive 77/338/EEC also cover a case where the employer does not convey the employees in its own vehicles, but commissions a third party (in this case, one of its own employees) to effect the transport?'

The first question

io In the first question, the national court asks whether Article 2(1) of the directive is to be interpreted as meaning that transport provided by an employer for employees free of charge from their homes to the workplace where they are more than a specified distance apart, in the absence of any real connection with either the work performed or the wages received, constitutes a supply of services effected for consideration within the meaning of that provision.

11Article 2(1) of the Sixth Directive provides that VAT is chargeable on the supply of services effected for consideration within the territory of the country by a taxable person.

i2 It is apparent from the case-law of the Court that the concept of the supply of services effected for consideration within the meaning of Article 2(1) of the Sixth Directive presupposes the existence of a direct link between the service provided and the consideration received (see, in particular, the judgment in Case 102/86 Apple and Pear Development Council [1988] ECR 1443, paragraph 12).

13It is also settled case-law that the taxable amount for the supply of goods or services is represented by the consideration actually received for them. That consideration is thus the subjective value, that is to say, the value actually received, and not a value estimated according to objective criteria (see judgments in Case 154/80 Coöperatieve Aardappelenbewaarplaats [1981] ECR 445, paragraph 13; Case 230/87 Naturally Yours Cosmetics [1988] ECR 6365, paragraph 16; Case C-126/88 Boots Company [1990] ECR 1-1235, paragraph 19; Case C-38/93 Glawe [1994] ECR 1-1679, paragraph 8; Case C-33/93 Empire Stores [1994] ECR 1-2329, paragraph 18, and Case C-288/94 Argos Distributors [1996] ECR 1-5311, paragraph 16).

i4 Furthermore, according to the same case-law, that consideration must be capable of being expressed in money (judgments in Coöperatieve Aardappelenbewaarplaats, paragraph 13; Naturally Yours Cosmetics, paragraph 16, and Argos Distributors, paragraph 17).

is It is clear from the order for reference that Julius Filiibeck Söhne provides transport for its employees from their homes to their workplace when they are more than a certain distance apart and that the employees do not make any payment, nor is any sum deducted from their wages in respect of that service.

i6 Furthermore, since the work to be performed and the wages received are independent of the use or otherwise by employees of the transport provided to them by their employer, it is not possible to regard a proportion of the work performed as being consideration for the transport services.

i7 In those circumstances, there is no consideration which has a subjective value and a direct link with the service provided. Consequently, the requirements relating to a supply of services effected for consideration are not satisfied.

is The reply to the first question is therefore that Article 2(1) of the Sixth Directive is to be interpreted as meaning that an employer who provides transport for employees free of charge from their homes to the workplace where they are more than a specified distance apart, in the absence of any real connection either with the work performed or the wages received, does not effect a supply of services for consideration within the meaning of that provision.

The second question

19 In the second question, the national court is asking essentially whether transport provided for employees free of charge between their homes and their workplace by the employer in a company vehicle for purposes which are not other than those of the business but which, at the same time, serve the employees' private purposes, is to be treated as a supply of services for consideration within the meaning of Article 6(2) of the Sixth Directive.

20 First of all, it should be noted that the national court refers to Article 6(2)(a) and (b) without, however, establishing which of those two provisions applies to the case before it. The parties to the main proceedings consider that, in the present case, it is not necessary to determine whether subparagraph (a) or (b) applies. Furthermore, it is clear from the question that the requested interpretation of those provisions concerns, more specifically, the concepts of 'private use of the taxable person or of his staff' and 'purposes other than those of his business', which appear in both provisions. The two provisions should, consequently, be considered together.

2i The national court pointed out that the transport provided by Julius Fillibeck Söhne is for travel between the employees' homes and the company's various building sites where those employees are required to work.

22 At the hearing, Julius Fillibeck Söhne explained, in particular, that it has a number of building sites which are some distance apart, that it is often not possible to reach those building sites by public transport and that employees are moved between the different sites.

