C-275/01 Sinclair Collis

JUDGMENT OF THE COURT (Fifth Chamber)

12 June 2003 *

In Case C-275/01,

REFERENCE to the Court under Article 234 EC by the House of Lords for a preliminary ruling in the proceedings pending before that court between

Sinclair Collis Ltd

and

Commissioners of Customs and Excise,

on the interpretation of Article 13B(b) of 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),

* Language of the case: English.

THE COURT (Fifth Chamber),

composed of: C.W.A. Timmermans, President of the Fourth Chamber, acting as President of the Fifth Chamber, D.A.O. Edward, A. La Pergola (Rapporteur), P. Jann and S. von Bahr, Judges,

Advocate General: S. Alber, Registrar: L. Hewlett, Principal Administrator,

after considering the written observations submitted on behalf of:

— Sinclair Collis Ltd, by D. Milne QC and R. Baldry, Barrister, instructed by Ernst & Young, Tax Advisers,

— the United Kingdom Government, by J.E. Collins, acting as Agent, and K. Parker QC,

— the Commission of the European Communities, by R. Lyal, acting as Agent,

having regard to the Report for the Hearing, after hearing the oral observations of Sinclair Collis Ltd, the United Kingdom Government and the Commission at the hearing on 18 September 2002,

after hearing the Opinion of the Advocate General at the sitting on 10 October 2002,

gives the following

Judgment

Legal context and the dispute

1By an order of 7 June 2001, received at the Court on 12 July 2001, the House of Lords referred to the Court for a preliminary ruling under Article 234 EC a question on the interpretation of Article 13B(b) of 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, hereinafter 'the Sixth Directive').

2That question was raised in proceedings between Sinclair Collis Ltd (hereinafter 'SC') and the Commissioners of Customs and Excise (hereinafter 'the Commissioners'), who have responsibility in the United Kingdom for collecting value added tax ('VAT'), concerning the VAT regime applicable to an agreement relating to the installation of cigarette vending machines in commercial premises.

Legal background

Community legislation

3Article 2(1) of the Sixth Directive provides as follows:

'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;

...'

4Article 13B(b) of the Sixth Directive provides:

'Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of the exemptions and of preventing any possible evasion, avoidance or abuse:

(a) ...

(b) the leasing or letting of immovable property excluding:

1. the provision of accommodation, as defined in the laws of the Member States, in the hotel sector or in sectors with a similar function, including the provision of accommodation in holiday camps or on sites developed for use as camping sites;

2. the letting of premises and sites for parking vehicles;

3. lettings of permanently installed equipment and machinery;

4. hire of safes.

...'

National law

5Item 1 in Group 1 of Part II of Schedule 9 to the Value Added Tax Act 1994 exempts from VAT:

'[t]he grant of any interest in or right over land or of any licence to occupy land'.

6The concept of a 'licence to occupy land' in that provision of national law refers to the concept of 'letting of immovable property' in Article 13B(b) of the Sixth Directive.

The main proceedings and the question referred for a preliminary ruling

7SC, which is part of the Imperial Tobacco Group, provides, operates and maintains vending machines for the sale of cigarettes in public houses, clubs and hotels.

8To that end it has concluded with each owner of these commercial premises an agreement for the provision of such machines in return for payment of an agreed percentage of the gross profits on overall sales of tobacco products made in the premises, more particularly on sales made through the machines (hereinafter 'the agreement').

9Under the agreement, the machines are to be positioned in such location as the site owner considers to be the most likely to generate the maximum sales. However, the site owner may not unreasonably refuse his consent to a different location selected by SC. SC retains ownership of the cigarettes kept in the machines, of the cash, and of cigars and other tobacco products. The site owner confers on SC for a period of two years the exclusive right to install and operate the machines, which remain the property of SC. In addition, the agreement grants SC an exclusive right to supply cigars and other tobacco products to the establishment in question.

10The site owner agrees to provide sufficient electricity and to prevent the installation on his premises of any machine dispensing products comparable to those covered by the agreement. Machines other than those which are designed to be wall-mounted can be moved around.

