C-33/11 A Oy

JUDGMENT OF THE COURT (Fourth Chamber)

19 July 2012 ( *1 )

‛Sixth Directive — Exemptions — Article 15(6) — Exemption for the supply of aircraft used by airlines operating for reward chiefly on international routes — Supply of aircraft to an operator who makes them available to such an undertaking — Concept of ‘operating for reward on international routes’ — Charter flights’

In Case C-33/11,

REFERENCE for a preliminary ruling under Article 267 TFEU from the Korkein hallinto-oikeus (Finland), made by decision of 18 January 2011, received at the Court on 21 January 2011, in the proceedings

A Oy,

THE COURT (Fourth Chamber),

composed of J.-C. Bonichot, President of the Chamber, A. Prechal (Rapporteur), L. Bay Larsen, C. Toader and E. Jarašiūnas, Judges,

Advocate General: P. Cruz Villalón,

Registrar: M. Ferreira, Principal Administrator,

having regard to the written procedure and further to the hearing on 8 February 2012,

after considering the observations submitted on behalf of:

A Oy, by P. Salomaa,

the Finnish Government, by M. Pere, acting as Agent,

the European Commission, by I. Koskinen and L. Lozano Palacios, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 26 April 2012,

gives the following

Judgment

Legal context and the dispute

1The reference for a preliminary ruling in this case concerns the interpretation of Article 15(6) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1), as amended by Council Directive 92/111/EEC of 14 December 1992 (OJ 1991 L 384, p. 47) (‘the Sixth Directive’).

2That reference was made in the course of proceedings brought by A Oy (‘A’) against the tax assessment notice concerning value added tax (‘VAT’) relating to the acquisition of aircraft, issued to it by the Kaakkois-Suomen verovirasto (Southeast Finland Tax Office).

Legal context

European Union law

3Article 2(1) of the Sixth Directive provides that ‘the supply of goods or services effected for consideration within the territory of a country by a taxable person acting as such’ is to be subject to VAT.

4Under the heading ‘Exemption of exports from the Community and like transactions and international transport’, Article 15 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 such exemptions and of preventing any possible evasion, avoidance or abuse:

...

4the supply of goods for the fuelling and provisioning of vessels:

used for navigation on the high seas and carrying passengers for reward or used for the purpose of commercial, industrial or fishing activities;

...

5the supply, modification, repair, maintenance, chartering and hiring of the sea-going vessels referred to in paragraph 4(a) and (b) and the supply, hiring, repair and maintenance of equipment — including fishing equipment - incorporated or used therein;

6the supply, modification, repair, maintenance, chartering and hiring of aircraft used by airlines operating for reward chiefly on international routes, and the supply, hiring, repair and maintenance of equipment incorporated or used therein;

7the supply of goods for the fuelling and provisioning of aircraft referred to in paragraph 6;

8the supply of services other than those referred to in paragraph 5, to meet the direct needs of the sea-going vessels referred to in that paragraph or of their cargoes;

9the supply of services other than those referred to in paragraph 6, to meet the direct needs of aircraft referred to in that paragraph or of their cargoes;

...’

5Under Title XVIa of the Sixth Directive, entitled ‘Transitional arrangements for the taxation of trade between Member States’, Article 28a thereof provides:

‘1. The following shall also be subject to value added tax:

intra-Community acquisitions of goods for consideration within the territory of the country by a taxable person acting as such or by a non-taxable legal person where the vendor is a taxable person acting as such ...

By way of derogation from the first subparagraph, intra-Community acquisitions of goods made under the conditions set out in paragraph 1a by a taxable person or non-taxable legal person shall not be subject to value added tax.

...

...

1a. The following shall benefit from the derogation set out in the second subparagraph of paragraph 1(a):

intra-Community acquisitions of goods whose supply within the territory of the country would be exempt pursuant to Article 15(4) to (10);

...

3. “Intra-Community acquisition of goods” shall mean acquisition of the right to dispose as owner of movable tangible property dispatched or transported to the person acquiring the goods by or on behalf of the vendor or the person acquiring the goods to a Member State other than that from which the goods are dispatched or transported.

...’

Finnish law

6The Sixth Directive was transposed into Finnish law by Law No 1501/1993 on value added tax (Arvonlisäverolaki 1501/1993) of 30 December 1993 (‘the AVL’).