23 It also pointed out that, since the carriage of the employees directly serves the purposes of the business and consequently falls within the employment relationship, it does not concern the private domain of employees. Furthermore, the transport is provided pursuant to a collective agreement.

24 In contrast, the other parties who submitted observations claim that the transport provided by the employer free of charge falls within Article 6(2) of the Sixth Directive. The United Kingdom Government and the Commission pointed out, however, that certain circumstances may justify regarding the transport provided for the employees as serving the purposes of the business.

25 It should be recalled that the purpose of Article 6(2) of the Sixth Directive is to ensure equal treatment as between taxable persons and final consumers (see the judgment in Case C-230/94 Enkler [1996] ECR 1-4517, paragraph 35). It is designed to prevent the non-taxation of business goods used for private purposes and of services provided free of charge by a taxable person for private purposes (see, to that effect, the judgments in Case 50/88 Kühne [1989] ECR 1925, paragraph 8, and Case C-193/91 Mohsche [1993] ECR 1-2615, paragraph 8).

26 In that respect, it should be noted that it is normally for the employee to decide where his home will be with regard, where appropriate, to his place of work, and to determine the distance between the two and the means of transport he intends to use. The employer is not involved in those decisions, since the employee's only obligation is to be present at his place of work at the agreed times. Consequently, under normal circumstances, the transport services provided to employees are for the private use of the employee within the meaning of Article 6(2) of the Sixth Directive.

27 The fact that an employee must travel between his home and the workplace in order to be present at work and, consequently, to perform his duties, is not conclusive evidence that transport provided for an employee from his home to his workplace is not to be considered as being for the employee's private use within the meaning of Article 6(2). Indeed, it would be contrary to the purpose of that provision if such an indirect link were sufficient, in itself, to prevent such travel being treated as a supply for consideration.

28 Article 6(2) of the Sixth Directive must be interpreted thus in the usual situation where an employee travels between his home and his fixed place of work, and has the possibility of using ordinary means of transport.

29 It should be acknowledged, however, that in certain circumstances the requirements of the business may make it necessary for the employer to provide transport for employees between their homes and the workplace. The fact that only the employer is able to provide suitable transport or that the workplace is not always the same but is liable to change may mean that the employer is obliged to provide transport for its employees.

30 In such special circumstances, the transport is organized by the employer for purposes which are not other than those of the business. The personal benefit derived by employees from such transport appears to be of only secondary importance compared to the needs of the business.

3i As regards the fact that the transport is provided pursuant to a collective agreement, even though such an obligation is not in itself sufficient to determine the character of the supply of those services for the purposes of Article 6(2) of the Sixth Directive, it indicates that the transport is provided for purposes which are not other than those of the business.

32 The special characteristics of building firms, as described in particular by Julius Fillibeck Söhne in the present case, suggest that the transport may be organized for purposes which are not other than those of the business.

33 It is for the national court to establish whether, in the light of the interpretations given by the Court, the particular characteristics of the case before it make it necessary, having regard to the requirements of the business, for the employer to provide transport for employees between their homes and the workplace.

34 The answer to the second question is therefore that Article 6(2) of the Sixth Directive is to be interpreted as meaning that transport provided for employees free of charge by the employer between their homes and the workplace in a company vehicle serves, in principle, the employees' private purposes and thus serves purposes other than those of the business. However, that provision does not apply when, having regard to certain circumstances, such as the difficulty of finding other suitable means of transport and changes in the place of work, the requirements of the business make it necessary for the employer to provide transport for employees, in which case the supply of those transport services is not effected for purposes other than those of the business.

The third question

35 In the third question, the national court asks essentially whether the answer to the second question also applies when the employer does not convey the employees in its own vehicles, but commissions one of its employees to provide the transport using his own private vehicle.