11SC retains exclusive control over access to the machines, keeps them properly stocked and removes the money inside for sharing as agreed.

12In January 1996 the Commissioners decided that the supplies under the agreement ought to be exempt from VAT under Article 13B(b) of the Sixth Directive, on the ground that the agreement constituted a licence to occupy land. SC, which had an interest in the supplies being found to be taxable so as to be able to set off input tax, appealed against that decision to the VAT and Duties Tribunal, Manchester (United Kingdom). The Tribunal found that the real subject of the agreement was the installation of cigarette vending machines and not the use or enjoyment of land and accordingly held that the transaction ought not to be exempt from VAT.

13The Commissioners appealed against the decision of the Tribunal to the High Court of Justice of England and Wales, which found in their favour. SC appealed against the High Court's decision to the Court of Appeal (England and Wales) (Civil Division), which dismissed the appeal. SC then appealed to the House of Lords.

14Taking the view that interpretation of the Sixth Directive was required in order to decide the case, the House of Lords decided to stay proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

'Is the grant, by the owner of premises ("the Siteholder") to an owner of a cigarette vending machine, of the right to install, operate and maintain the machine in the premises for a period of two years, in a place nominated by the Siteholder, in return for a percentage of the gross profits of the sales of cigarettes and other tobacco goods in the premises, but with no other significant rights of possession or control than those set out in the written agreement between the parties, capable of amounting to the letting of immovable property within the meaning of Article 13B(b) of [the Sixth Directive]; and what are the principles applicable in deciding whether an agreement amounts to the letting of immovable property within such meaning?'

Consideration of the question referred

15By its question the national court is essentially asking whether, on a proper construction of Article 13B(b) of the Sixth Directive, the grant, by the owner of premises to an owner of a cigarette vending machine, of the right to install the machine, and to operate and maintain it in the premises for a period of two years, in a place nominated by the owner of the premises, in return for a percentage of the gross profits on the sales of cigarettes and other tobacco goods in the premises, but with no rights of possession or control being granted to the owner of the machine other than those expressly set out in the agreement between the parties, constitutes a letting of immovable property within the meaning of that provision.

16It is common ground that, under the agreement, the owner of the premises who grants the right to install and maintain a cigarette vending machine is supplying a service as a taxable person within the meaning of Articles 6(1) and 4(1) of the Sixth Directive respectively. The services supplied by him under the agreement are therefore in principle subject to VAT in accordance with Article 2(1) of the Sixth Directive. It remains to be determined whether they fall within the scope of the exemption provided for by Article 13B(b) of the Sixth Directive.

Observations submitted to the Court

17SC and the Commission submit that the agreement does not constitute the leasing or letting of immovable property for the purposes of Article 13B(b) of the Sixth Directive. They argue that the essential characteristics of a letting within the meaning of that provision include the grant to a person of a right to occupy a defined piece or area of property as one's own and to exclude or allow access to others.

18SC argues in that regard that the subject of the agreement is the installation and operation of income-producing vending machines, not the use and occupation of the premises in which they are installed. The agreement contains no restriction on the number of machines nor does it identify any defined area where they may be placed. Once installed, they are, like other fixtures on the premises, in the custody or possession of the site owner, who undertakes not to interfere with them. SC retains ownership of the machines but has no control regarding access to them except to restock, maintain and repair them. At the hearing SC stated in this connection that it enjoyed access to the machines only during the opening hours of the establishment.

19The Commission for its part submits that the right to install a vending machine on premises belonging to another person and to leave it there can be considered to amount to a letting for the purposes of Article 13B(b) of the Sixth Directive only if it entails a right of occupation or control of a defined portion of the premises. Further, the payment made for a letting within the meaning of that provision need not necessarily, in the Commission's view, be a function of its duration.

20The United Kingdom Government, on the other hand, submits that the agreement amounts to a letting of immovable property within the meaning of Article 13B(b) of the Sixth Directive. By fixing a vending machine to a wall or standing it in a particular place for a sustained period, a person is occupying the land where the machine is situated to the exclusion of all others, such that this may be considered to amount to a letting of immovable property for the purposes of that provision.