7Under Paragraph 1(1)(3) of the AVL, VAT is payable on all intra-Community acquisitions of goods within the meaning of Paragraph 26a of the AVL made in Finland. The latter provision defines intra-Community acquisition as acquisition for consideration of the ownership of movable property where the vendor, purchaser or any other third party acting on their own behalf transports that property from one Member State to another. Under Paragraph 2b of the AVL, the person liable for VAT on intra-Community acquisitions of goods within the meaning of Paragraph 1(1)(3) is the purchaser.

8Under the sixth chapter of the AVL, dealing with exemptions in international trade, point 6 of the first paragraph of Paragraph 70 thereof provides that tax is not due on the sale of aircraft, spare parts and/or equipment for aircraft intended to be used by a trader operating for reward chiefly on international routes.

9Under Paragraph 72f(1) of the AVL, VAT is not payable on intra-Community acquisitions of goods where VAT is not payable upon import of the goods. Point 9 of the first paragraph of Paragraph 94 of the AVL gives a VAT exemption for the import of aircraft, spare parts and equipment within the meaning of point 6 of the first paragraph of Paragraph 70 of the AVL.

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

10In July 2002 and in October 2003, A acquired two jet aircraft from a French manufacturer. The vendor declared both transactions as intra-Community sales. A did not declare the acquisitions in question as intra-Community acquisitions of goods effected in Finland.

11Both aircraft were registered in the Finnish aircraft registry on 22 July 2002 and 23 July 2004 respectively, whilst the relevant Air Operation Certificates (‘AOCs’) were issued on 19 November 2002 and 24 October 2004 respectively. A was listed as the owner of the two aircraft and B Oy (‘B’) was designated as the user of them. On 17 December 2003 and 1 April 2005, respectively, A resold the aircraft to an undertaking registered in Cyprus.

12All of the shares in A are held by X, a natural person. A holds 25% of the shares in C Oy (‘C’). B is a 78%-owned subsidiary of C.

13B organises international charter flights and ensures maintenance and management of aircraft. Under the contract it concluded with A, B has invoiced A inter alia for the costs of maintenance work on the aircraft and for flights. That agreement also allowed B to hire the aircraft from A for its own commercial purposes, at the price indicated in the annex thereto.

14A’s total turnover for the accounting periods from 1 January to 31 December 2002 and from 1 January 2003 to 30 June 2004 of EUR 925 606.32 and EUR 2 170 503.84 respectively came entirely from accounting entries made on the basis of sales invoices addressed to X, A’s owner, with the sole exception of the invoice addressed to the Cypriot undertaking for the resale of the aircraft. The tax inspection found that A’s accounting records did not mention any income derived from aircraft hire.

15A’s expenditure entries relating to the aircraft concerned primarily the invoices issued by B to A for the maintenance of the aircraft and flights. The aforementioned tax inspection found that the invoices had been passed on to X virtually unchanged.

16A was registered as a taxable person for VAT as from 1 July 2002. In its notice of termination of business dated 14 June 2003, A declared that it had not pursued activities that were liable for VAT. The Southeast Finland Tax Office removed that company from the register of taxable persons for VAT with retroactive effect to 1 July 2002.

17On 4 November 2005, the Southeast Finland Tax Office issued two tax assessments regarding the VAT owing by A on the intra-Community acquisition of the aircraft. The tax office also found that A was not entitled to any deduction or to the refund of that VAT.

18The action brought by A against those tax assessments was dismissed by decision of 26 May 2008 of the Helsingin hallinto-oikeus (Administrative Court, Helsinki). The Administrative Court took the view that the two purchases of the aircraft had been taxable intra-Community acquisitions subject to VAT, which A had failed to declare to the tax office. A had not been operating flights for reward on international routes within the meaning of point 6 of the first paragraph of Paragraph 70 of the AVL, but rather in practice had acted as the owner of C, which was engaged in international oil product trading. Nor were the aircraft in question used by B in operating flights for reward on international routes within the meaning of point 6 of the first paragraph of Paragraph 70 of the AVL. The aim of the arrangement was merely to take care of the personal transportation needs of X, the principal owner of the companies.

19A appealed against that decision to the Korkein hallinto-oikeus (Supreme Administrative Court of Finland). It argued that the acquisition of the aircraft should be VAT exempt, since they were purchased and registered by A with a view to entrusting them to В, which is an airline operating for reward chiefly on international routes. As per usual practice in that sector, B is under assignment from A, in return for remuneration, to ensure that the aircraft are always in flight-ready condition and to promote their commercial use on the basis of specific contracts, whilst B has in fact offered aircraft to third parties in return for remuneration per hour of flight.