36 In that respect, it is sufficient to note that the question whether transport services serve the private purposes of employees of an undertaking or, more generally, serve purposes other than those of the business, within the meaning of Article 6(2) of the Sixth Directive, is not altered by the fact that, instead of providing the transport in its own vehicles, the employer commissions one of its employees to provide that transport using his own private vehicle.

37 Consequently, the answer to the third question must be that the answer to the second question also applies when the employer does not convey the employees in its own vehicles, but commissions one of its employees to provide the transport using his own private vehicle.

Costs

Costs

38 The costs incurred by the German Government, the United Kingdom Government and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the proceedings pending before the national court, the decision on costs is a matter for that court.

Operative part

On those grounds,

THE COURT (Fifth Chamber),

in answer to the questions referred to it by the Bundesfinanzhof by order of 11 May 1995, hereby rules:

1. Article 2(1) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment is to be interpreted as meaning that an employer who provides transport for employees free of charge from their homes to the workplace where they are more than a specified distance apart, in the absence of any real connection either with the work performed or the wages received, does not effect a supply of services for consideration within the meaning of that provision.

2. Article 6(2) of the Sixth Directive 77/388/EEC is to be interpreted as meaning that transport provided for employees free of charge by the employer between their homes and the workplace in a company vehicle serves, in principle, the employees' private purposes and thus serves purposes other than those of the business. However, that provision does not apply when, having regard to certain circumstances, such as the difficulty of finding other suitable means of transport and changes in the place of work, the requirements of the business make it necessary for the employer to provide transport for employees, in which case the supply of those transport services is not effected for purposes other than those of the business.

3. The answer to the second question also applies when the employer does not convey the employees in its own vehicles, but commissions one of its employees to provide the transport using his own private vehicle.

Gulmann Wathelet Moitinho de Almeida

Jann Sevón

Delivered in open court in Luxembourg on 16 October 1997.

C. Gulmann R. Grass

President of the Fifth Chamber Registrar

OPINION OF ADVOCATE GENERAL LÉGER delivered on 16 January 1997 *

Introduction

1The Bundesfinanzhof (Federal Finance Court) has referred three questions to the Court concerning the interpretation of certain provisions of the Sixth VAT Directive ' (hereinafter 'the Directive'). The Court is essentially asked to consider the manner in which free collective transport provided by an employer to its employees, from their home to the workplace, should be treated for VAT purposes.

Facts and procedure

2According to the order for reference, the facts in this case are as follows.

3Julius Fillibeck Söhne GmbH&Co. KG (the applicant and appellant on a point of law, hereinafter 'the applicant') runs a building firm. In the years in question, 1980 to 1985, it provided transport for some of its employees free of charge from their homes to the various building sites where they were

* Original language: French.

required to work. Employees were mainly transported in vehicles belonging to the employer, although some were transported by another employee in his own private vehicle on the employer's behalf. In neither case was any specific charge made to employees using the transport, nor was any deduction made from their wages.

4Those transport services were provided pursuant to the Bundesrahmentarifvertrag für das Baugewerbe (Federal Collective Framework Agreement for the Building Industry) where the employees' homes and the building sites were more than a minimum distance apart (six kilometres).

5In that context, the Finanzamt (Tax Office) (the defendant and respondent on a point of law, hereinafter 'the defendant') considered there to be taxable transactions within the meaning of the German legislation on turnover tax.

6In its appeal, the applicant challenged the specifically agreed, fixed return for the ben view that those transport services were tax efit in kind'. It therefore referred the fol able. It claimed, in that respect, that the lowing questions to the Court for a prelimi judgment of the Bundesfinanzhof of 11 nary ruling:

March 1988 did not apply to circumstances such as those in the present case and on that ground the transport at issue could therefore not be regarded as a taxable supply for the purposes of the provisions of the UStG 1980 cited above.

'(1) Does the transport provided by an Both the defendant and the Finanzgericht (Finance Court), before which its action was unsuccessful, it claimed, failed to recognize that the transport services at issue were not provided to employees for their own private use, but were provided by the employer predominantly in the interests of its business and pursuant to its obligation, in its capacity as a building firm, under the Collective Framework Agreement for the Construction Industry.