21According to the United Kingdom Government, the fact that the machine may be moved does not mean there is not exclusive occupation. It merely means that the occupation has been varied by consent of the parties. SC's right of access to the machines to maintain and repair them is sufficient for the purposes for which occupation is obtained. Unconditional or unlimited rights of access are not a necessary condition for a right of occupation. The essential point is that the rights of access are consistent with the purpose for which occupation is envisaged.

Findings of the Court

22It is settled case-law, first of all, that the exemptions provided for by Article 13 of the Sixth Directive have their own independent meaning in Community law and that they must therefore be given a Community definition (see Case C-358/97 Commission v Ireland [2000] ECR I-6301, paragraph 51, and Case C-315/00 Maierhofer [2003] ECR I-563, paragraph 25).

23Secondly, the terms used to specify the exemptions provided for by Article 13 of the Sixth Directive are to be interpreted strictly since they constitute exceptions to the general principle that VAT is to be levied on all services supplied for consideration by a taxable person (see, inter alia, Commission v Ireland, paragraph 52, and Case C-150/99 Stockholm Lindöpark [2001] ECR I-493, paragraph 25).

24With regard to the exemptions in Article 13B(b) of the Sixth Directive, the provision does not define 'letting', nor does it refer to relevant definitions adopted in the legal orders of the Member States (see Case C-326/99 'Goed Wonen' [2001] ECR I-6831, paragraph 44).

25However, it is also settled that the fundamental characteristic of a letting of immovable property for the purposes of Article 13B(b) of the Sixth Directive lies in conferring on the person concerned, for an agreed period and for payment, the right to occupy property as if that person were the owner and to exclude any other person from enjoyment of such a right (see, to that effect, 'Goed Wonen', paragraph 55, and Case C-108/99 Cantor Fitzgerald International [2001] ECR I-7257, paragraph 21).

26Moreover, in order to determine the nature of a taxable transaction, regard must be had to all the circumstances in which the transaction in question takes place in order to identify its characteristic features (see Case C-231/94 Faaborg-Gelting Linien [1996] ECR I-2395, paragraph 12, and Stockholm Lindöpark, paragraph 26).

27According to the information supplied by the national court, the subject matter of the agreement is not the passive provision of an area or space, together with the grant to the other party of a right to occupy it as though he were the owner and to exclude all other persons from the enjoyment of that right.

28That finding is supported, first of all, by the fact that the agreement does not prescribe any precisely defined area or space for the installation of the vending machines at the premises. Contrary to the position in relation to the characteristics of a letting, the location of the machine is material only in so far as it enables the maximum possible number of sales to be generated. Subject to that criterion, under the agreement there is nothing to prevent the machines from being moved about, to a degree, as the site owner wishes.

29Secondly, the agreement does not confer on SC the right to control or restrict access to the area where the machines are placed. Whilst it is true that under the agreement SC retains an exclusive right of access to the machines to maintain them, keep them stocked with cigarettes and remove the cash inside, that right concerns only access to the machine itself, in particular its inner mechanism, and not access to that part of the premises where the machine is situated. In any event, according to the information provided by SC at the hearing, the right is restricted to the opening hours of the commercial establishment and cannot be exercised without the site owner's consent. Furthermore, third parties have access to the machines within such practical parameters as are imposed by the site owner, in particular during the opening hours of the establishment, and not according to limits determined by SC.

30In those circumstances, the occupation of an area or space at the commercial premises is, under the terms of the agreement, merely the means of effecting the supply which is the subject matter of the agreement, namely the guarantee of exercise of the exclusive right to sell cigarettes at the premises by installing and operating automatic vending machines, in return for a percentage of the profits.

31It follows from the foregoing considerations that the reply to the question referred should be that, on a proper construction of Article 13B(b) of the Sixth Directive, the grant, by the owner of premises to an owner of a cigarette vending machine, of the right to install the machine, and to operate and maintain it in the premises for a period of two years, in a place nominated by the owner of the premises, in return for a percentage of the gross profits on the sales of cigarettes and other tobacco goods in the premises, but with no rights of possession or control being granted to the owner of the machine other than those expressly set out in the agreement between the parties, does not amount to a letting of immovable property within the meaning of that provision.