20On the other hand, whilst acknowledging that B must be considered an airline operating for reward on international routes, even though X has been the only person transported for consideration, the other party to the proceedings takes the view that, since A does not operate the flights itself but had the aircraft delivered from France to Finland and has provided them for free to B for the latter’s use, the acquisitions in dispute cannot be VAT exempt.

21Against that background, the Korkein hallinto-oikeus decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

Is Article 15(6) of the [Sixth Directive] to be interpreted as meaning that the concept “airline operating for reward chiefly on international routes” also refers to a commercial airline operating for reward chiefly on international charter routes to meet the requirements of companies and private persons?

2Is Article 15(6) of the [Sixth Directive] to be interpreted as meaning that the exemption provided for therein applies only to a supply of aircraft made directly to an airline operating for reward chiefly on international routes, or does that exemption apply also to the supply of aircraft to an operator which does not itself operate for reward chiefly on international routes, but makes the aircraft available for the use of such an operator?

3Given that the airline may also have used the aircraft for other flights, does the fact that the owner passes on the charge for the use of the aircraft to an individual who is its shareholder and who uses the aircraft purchased chiefly for his own business and/or private purposes affect the answer to the second question?’

The questions referred for a preliminary ruling

The first question

22By its first question, the referring court asks, in essence, whether the wording ‘operating for reward on international routes’ within the meaning of Article 15(6) of the Sixth Directive must be interpreted as encompassing also international charter flights to meet the requirements of companies and private persons.

23The referring court’s doubts on this point appear to relate to there being certain divergences between the different language versions of that provision. In its observations, A observes that some of the language versions, such as the English and Swedish versions, refer to ‘international routes’ rather than ‘international traffic’, an expression which may seem more generic and is used in most of the other language versions of that provision, including the Finnish version.

24It is settled case-law that the interpretation of a provision of European Union law must, as a rule, take account of possible divergence between the different language versions of that provision (see, inter alia, Case C-382/02 Cimber Air [2004] ECR I-8379, paragraph 38).

25In the present case, however, the nuances in wording referred to in paragraph 23 of this judgment do not lead to the conclusion that the European Union legislature intended to exclude international charter flights from the scope of the exemption introduced by Article 15(6) of the Sixth Directive.

26Firstly, on a strictly textual reading, the wording ‘international routes’ as found in certain language versions is not defined anywhere in the Sixth Directive and, as pointed out by the European Commission and the Finnish Government, are not supplemented by any further clarification indicating that flights concerned must be ‘regular’ in nature. In those circumstances, such wording may, like the expression ‘international routes’ used in the other language versions, be construed as referring, in essence, to flights made on an aircraft between two geographical points which make the transport concerned more international in nature than domestic. As the Court has held previously, Article 15(6) of the Sixth Directive is concerned in substance with airlines whose activities are chiefly international (Cimber Air, paragraphs 27 and 28).

27According to the Court’s settled case-law, in interpreting a provision of European Union law such as the one at issue here, it is necessary to consider not only its wording but also its context and the objectives pursued by the rules of which it is part (see, inter alia, Case C-185/89 Velker International Oil Company [1990] ECR I-2561, paragraph 17, and Case C-116/10 Felgen and Bacino Charter Company [2010] ECR I-14187, paragraph 12 and the case-law cited).

28Neither the context surrounding Article 15(6) of the Sixth Directive nor its purpose is such as to require that the aircraft used by undertakings operating chiefly international charter flights be excluded from the scope of the exemption it introduces.

29The purpose of that provision is to grant an exemption for the supply of aircraft when they are intended chiefly for use on international routes, that is to say, for flights crossing over the airspace of several States as well as, in some cases, international airspace.

30It does not appear, in the light of such an objective, that it is necessary to draw a distinction depending on whether the international air transport is made on regular flights or charter flights.

31Regarding the context surrounding Article 15(6) of the Sixth Directive, it should be borne in mind that, as is clear from consistent case-law, exemptions constitute independent concepts of European Union law which must be placed in the general context of the common system of VAT introduced by that directive (see, inter alia, Cimber Air, paragraph 23, and Case C-97/06 Navicon [2007] ECR I-8755, paragraph 20).