7The national court considers that this case raises 'questions relating to the taxation of so-called benefits in kind provided by an employer to its employees where the employees do not have to provide any employer constitute a service "effected for consideration" within the meaning of Article 2(1) of Directive 77/388/EEC — that is to say, effected for a proportion (to be estimated) of the work performed by the employees — where, pursuant to a collective agreement, the employer conveys employees (without specially agreed and calculated consideration) from their homes to the workplace where they are more than a specified distance apart, and the work performed — which has no actual connection with such transport services — is already to be carried out in return for the agreed money wages as in the case of the other employees?

(2) Does Article 6(2) of Directive 77/388/EEC cover the use of goods forming part of the assets of the business or a service carried out free of charge even where — as in the case of free transport for employees from their homes to the workplace and back in a company vehicle — it does not serve purposes other than those of the business as far as the employer is concerned, the value of that notional part of the work constituting con 5 — Page 8 of the English translation [amended] of the order for sideration.

reference.

but does serve the employees' private purposes and the employees are not charged turnover tax in this respect (on account of their use free of charge of the transport service)?

(3) In the event that Question 2 is answered in the affirmative: Does Article 6(2) of Directive 77/388/EEC also cover a case where the employer does not convey the employees in its own vehicles, but commissions a third party (in this case, one of its own employees) to effect the transport?'

First question

8The Bundesfinanzhof is in doubt, first, as to whether, and if so the extent to which, the transport services provided by the employer to its employees in this case constitute supplies 'effected for consideration' (in the form of a proportion — to be estimated as appropriate — of the work performed) within the meaning of Article 2(1) of the Directive.

9Article 2(1) provides that:

'The following shall be subject to value added tax:

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

10It is not disputed that in this case the transport services constitute a supply of services by a taxable person for the purposes of the Directive; the national court's only question is whether the supply is effected for consideration.

11The question of whether a supply of services is effected for consideration has been addressed in numerous cases and has now been settled.

12According to the Court, in order for a supply of services to be regarded as effected for consideration, and thus to be taxable, there must be a direct link between the service provided and the consideration received.

13That principle was first laid down in Case 154/80 Coöperatieve Aardappelenbewaarplaats, which concerned the so-called 'Second VAT Directive'.

14In Case 102/86 Apple and Pear Develop 9 ment Counàl, the Court confirmed that decision, this time in the context of the Sixth VAT Directive, and held that the body in question which, in pursuit of its task of defending the common interests of growers of apples and pears, carried out collective advertising campaigns financed by a mandatory annual charge, was not supplying services for consideration, in the absence of any direct link between the service provided and the consideration received.

The Court held that if individual growers did receive benefits, then those benefits were only derived indirectly from those accruing generally to the industry as a whole and, furthermore, that there was no link between the level of benefit derived by individual growers from the services of the Apple and Pear Development Council and the level of the mandatory charge which they had to pay.

15It is also useful to refer to Case C-16/93 10 Tolsma, in which the Court held that a supply of services is effected 'for consideration' within the meaning of Article 2(1) of the Directive, 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 value actually given in return for the service sup n plied to the recipient.'

On that occasion, the Court recalled that it

'... has already held with reference to the concept of the "provision of services against payment" in Article 2(a) of the Second Directive, whose wording is similar to that of Article 2(1) of the Sixth Directive, that taxable transactions, within the framework of the VAT system, presuppose the existence of a transaction between the parties in which a price or consideration is stipulated. The Court concluded that, 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 (judgment in Case 89/81 Staatssecretaris van Financiën v Hong Kong Trade Development Council ,2 [1982] ECR 1277, paragraphs 9 and 10)'.