Costs

Costs

32The costs incurred by the United Kingdom Government and by the Commission, 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 action pending before the national court, the decision on costs is a matter for that court. On those grounds,

THE COURT (Fifth Chamber),

in answer to the question referred to it by the House of Lords by order of 7 June 2001, hereby rules:

On a proper construction of Article 13B(b) of 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, the grant, by the owner of premises to an owner of a cigarette vending machine, of the right to install the machine, and to operate and maintain it in the premises for a period of two years, in a place nominated by the owner of the premises, in return for a percentage of the gross profits on the sales of cigarettes and other tobacco goods in the premises, but with no rights of possession or control being granted to the owner of the machine other than those expressly set out in the agreement between the parties, does not amount to a letting of immovable property within the meaning of that provision.

Timmermans Edward La Pergola

Jann von Bahr

Delivered in open court in Luxembourg on 12 June 2003.

R. Grass M. Wathelet

Registrar President of the Fifth Chamber

OPINION OF ADVOCATE GENERAL ALBER delivered on 10 October 2002 1

I — Introduction

1The House of Lords has referred a question to the Court on the interpretation of 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 2 (hereinafter 'the Sixth Directive'). The referring court seeks guidance as to whether an agreement for the installation of a cigarette vending machine in a public house is a contract for the 'letting of immovable property', which would be exempt from value added tax under Article 13B(b) of the Sixth Directive.

II — Legal context

A — Community law

2Article 2 of the Sixth Directive provides as follows:

'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;

...'

3Article 13B of the Sixth Directive provides as follows:

'Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of the exemptions and of preventing any possible evasion, avoidance or abuse:

(b) the leasing or letting of immovable property excluding:

1. the provision of accommodation, as defined in the laws of the Member States, in the hotel sector or in sectors with a similar function, including the provision of accommodation in holiday camps or on sites developed for use as camping sites;

2. the letting of premises and sites for parking vehicles;

3. lettings of permanently installed equipment and machinery;

4. hire of safes.

Member States may apply further exclusions to the scope of this exemption;

B — National law

4The Sixth Directive was implemented in the United Kingdom by Section 31 of the Value Added Tax Act 1994, which provides that a supply of services is an exempt supply if it is of a description for the time being specified in Schedule 9 to the Act. Item 1 in Group 1 of Part II of that Schedule includes:

'The grant of any interest in or right over land or of any licence to occupy land'.

III — Facts and procedure

5Sinclair Collis Ltd. (hereinafter 'Sinclair Collis'), the appellant in the main proceedings, installs vending machines for the sale of cigarettes in public houses, clubs and hotels. To that end it enters into agreements with the owners of such establishments.

6The agreements contain the following provisions:

— The siteholders agree to install the machines in their premises. The siteholders determine where the machines are to be positioned; if they are not mounted on a wall, they may be moved around. Sinclair Collis none the less has a right to require that a machine be installed in a different position if, in its view, this is likely to generate increased sales.

— Sinclair Collis retains ownership of the machines, the cigarettes and the money in the machines. It retains exclusive control over the machines, keeps them stocked with cigarettes and removes the cash.

— The siteholders agree to provide electricity and to ensure that no other cigarette vending machines are installed on the premises.

— Sinclair Collis is given the exclusive rights to supply cigarettes and other tobacco products at the relevant premises.

— The siteholders receive a certain percentage of the gross takings of the machines by way of consideration.

— The licence period is two years.

7In January 1996 the Commissioners of Customs and Excise decided that the services supplied entailed licences to occupy land and were therefore exempt from VAT under Article 13B(b) of the Sixth Directive.

8Sinclair Collis, which had an interest in the services supplied being found to be taxable so as to be able to set off input tax, appealed against that decision to the Manchester VAT and Duties Tribunal. The Tribunal found for the appellant. It stated that the services supplied were taxable because the real subject of the agreement was the installation of the machines and not the use or enjoyment of the land on which they stood.