32That system is based inter alia on the principle of fiscal neutrality, which precludes economic operators carrying out the same transactions from being treated differently in relation to the levying of VAT (see, inter alia, Cimber Air, paragraph 24, and Navicon, paragraph 21). That principle does not require the transactions to be identical. According to settled case-law that principle precludes, in particular, treating similar goods and supplies of services, which are thus in competition with each other, differently for VAT purposes (see, inter alia, Case C-363/05 JP Morgan Fleming Claverhouse Investment Trust and The Association of Investment Trust Companies [2007] ECR I-5517, paragraph 46 and the case-law cited).

33The principle of fiscal neutrality includes the principle of elimination of distortion in competition as a result of differing treatment for VAT purposes. Therefore, distortion is established once it is found that supplies of services are in competition and are treated unequally for the purposes of VAT (see JP Morgan Fleming Claverhouse Investment Trust and The Association of Investment Trust Companies, paragraph 47 and the case-law cited).

34Transport services offered by operators who operate chiefly international flights, be they regular flights and/or charter flights, are similarly and manifestly in competition with one another, with the result that different VAT treatment for supplies of aircraft depending on whether the operator operates chiefly international regular flights or chiefly international charter flights would give rise to the risk of distortions in competition as between those operators.

35In the light of the foregoing, the answer to the first question is that the wording ‘operating for reward on international routes’ within the meaning of Article 15(6) of the Sixth Directive must be interpreted as encompassing also international charter flights to meet demand from undertakings and private persons.

The second question

36By its second question, the referring court asks whether Article 15(6) of the Sixth Directive must be interpreted as meaning that the exemption for which it provides also applies to the supply of an aircraft to an operator which is not itself an ‘airline operating for reward chiefly on international routes’ within the meaning of that provision but which acquires that aircraft for the purposes of exclusive use thereof by such an undertaking.

37It should be observed, first, that the Finnish language version of Article 15(6) refers to the supply of aircraft ‘to’ an airline operating for reward chiefly on international routes.

38However, most of the other language versions of that same provision refer to supplies of aircraft ‘used by’ such an undertaking.

39As stated in paragraph 24 of this judgment, the interpretation of that provision must, as a rule, take account of the linguistic differences thus observed.

40Secondly, it is clear that the wording of most of the language versions of Article 15(6) of the Sixth Directive, in not emphasising the identity of the recipient of the supply or the owner of the aircraft, but rather the fact that the aircraft being supplied must be ‘used by’ an airline operating for reward chiefly on international routes, does not per se exclude from the scope of the exemption introduced by that provision supplies of aircraft to an operator who acquires them solely for use by such an undertaking under a leasing agreement, for example.

41Thirdly, as observed in paragraph 27 of this judgment, it is necessary, for the purposes of interpreting Article 15(6) of the Sixth Directive, to take account not only of the wording of that provision, but also of its context and the objectives it pursues.

42As regards, firstly, the objective pursued, it was stated above in paragraph 29 of this judgment that it consists in granting an exemption for the supply of aircraft when they are intended chiefly for use on international routes, that is to say, for flights crossing over the airspace of several States as well as, in some cases, international airspace.

43It is clear, moreover, that such an objective is liable to give rise to an interpretation of Article 15(6) of the Sixth Directive according to which the condition that must be met in order for a supply of aircraft to be exempt under that provision is precisely that that aircraft be intended to be used by an airline operating for reward chiefly on international routes, the identity of the owner being immaterial in that regard.

44However, account must be taken, in respect of this last point, of the fact that the purchaser of an aircraft will be liable to pay VAT on that acquisition, even where it took place solely for the purpose of that aircraft being used by an undertaking operating for reward chiefly on international routes, and that this inter alia will be likely to lead to an increase in the price the undertaking must pay for the use of the aircraft and, in so doing, undermine that objective. It may be presumed that the purchaser of the aircraft, having had to pay the VAT on the sale price, will, as a rule, pass on all or part of the charge resulting from the VAT payment to the user undertaking.

45In such a scenario, and as observed by the Advocate General in point 38 of his Opinion, even though the purchaser of the aircraft may subsequently be able to obtain a refund of the VAT under the Sixth Directive, the mere payment of VAT still amounts to a cash advance the financial consequences of which may be important, since that advance may be for a high amount. That burden is borne in the meantime by the purchaser.

46It follows that, in the circumstances just described, the absence of VAT exemption for the supply of the aircraft and the payment of VAT by the purchaser will be an indirect burden for the undertaking using that aircraft.