And that,

'In its judgments in Case 154/80 Coöperatieve Aardappelenbewaarplaats [1981] ECR 445, paragraph 12, and Case 230/87 Naturally Yours Cosmetics [1988] ECR 6365, paragraph 11, the Court stated on this point that the basis of assessment for a provision of services is everything which makes up the consideration for the service and that a provision of services is therefore taxable only if there is a direct link between the service provided and the consideration received (see also the judgment in Case 102/86 Apple and Pear Development Council v Commissioners of Customs and Excise [1988] ECR 1443, paragraphs 11 and 12).'

16The three following criteria can be identified from those decisions, which makes it possible to define the concept of the supply of services effected 'for consideration':

— there must be a direct link between the service supplied and the consideration ,5 received;

— the consideration must be capable of being expressed in money;

— the consideration must be the subjective value given to it by the parties.

17The three conditions which the case-law of this Court requires to be satisfied in order for a supply of services to be regarded as being effected for consideration and, as such, subject to value added tax, are not satisfied here.

18A mere 'proportion (to be estimated) of the work performed by the employee', to use the words of the national court, cannot be considered real consideration for the transport services received by the employee.

19In the present case, no direct link can be observed between the service supplied and the consideration received.

20The service which, in this case, consists of the transport services is supplied independently of any consideration received. Employees using the free collective transport made available to them by the employer do not make any payment, nor is any sum deducted from their wages as consideration for that service. Furthermore, the wages cannot be regarded as comprising consideration for that service, since they are only paid as consideration for the work performed.

Just as in Apple and Pear Development Council, cited above, in which all apple and pear growers paid the same charge to the body in question and there was no link between the charge paid and the benefits derived, the employees in this case are required to perform the same work and receive the same salary, irrespective of whether they derive a benefit from the free transport; there is no consideration which has a direct link with the transport provided by the employer.

The employer is required to make free transport available for all its employees under the relevant collective agreement, but they are free to choose whether or not to make use of it.

21A distinct proportion of the work performed by the employee cannot therefore be regarded as the (estimated) value of the consideration for the transport services.

22Furthermore, in the course of the proceedings, neither party proposed any estimation of the distinct proportion of the work performed which represents the consideration for the transport services.

23As a result, in so far as no consideration having a direct link with the service supplied can be identified, it is, a fortiori, impossible in this case to express the consideration 'in money', as required by the case-law cited above, and to recognize a 'subjective' value given to it by the parties.

24Since transport services provided free of charge by an employer to its employees cannot be regarded as effected 'for consideration' within the meaning of Article 6(2) of the Directive, those services do not fall within the scope of that provision and on that basis cannot therefore be subject to value added tax.

25The first question should therefore be answered in the negative.

Second question

26In the event that the first question is answered in the negative, the national court asks whether the transport services at issue fall within the definition of taxable transactions for the purposes of Article 6(2) of the Directive.

27That provision reads as follows:

'2. The following shall be treated as supplies of services for consideration:

(a) the use of goods forming part of the assets of a business for the private use of the taxable person or of his staff or more generally for purposes other than those of his business where the value added tax on such goods is wholly or partly deductible,

(b) supplies of services carried out free of charge by the taxable person for his own private use or that of his staff or more generally for purposes other than those of his business.

Member States may derogate from the provisions of this paragraph provided that such derogation does not lead to distortion of competition'.

28According to Article 11(A)(1)(c) of the Directive, the taxable amount of the transactions referred to in Article 6(2) is 'the full cost to the taxable person of providing the services'.

29The wording of the national court's question seems to suggest that a distinction should be made between 'the use of goods forming part of the assets of the business' (Article 6(2)(a)) and 'supplies of services carried out free of charge' (Article 6(2)(b)).

However, that distinction does not seem to me to be necessary in the circumstances of this case. Only the expressions 'private use of the taxable person or of his staff' and 'purposes other than those of his business', which are used in both provisions, are relevant.

30To summarize, either the transport at issue is regarded as being effected for the private use of the staff, for purposes other than those of the business, or, alternatively, it is regarded as serving the purposes of the business, in which case it is not subject to any tax under Article 6(2) of the Directive.