9The Commissioners appealed against the decision of the Tribunal to the High Court, which overturned the Tribunal's decision. Lightman J. stressed that the critical question was what, upon the true construction of the agreement, the siteholder was agreeing to supply. The answer to that question was that the agreement amounted to a licence to keep a machine on a site. It was a licence to occupy land combined with certain ancillary or incidental rights. He accordingly held the supply to be exempt from VAT.

10Sinclair Collis appealed against that decision to the Court of Appeal. The Court of Appeal upheld the decision of the High Court. Sinclair Collis then appealed further to the House of Lords.

IV — Reference for a preliminary ruling

11The House of Lords is uncertain whether the supply in question should be classified as a 'letting of immovable property' within the meaning of Article 13B(b) of the Sixth Directive, and so deemed exempt from VAT.

12It has therefore referred the following question to the Court of Justice for a preliminary ruling:

'Is the grant, by the owner of premises ("the Siteholder") to an owner of a cigarette vending machine, of the right to install, operate and maintain the machine in the premises for a period of two years, in a place nominated by the Siteholder, in return for a percentage of the gross profits of the sales of cigarettes and other tobacco goods in the premises, but with no other significant rights of possession or control than those set out in the written agreement between the parties, capable of amounting to the letting of immovable property within the meaning of Article 13B(b) of Council Directive 77/388/EEC of the 17th day of May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes; and what are the principles applicable in deciding whether an agreement amounts to the letting of immovable property within such meaning?'

13Lord Slynn of Hadley, Lord Steyn, Lord Nicholls of Birkenhead, Lord Millet and Lord Scott of Foseóte have set out their opinions on the reference for the preliminary ruling in writing. These will be addressed in the context of the legal appraisal.

V — Arguments of the parties

14The appellant is of the view that agreements for the installation of machines of the kind in point here do not meet the conditions for a 'letting of immovable property' within the meaning of Article 13B(b) of the Sixth Directive. The agreement does not specify any particular location for the machines. Rather, it is generally for the siteholder to select an appropriate position for the installation of the machines. The siteholder is simply bound not unreasonably to withhold his consent to the selection of a position for installing the machine which the appellant considers to be more likely to generate maximum sales. The fact that most of the machines can be moved around by the siteholder is another factor suggesting that there is no occupation of a defined part of the land.

15More importantly, although the appellant has a right of access to the machines to maintain them, remove the money and keep them stocked with cigarettes, it has no further control over access to the machine nor does it have a right to exclude others. Only the siteholder enjoys that right.

16It follows from the above that the characteristics necessary for there to be a 'letting of immovable property' are not present or at any rate do not predominate in the contract as a whole. The agreement is first and foremost a contract for the installation of the machines, not for the use or occupation of the land on which they stand.

17The United Kingdom Government, on the other hand, takes the view that, by installing the machine, a person is occupy ing the land by the machine to the exclusion of all others. This is quite different from sitting at a table to drink a cup of coffee or wander around a park or across a golf course.

18Nor does the fact that the machine may be moved invalidate the conclusion that there is occupation. It merely means that the land occupied has been varied consen sually by the parties.

19Moreover, the appellant does have control over access to the machines, albeit limited. It has its own rights of access to the machines to maintain them, remove the cash and keep them stocked with cigarettes. Those rights of access are sufficient for the purposes for which occupation is obtained. In any event, unlimited rights of access are not a necessary condition for a right to occupy land. The essential point is that the rights of access are consistent with the purpose for which occupation is sought.

20The services supplied therefore amount to a 'letting of immovable property' within the meaning of Article 13B(b) of the Sixth Directive and must therefore be regarded as exempt from VAT.

21The Commission does not make any detailed submissions on the classification of the agreement at issue. It simply points out that the mere right to install a machine does not normally entail any right of occupation of a piece of land or control over access to that land. Only if there is occupation and control can there be a 'letting of immovable property' for the purposes of Article 13B(b) of the Sixth Directive.