47Secondly, as regards the context surrounding Article 15(6) of the Sixth Directive, it was observed in paragraph 31 of this judgment that the exemptions introduced by that provision constitute independent concepts of European Union law which must be placed in the general context of the common system of VAT introduced by that directive.

48That system is based in particular on two principles. Firstly, each supply of goods and services effected for consideration by a taxable person is subject to VAT. Secondly, as observed in paragraphs 32 and 33 of this judgment, the principle of neutrality precludes, inter alia, the provision of analogous services, which therefore are in competition with each other, from being treated differently for VAT purposes.

49Although, according to settled case-law, in the light of those principles, the exemptions envisaged in Article 15 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, Velker International Oil Company, paragraph 19; Cimber Air, paragraph 25; Joined Cases C-181/04 to C-183/04 Elmeka [2006] ECR I-8167, paragraph 15; Navicon, paragraph 22; and Feltgen and Bacino Charter Company, paragraph 19), that requirement of strict interpretation does not mean that the terms used to specify the exemptions should be construed in such a way as to deprive those exemptions of their intended effect (see, inter alia, Navicon, paragraph 22).

50In the present case, firstly, as observed above and as is evident from its wording and the objective it pursues, Article 15(6) of the Sixth Directive aims, in essence, to grant a VAT exemption for acquisitions of aircraft intended to be used by an undertaking operating for reward chiefly on international routes.

51Secondly, it has not been alleged and nor does it seem that the interpretation according to which the exemption provided for in Article 15(6) of the Sixth Directive must also be granted for the supply of an aircraft to a trader which is not an ‘airline operating for reward chiefly on international routes’ within the meaning of that provision, but which acquires that aircraft solely for use by such an undertaking, is liable to undermine the principle of fiscal neutrality.

52However, and as observed by the Advocate General in point 40 of his Opinion, the possibility cannot be ruled out from the outset that an interpretation to the contrary may, in certain circumstances, undermine that principle.

53Moreover, although it is true that the interpretation set out in paragraph 51 of this judgment may seem to depart somewhat from the one endorsed by the Court in respect of the exemptions provided for in Article 15(4) and (8) of the Sixth Directive in relation to supply operations for the provisioning of sea-going vessels and services performed to meet their direct needs (see Velker International Oil Company, paragraphs 21 and 22, and Elmeka, paragraphs 22 and 24), it is important to bear in mind that there is nothing requiring the approaches adopted in those cases to be applied to the interpretation of Article 15(6).

54As evidenced, in particular, by paragraphs 23 to 25 of Elmeka, an extension of the exemption provided for in Article 15(4) and (8) of the Sixth Directive to stages prior to the final supply of goods or services made directly to the vessel operator was ruled out by the Court in those judgments, in particular because such an exemption would require Member States to set up means of supervision and monitoring in order to be sure of the ultimate use of the goods or services in question. Such means would give rise to constraints for the Member States and the economic agents concerned which would be irreconcilable with the ‘correct and straightforward application of such exemptions’ prescribed by the first sentence of Article 15 of the Sixth Directive (see also Velker International Oil Company, paragraph 24).

55As observed inter alia by the Advocate General in points 44 to 46 of his Opinion, it is difficult to apply such considerations to an exemption for the supply of an aircraft to a trader who intends to have it used solely by an undertaking operating for reward chiefly on international routes.

56Making the exemption in such circumstances subject to the intended use being known and duly established as of the time of acquisition of the aircraft and to subsequent verification of the actual use of the aircraft by such an undertaking does not seem, in the light of the type of object at issue here and, inter alia, the registration and authorisation mechanisms in place for its use, to be liable to give rise to constraints for the Member States and the economic agents concerned which would be irreconcilable with the correct and straightforward application of the exemptions prescribed by the Sixth Directive.

57In the light of all the foregoing, the answer to the second question is that Article 15(6) of the Sixth Directive must be interpreted as meaning that the exemption for which it provides also applies to the supply of an aircraft to an operator who is not itself an ‘airline operating for reward chiefly on international routes’ within the meaning of that provision but which acquires that aircraft for the purposes of exclusive use thereof by such an undertaking.

The third question

58By its third question, the referring court asks whether the answer to the second question may be influenced by the fact that the operator who acquired the aircraft then passes on the charge for the use of the aircraft to an individual who is its shareholder and who uses the aircraft purchased chiefly for his own business and/or private purposes, given that the airline can also use it for other flights.