31Arguments were submitted in favour of both approaches during the proceedings.

32First, the applicant claimed that the transport provided for employees directly and exclusively serves the purposes of the business and therefore falls within the employment relationship and does not concern the 'private' domain of employees. It submits, in that respect, that even if the transport did theoretically concern the employees' 'private sphere', it would have been brought within the employment relationship by virtue of the collective agreement pursuant to which it is provided. It concluded therefore that Article 6(2) does not apply in this case.

33In contrast, the other parties considered that the free transport of employees serves their private purposes and thus serves purposes other than those of the business; Article 6(2) therefore applies.

34The United Kingdom Government and the Commission, however, consider that the special circumstances of this case should be taken into account and justify non-taxation under Article 6(2).

35I support that view.

36First, it seems difficult to deny that the transport provided for employees from their home to the workplace is a matter which in principle concerns their private life.

37The employee decides where his home will be with regard, where appropriate, to his place of work, and that determines the distance between the two and the means of transport he is free to choose for that journey. The employer is not involved in any way in those decisions, since the employee's only obligation towards him is to report to his place of work at the agreed time. The employee is responsible for taking the necessary steps to arrive at the workplace and he alone is responsible for deciding how to do so. As a result, under normal circumstances, transport provided for an employee from his home to the workplace is 'for the private use' of staff, and is effected for purposes 'other than those of the business'. That is not altered by the fact that the transport may be organized by the employer, who makes free FILLffiECK v FINANZAMT NEUSTADT collective transport available to those employees wishing to use it.

38In general, therefore, the transport provided for employees by an employer free of charge using a company vehicle must be considered to be subject to value added tax, since it is treated as a supply of services effected for consideration in accordance with Article 6(2) of the Directive.

39That principle is consistent with the aim of that provision, which 'is designed to prevent the non-taxation of business goods used for private purposes'.

40However, I believe that, in exceptional cases and under special circumstances, which in this case relate to the nature of the business, transport provided by an employer could be regarded as being supplied for purposes which are not other than those of the business.

41The particular characteristic of a building firm is that its employees are required to work on building sites in various locations according to the needs of the company's customers, rather than working on a permanent basis at a place of work agreed in advance with the employer. The place in which they are required to work can change from one day to the next, or even in the course of a single day. Employees must be prepared to move as soon as the employer asks them to do so. That is a specific characteristic which distinguishes employees in the building sector, in this case, from employees who are required to work in a place determined in advance, for example on the premises of the company employing them. Employees are consequently unable to exercise any degree of choice or control over the length of the journey between their home and the workplace.

42The places where the employees concerned are required to work are generally difficult to reach by traditional means, since they are building sites which may be situated, for example, on industrial estates or in outlying areas.

43Furthermore, because those building sites may be some distance from the employees' homes, depending on where they are required to work, working hours in the building sector can mean that employees have to get up particularly early in the morn ing in order to reach their place of work in time.

44In those circumstances, the risk involved for the employer in leaving employees to choose for themselves how to travel from their homes to the workplace could be detrimental to the successful operation of the company. It is possible that other more traditional means of transport, such as public transport, might prove to be inadequate or even non-existent in those circumstances.

45Therefore, transport organized by an employer for its employees from their homes to their places of work may, in certain special circumstances, such as those in the present case, be necessary to meet fundamental requirements for the proper operation of the business. Although it cannot be denied that the employees derive a benefit from the transport made available to them, that benefit seems to be of secondary importance compared to the purposes of the business in respect of which the free collective transport was organized.

46Although the fact that a collective agreement expressly provides for such transport is not conclusive, it is none the less indicative of the fact that the building sector involves an activity with special characteristics, which must be taken into account.