VI — Legal appraisal

22The installation of the machine amounts to the supply of a service effected for consideration, within the meaning of Article 6(1) of the Sixth Directive, which is subject to VAT pursuant to Article 2(1) of the Directive. The taxable person under Article 4(1) of the Sixth Directive is the siteholder as the supplier of the service.

23The only question is whether an agreement of the kind described in this case is to be regarded as amounting to 'the letting of immovable property' within the meaning of Article 13B(b) of the Sixth Directive and thus exempt from VAT.

A — 'Letting of immovable property' within the meaning of Article 13B(b) of the Sixth Directive

24The concept of 'letting of immovable property' is not defined in the Sixth Directive itself. 3

25However, it is settled case-law that the exemptions from VAT provided for in Article 13 of the Sixth Directive have their own independent meaning in Community law and must therefore be given a Community definition. 4

26The purpose of establishing a common list of exemptions in the Sixth Directive was to create a uniform basis for charging value added tax in the Member States. That is only possible if the tax exemptions provided for in the Sixth Directive are based on uniform concepts of Community law. 5

27The tax exemptions listed in Article 13 of the Sixth Directive are, moreover, according to the settled case-law of the Court, to be construed strictly, since they are exceptions to the general principle that all supplies made by a taxable person for consideration are subject to value added tax. 6

28The Court of Justice has not yet been called upon to give a comprehensive interpretation of the concept of 'letting of immovable property' for the purposes of Article 13B(b) of the Sixth Directive. Where is has considered the matter before the present request for a preliminary ruling, it has been concerned inter alia with the status of a transaction surrendering a lease, 7 a licence to use a golf course and a licence to use a road on payment of a toll.

29Certain principles for interpreting the concept of the 'letting of property' may none the less be derived from those decisions and from the corresponding Opinions of the Advocates General. In its judgment in Case C-359/97 Commission v United Kingdom, for instance, the Court of Justice held that it is an essential element of a contract to let property that a specific period be agreed for use of the property:

'[The term letting of immovable property] cannot be considered to cover contracts where... the parties have not agreed on any duration for the right of enjoyment of the immovable property, which is an essential element of a contract to let'.

30Advocate General Jacobs took the view in his Opinion in the Stockholm Lindöpark case that it is a salient and typical characteristic of a lease or let that 'it necessarily involves the grant of some right to occupy the property as one's own and to exclude or admit others'. The right must also be linked to a defined piece of property.

31These criteria are sufficient to provide a reply to the question posed by the referring court; there is no need for a more comprehensive definition of the term 'letting of immovable property' at this stage. The fact that the consideration for installing the machines is not a fixed sum but a percentage of the profits made from the sale of the cigarettes is irrelevant to the question how to classify the main supply under the contract. It is precisely in circumstances involving the letting of sales areas that rents are in practice conditional on turnover.

B — Classification of the agreement for installation of the machine in this case

32It is for the national court to determine the exact nature of the agreement at issue here. In the light of the criteria set out under section A above, however, an agreement of the kind described in this case appears not to constitute a 'letting of immovable property' for the purposes of Article 13B(b) of the Sixth Directive.

33The agreement for the installation of the machine was entered into for a limited period, namely two years. The situation in this case is therefore different from that in, for instance, Cases C-358/97 Commission v Ireland and C-359/97 Commission v United Kingdom, which related to the use of a road on payment of a toll.

34In those cases the Court held that one reason why there could be no 'letting of immovable property' for the purposes of Article 13B(b) of the Sixth Directive was that there was no agreement between the parties as to the duration of the right to enjoy the land:

'Where access to roads is provided, what interests the user is the possibility offered to him of making a particular journey rapidly and more safely. The duration of the use of the road is not a factor taken into account by the parties, in particular in determining the price.'

35What is uncertain with regard to the contract at issue in this case, however, is whether the agreement includes the right to occupy a particular piece of property and to refuse others access to that property.

36As stated at points 14 to 16 above, the appellant takes the view that it does not because the agreement does not specify a site for installing the machine and because it only has limited rights of access which do not extend to excluding third parties from the site where the machine is installed. That is also the view taken by Lord Nicholls and Lord Millet.