59It should be borne in mind that, in accordance with the answer given to the second question, the only criterion for determining whether the exemption provided for in Article 15(6) of the Sixth Directive is applicable is whether the aircraft in question is used by an airline operating for reward chiefly on international routes, which it is for the national court to assess.

60In that context, the circumstances mentioned by the referring court in its third question are therefore prima facie irrelevant for the answer to the second question, since the purchaser is able to demonstrate that that criterion is indeed satisfied.

61However, should the national court determine, on the basis of an overall assessment of the facts of the case in the main proceedings, that the aircraft are not intended for commercial use by an airline on international routes, then Article 15(6) of the Sixth Directive should not apply.

62It should also be borne in mind, as pointed out by the Finnish Government in its observations, that it is common ground that the application of the European Union rules cannot be extended to cover abusive practices by economic operators, that is to say, transactions carried out not in the context of normal commercial operations, but solely for the purpose of wrongfully obtaining advantages provided for by European Union law, and that that principle of prohibiting abusive practices also applies to the sphere of VAT (see, inter alia, Case C-255/02 Halifax and Others [2006] ECR I-1609, paragraphs 69 and 70 and the case-law cited).

63The effect of that principle is therefore to prohibit wholly artificial arrangements which do not reflect economic reality and are set up with the sole aim of obtaining a tax advantage (Case C-162/07 Ampliscientifica and Amplifin [2008] ECR I-4019, paragraph 28).

64Thus, in the interpretation of the Sixth Directive, an abusive practice can be found to exist if, firstly, the transactions concerned, notwithstanding formal application of the conditions laid down by the relevant provisions of that directive and the national legislation transposing it, result in the accrual of a tax advantage the grant of which would be contrary to the purpose of those provisions and, secondly, it is apparent from a number of objective factors that the essential aim of the transactions concerned is to obtain such a tax advantage (see Halifax and Others, paragraphs 74 and 75, and Case C-425/06 Part Service [2008] ECR I-897, paragraph 42).

65It is for the national court to verify in accordance with the rules of evidence of national law, provided that the effectiveness of European Union law is not undermined, whether action constituting such an abusive practice has taken place in the case before it (Halifax and Others, paragraph 76).

66In the light of all the foregoing, the answer to the third question is that the circumstances referred to by the national court, namely the fact that the purchaser of the aircraft passes on the charge corresponding to its use to an individual who is its shareholder and who uses that aircraft essentially for his own business and/or private purposes, with the airline also having the opportunity to use it for other flights, are not such as to affect the answer to the second question.

Costs

67Since 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:

The wording ‘operating for reward on international routes’ within the meaning of Article 15(6) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment, as amended by Council Directive 92/111/EEC of 14 December 1992 must be interpreted as encompassing also international charter flights to meet demand from undertakings and private persons.

Article 15(6) of Directive 77/388, as amended by Directive 92/111, must be interpreted as meaning that the exemption for which it provides also applies to the supply of an aircraft to an operator who is not itself an ‘airline operating for reward chiefly on international routes’ within the meaning of that provision but which acquires that aircraft for the purposes of exclusive use thereof by such an undertaking.

The circumstances referred to by the national court, namely the fact that the purchaser of the aircraft passes on the charge corresponding to its use to an individual who is its shareholder and who uses that aircraft essentially for his own business and/or private purposes, with the airline also having the opportunity to use it for other flights, are not such as to affect the answer to the second question.

Signatures

[Signatures]

( *1 ) Language of the case: Finnish.

OPINION OF ADVOCATE GENERAL

CRUZ VILLALÓN

delivered on 26 April 2012 ¹

‛Sixth VAT Directive — Exemption under Article 15(6) — Concept of aircraft used by airlines operating for reward chiefly on international routes — Supply of an aircraft to an operator which does not itself operate chiefly on international routes but which assigns the right to use the aircraft to an airline — Charter airlines’

I – Introduction

1In this case, the Korkein hallinto-oikeus (Supreme Administrative Court of Finland) has referred to the Court of Justice for a preliminary ruling three questions concerning the interpretation of the Sixth Directive ² in connection with the VAT exemption applicable to the supply of aircraft to be ‘used by airlines operating for reward chiefly on international routes’.