47I therefore consider that the answer to the second question should be that, although in general the transport provided for employees from their homes to the workplace using a vehicle belonging to the employer must be regarded as serving the private purposes of those employees and, on that basis, subject to tax under Article 6(2) of the Directive, that is not the case when, as a result of special circumstances inherent, for example, in the nature of the business, those transport services serve purposes which are not other than those of the business. Such a situation falls outside the scope of Article 6(2) and the transaction is not taxable.

Third question

48By this question, the Bundesfinanzhof asks the Court, in the event that the second question is answered in the affirmative, whether the fact that an employee may be commissioned to provide the transport at issue, using his own private vehicle, is relevant.

49In view of the suggested answer to the second question, there is no need to answer the third question in this case.

50However, if the circumstances were not such as to justify regarding the transport as being provided for purposes which are not other than those of the business, the answer to the third question would not differ from that given to the previous question. An thereof: transport services supplied by an employee commissioned to carry out a task employee must be regarded as comparable to on behalf of the taxable person, within the transport services supplied by the taxable meaning of the Directive, is not acting inde trader, since they are carried out on behalf of pendently within the meaning of Article 4(1)

that trader.

Conclusion

51For those reasons, I propose that the questions referred by the Bundesfinanzhof should be answered as follows:

(1) Article 2(1) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States on turnover taxes — Common system of value added tax: uniform basis of assessment, is to be interpreted as meaning that an employer who provides transport for employees free of charge from their homes to the workplace, in the absence of any real connection either with the work performed or the wages received, does not effect a supply of services 'for consideration' within the meaning of that provision.

(2) Article 6(2) of the Directive is to be interpreted as meaning that it applies where employees are conveyed free of charge by the employer from their homes to the workplace and back, in so far as the transport provided serves, in principle, the employee's private purposes and thus serves purposes other than those of the business. That provision does not, however, apply where, as in this case, because of the specific nature of the business, the supply of those transport services is not effected for purposes other than those of the business and therefore serves the purposes of the business.

(3) The first sentence of the answer to Question 2 also applies when the employer does not convey the employees in its own vehicles, but commissions a third party (in this case, one of its own employees) to do so.

Notes

(1) Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1).

(2) Paragraph 1(1)(1), second sentence, (b), of the Umsatz-stcuergesctz of 1980 (1980 Law on turnover tax — hereinafter 'the UStG 1980'). O P I N I ON OF MR LÉGER — CASE C-258/95

(3) V R 30/84 and V R 114/83 (BFHE 153, 155, 162, BStBl II

(198) 8, 643, 651).

(4) The national court points out (point II. 1 of the order for reference) that, in that judgment, the Bundesfinanzhof abandoned the former case-law. Whereas a notional part of the work performed by the employees had previously been treated as consideration for the transport supplied by the employer, it now considers that it is impossible to ascertain

(6) Emphasis added. O P I N I ON OF MR LÉGER — CASE C-258/95

(7) _ [1981] ECR 445, parigraphs 12 and 13.

(8) Second Council Directive 67/228/EEC of 11 April 1967 on the harmonization of legislation of Member States concerning turnover taxes —Structure and procedures for application of the common system of value added tax (OJ, English Special Edition 1967 (I), p. 16).

(9) [1988] ECR 1443.

(10) [1994] ECR 1-743.

(11) Paragraph 14.

(12) Paragraph 12.

(13) Paragraph 13.

(14) See, to that effect, point 14 of the Opinion of Advocate General Lenz in Tolsma, cited above.

(15) Coöperatieve Aardappelenbewaarplaats (paragraph 12), Apple and Pear Development Council (paragraph 11) and Naturally Yours Cosmetics (paragraph 11).

(16) Coöperatieve Aardappelenbewaarplaats (paragraph 13) and Naturally Yours Cosmetics (paragraph 16).

(17) Coöperatieve Aardappelenbewaarplaats (paragraphs 13 and

(14) and Naturally Yours Cosmetics (paragraph 16).

(18) Case C-193/91 Mohsche [1993] ECR 1-2615, paragraph 8. Sec also Case 50/88 Kühne [1989] ECR 1925, paragraph 8.