37The United Kingdom and Lord Slynn, on the other hand, are of the opinion that installing the machine is a way of taking possession of the site on which it is placed and excluding all third parties (occupying the land by the machine). The fact that the machine may be moved does not affect the fact of occupation. Moving the machine merely alters the piece of land occupied by agreement between the parties.

38The United Kingdom also takes the view that the appellant does enjoy the right to control access to the machines. The appellant has a right of access to the machines to maintain them, remove the money and keep them stocked with cigarettes. That right is sufficient for the purposes of occupying the land. It is not necessary to have unlimited rights of access.

39I concur with the appellant's view. The agreement in this case does not give the appellant the right to occupy a particular piece or parcel of land.

40That is clear from the fact that the agreement does not identify any particular area, by size or location, in the public house where the machine to be installed. It is, rather, left to the siteholder to determine where the machine is to stand. The appellant only has the right to require that it be moved if it considers a different location to be more suitable for the purposes of maximising profits. The appellant cannot therefore be said to occupy a particular, precisely defined site.

41Moreover, under the agreement in this case, unlike in a classic lease of property, the actual site is immaterial. It is only relevant in so far as it is intended to generate maximum sales. In this case the occupation of a particular site is therefore not an end of the contract in itself, but a means to that end.

42The fact that machines that are not intended to be mounted on the wall may be moved around the room by the siteholder at will lends further support to the view that there is no occupation of a specific piece of land.

43The argument advanced by the United Kingdom and by Lord Slynn in this connection that moving the machine merely varies the land occupied by agreement between the parties is not entirely convincing.

44It assumes that the contract does not permit the siteholder to alter the machine's position unilaterally but that he must agree any potential alteration with the appellant in advance. It is for the national court to decide whether this is what the agreement provides. If it does not, and the siteholder is entitled to move the machine unilaterally, then the parties cannot be said to have agreed to vary the land occupied.

45The United Kingdom and Lord Slynn are right to say that the machine occupies the space where it stands. But that is not sufficient for it to be deemed to occupy a particular piece of land, since it is a feature of every physical object that it occupies space. This is persuasively argued by Lord Nicholls in his speech.

46It is clear from all of the foregoing that the principal element of the agreement in this case is not the occupation of a specific piece of land but the supply of a service, namely installation of the machine, for which the land itself is an incidental, albeit essential, prerequisite.

47The facts in this case may therefore be compared with the provision of a meal in a hotel restaurant, as contrasted with the provision of a hotel room. Whereas in the latter case the dominant feature is the occupation of the room itself, in the former the essential element is the meal, combined with certain ancillary services. In order to receive the service the diner must sit down at a table in the restaurant, and must therefore use a particular area of land for a time. But the use of that area of land is not the main feature of the contract viewed in the light of its scheme and purpose. It cannot therefore be said to amount to occupation of the part of the land on which the table is placed.

48Advocate General Jacobs took a similar approach in his Opinion in Case C-150/99 Stockholm Lindöpark, which related to a licence to use a golf course, stating as follows:

'Whilst it is obviously difficult to play golf without a course to play it on, the service provided in that case is the opportunity to play the game and not the opportunity to occupy the course. Indeed, a golfer may be thought of not as occupying the course in any sense but as traversing it'. 6

49I too made that point in my Opinion in Case C-358/97 Commission v Ireland (road tolls):

'The chief purpose of the "contract" between the parties is not so much the use of the property as the one-time provision of a service using that property. For car drivers a brief use of the property is in fact of secondary importance, as their priority is to reach their destination quickly and safely.'

50In addition, in the situation in this case, the appellant has no right to control access to the site where the machine stands, or to exclude others' access to that site.

51Admittedly, the appellant has a right of access to the machine under the agreement in order to maintain it, to remove the money and stock it with cigarettes, albeit limited to the pub's opening hours. But the agreement does not confer any wider right to control or limit access to third parties. Those rights are enjoyed by the siteholder alone.

52The siteholder is entitled, on the basis of his domiciliary rights, and his contractual duty to protect the machine, to control access to the place where the machine stands and to deny access to certain patrons, for example, those causing a nuisance.