2The national court’s doubts as to interpretation stem principally from three facts. First of all, the company which acquired the aircraft is not an airline of the kind referred to in the provision in issue, although it assigned the right to use the aircraft under a lease to another undertaking which does have that status. Secondly, the airline in question is a charter airline. Lastly, there is a rather complex structure linking the natural person who holds the shares in the company which owns the aircraft, the latter company and the airline itself.

3The applicability of the exemption laid down in Article 15(6) of the Sixth Directive in circumstances of the kind referred to is a question which has not previously been addressed in case-law and which is of considerable economic importance in view of the large number of fleets of leased aircraft which appear to exist in the European airline sector. According to the data provided by the applicant, a significant number of Member States have been granting the right to the exemption in cases like the present one, but the matter is far from being uncontroversial. Thus, the Commission has taken action against that broad interpretation of the scope of the exemption.

4Further, it seems to me that it is necessary to point out that the facts of the present case are particularly complex. The different contractual and corporate relationships surrounding the acquisition and use of the aircraft could possibly give rise to the suspicion of fraud, but it should be noted that the assessment of those facts falls exclusively to the national court.

II – Legal framework

A – European Union law: the Sixth VAT Directive

5The present case is caught by the provisions of the Sixth Directive, Article 2(1) of which provides that the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such is to be subject to VAT.

6Article 15 of the Sixth Directive reads, in part, 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 such exemptions and of preventing any evasion, avoidance or abuse:

…

6the supply, modification, repair, maintenance, chartering and hiring of aircraft used by airlines operating for reward chiefly on international routes, and the supply, hiring, repair and maintenance of equipment incorporated or used therein’.

B – National law

7The Sixth Directive was implemented in Finland by the Arvonlisäverolaki (Law on VAT of 20 December 1993; ‘AVL’), the relevant provisions of which, in the version applicable to the facts of the main proceedings, are the following.

8Under Paragraph 1(1)(3) of the AVL, VAT is payable to the State on an intra-Community acquisition of goods which takes place in Finland within the meaning of Paragraph 26a. Under Paragraph 2b of the AVL, the person liable for tax in the case of an intra-Community acquisition of goods within the meaning of Paragraph 1(1)(3) is the person who made the acquisition.

9Chapter 6 (Paragraphs 70 to 72n) of the AVL concerns exemptions related to international trade. Under Paragraph 70(1)(6) of the AVL, tax is not payable on the sale of an aircraft, its spare parts or equipment for use by an operator which operates for reward mainly on international routes.

10Paragraph 72f(1) of the AVL provides that tax is not payable on an intra-Community acquisition of goods if tax is also not payable on the importation of the goods. Under Paragraph 94(1)(9) of the AVL, the importation of vessels within the meaning of Paragraph 58(1) and of aircraft, spare parts and equipment within the meaning of Paragraph 70(1)(6) is exempt from tax.

III – The main proceedings and the questions referred for a preliminary ruling

11In 2002 and 2004 respectively, the Finnish company A Oy acquired two jet aircraft from the same French manufacturer. A Oy was registered as the owner of the aircraft while B Oy, a company which operates an international charter airline, was registered as their user. All of the share capital in A Oy is owned by natural person X. For its part, A Oy owns 25% of C Oy, while B Oy is 78% owned by C Oy.

12The French vendor declared both transactions as intra-Community sales. In Finland, A Oy did not declare the acquisition of the aircraft as intra-Community acquisitions of goods. In 2003 and 2005 respectively, A Oy sold the aircraft to a Cypriot-registered undertaking at a price that was lower than the purchase price.

13Under the contract concluded between the two companies, B Oy was entitled to lease the aircraft from A Oy for its own commercial purposes and to invoice the latter company for maintenance work on the aircraft and for flights. ³

14A Oy’s total turnover for the accounting periods from 1 January to 31 December 2002, on the one hand, and from 1 January 2003 to 30 June 2004, on the other, consisted entirely of accounting entries made on the basis of sales invoices addressed to X, with the sole exception of the invoice addressed to the Cypriot undertaking which purchased the aircraft. Those invoices addressed to X, the owner of A Oy, were based on the invoices which B Oy issued to A Oy for use of the aircraft. Likewise, the expenditure entries relating to the aircraft primarily concerned the invoices issued by B Oy for the maintenance of the aircraft and flights. The tax inspection found that the invoices had been passed on to X virtually unchanged.

15On 4 November 2005, the competent tax office issued A Oy with two additional assessments regarding the VAT on the intra-Community acquisition of the aircraft. The tax office also found that A Oy was not entitled to any deduction or to the refund of that VAT.