53Contrary to the view taken by the United Kingdom it is difficult to see how the appellant can be said to enjoy a right, albeit a limited one, to control access, derived from its own right of access.

54At most it might be said that the appellant controls access to the actual machine or its interior. But that is immaterial in this case since the question whether there is a 'letting of immovable property' turns precisely not on whether there is access to the machine itself, but on whether there is access to the site on which it stands.

55In that respect the facts in this case may also be compared to a licence to use a golf course or road for consideration. These too are situations in which an individual golfer or driver is entitled to use the golf course or road himself, but not to exclude others.

56In view of the foregoing considerations, the facts of this case do not entail occupation of a particular piece of land or the ancillary right to exclude others from access to that piece of land.

57Subject, therefore, to the findings of the national court under point 44 above, an agreement such as that in this case does not involve a 'letting of immovable property' within the meaning of Article 13B(b) of the Sixth Directive.

VII — Conclusion

58I therefore propose that the Court should answer the question referred as follows:

The grant, by the owner of premises ('the Siteholder') to an owner of a cigarette vending machine, of the right to install, operate and maintain the machine in those premises for a period of two years, in a place nominated by the Siteholder, in return for a percentage of the gross profits of the sales of cigarettes and other tobacco goods in the premises, but with no other significant rights of possession or control than those set out in the written agreement between the parties, does not amount to the letting of immovable property within the meaning of Article 13B(b) of the Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes.

Notes

(1) Original language: German.

(2) OJ 1977 L 145, p. 1.

(3) See Case C-359/97 Commission v United Kingdom [20001 ECR 1-6355, paragraph 65, and Case C-326799 Slichting Coed Wonen [2001] ECR I-6831, paragraph 44.

(4) See Case 348/87 Stichting Uitvoering Financiele Acties [1989] ECR 1737, paragraph 11; Case C-453/93 Bulthuis-Griffioen [1995] ECR I-2341, paragraph 18; Case C-2/95 SDC [1997] ECR I-3017, paragraph 21; and Case C-358/97 Commission v Ireland [2000] ECR I-6301, paragraph 51.

(5) See the 11th recital to the Sixth Directive. See also the Stichting Goed Wonen case, cited in footnote 3, paragraph

(47) .

(6) See, on tax exemptions in respect of leasing of land in particular, Case C-358/97 Commission v Ireland, cited in footnote 4, paragraph 55; Case C-150/99 Stockholm Lindöpark [2001] ECR I-493, paragraph 25; and Stichting Goed Wonen, cited in footnote 3, paragraph 46.

(7) Case C-63/92 Lubbock Fine [19931 ECR I-6665; Case C-108/99 Cantor Fitzgerald International [2001] ECR I-7275 and Case C-409/98 Mirror Group [2001] ECR I-7157.

(8) Case C-150/99 Stockholm Lindöpark, cited in footnote 6.

(9) Case C-358/97 Commission v Ireland, cited in footnote 4, and Case C-359/97 Commission v United Kingdom, cited in footnote 3.

(10) Case C-359/97 Commission v United Kingdom, cited in footnote 3, paragraph 68. See on this point also Stockholm Lindöpark, cited in footnote 6, paragraph 27.

(11) Opinion in Stockholm Lindòpark, cited in footnote 6, point 38. See also on this the Opinion of Advocate General Tizzano in Case C-409/98 Mirror Group, cited in footnote

(7) , point 25.

(12) Cited in footnote 4.

(13) Cited in footnote 3.

(14) Case C-358/97 Commission v Ireland, cited in footnote 4, paragraphs 56 and 57, and Case C-359/97 Commission v United Kingdom, cited in footnote 3, paragraphs 68 and

(69) .

(15) See on this also Advocate General Jacob's Opinion in Stockholm Lindöpark, cited in footnote 11, point 32.

(16) Opinion in Stockholm Lindöpark, cited in footnote 11, point 35.

(17) My Opinion in Case C-358/97 Commission v Ireland, point 67.

(18) See Opinion in Case C-358/97 Commission v Ireland, cited in footnote 17, point 66.