16By decision of 26 May 2008, the Helsingin hallinto-oikeus (Administrative Court, Helsinki) dismissed the appeal brought by A Oy. The court stated that the acquisition of the aircraft constituted a taxable intra-Community acquisition of goods which A Oy had failed to declare, and that A Oy did not operate on international routes within the meaning of Paragraph 70(1)(6) of the AVL, but rather that it acted in practice as the owner of C Oy, which was engaged in international oil product trading. According to a statement made by B Oy about its activities, that company did not use the aircraft on international routes within the meaning of Paragraph 70(1)(6) of the AVL. The agreement between the two companies was aimed exclusively at taking care of the personal transport needs of X. Accordingly, the administrative court concluded that A Oy was not entitled to a deduction or refund of the VAT payable on the intra-Community acquisition of goods.

17A Oy appealed against that decision to the Korkein hallinto-oikeus, claiming that it was not required to pay VAT on the acquisition of the aircraft because those aircraft were used by an airline which operated for reward chiefly on international routes, namely B Oy. The Finnish tax authorities claim, on the other hand, that that fact is completely immaterial since it was A Oy which acquired the aircraft.

18The Korkein hallinto-oikeus took the view that there are doubts as to the interpretation of the concept ‘airlines operating for reward chiefly on international routes’ in Article 15(6) of the Sixth Directive and also as to whether that provision precludes the exemption from VAT of a company which buys aircraft but does not operate them itself on international routes, and therefore it stayed the proceedings and referred the following questions to the Court of Justice for a preliminary ruling:

Is Article 15(6) of the Sixth VAT Directive 77/388/EEC to be interpreted as meaning that the concept “airline operating for reward chiefly on international routes” also refers to a commercial airline operating for reward chiefly on international charter routes for the requirements of companies and private persons?

Is Article 15(6) of the Sixth VAT Directive 77/388/EEC to be interpreted as meaning that the exemption provided therein only applies to that supply of aircraft which takes place directly to airlines operating for reward chiefly on international routes, or does this exemption also apply to the supply of aircraft to a operator which does not itself operate for reward chiefly on international routes, but which in turn supplies the aircraft for the use of such an operator?

Having regard to the reply given to the second question above, is it of significance that the owner of the aircraft in turn makes a charge for the use of the aircraft to a private person who is its shareholder, who uses the procured aircraft for his own business and/or private use, taking into account the fact that the airline has also been able to use the aircraft for other flights?’

IV – The procedure before the Court of Justice

19The reference for a preliminary ruling was lodged at the Registry of the Court of Justice on 21 January 2011.

20Written observations were lodged by A Oy, the Finnish Government and the Commission.

21At the hearing, which was held on 8 February 2012, oral argument was presented by the representative of A Oy, the Commission and the Republic of Finland.

V – Analysis of the questions

22For practical reasons, I believe that it is preferable to leave until last the reply to the first question referred for a preliminary ruling.

A – The second question

23By its second question, the referring court seeks to establish whether the exemption provided for in Article 15(6) of the Sixth Directive applies solely to the supply of aircraft which takes place directly to airlines operating for reward chiefly on international routes or whether it also applies when the acquisition is made by another operator which does not itself operate on international routes but which assigns the right to use the aircraft to such a company.

24An initial examination of the wording of the provision concerned does not completely answer that question because, while in most of the language versions of the Sixth Directive the exemption is based explicitly on the criterion of use of the aircraft by an airline operating on international routes, ⁴ the Finnish version refers to the supply of aircraft to an airline without mentioning that criterion, thereby giving grounds to regard the exemption as subjective and as applicable only when an airline operating on international routes purchases an aircraft directly. ⁵

25In the light of that divergence and according to settled case-law, the exemption must be interpreted by reference to the general scheme of the provision and the purpose of the legislation of which it forms part. ⁶

26It should be noted that, in my opinion, a purposive interpretation of the provision leads to the conclusion that the exemption must apply if the aircraft is to be used by an airline which operates for reward chiefly on international routes both where that airline acquires the aircraft directly and where another operator does so with the aim of assigning the right to use it to the former (1). The basic principles on which the common system of VAT is founded, in particular the principle of neutrality in competition, bolster that conclusion (2), while the rather more restrictive case-law laid down in Velker ⁷ and Elmeka does not present an obstacle (3). ⁸

1. The purposive interpretation of the exemption

27It is common knowledge that the Court regards the exemptions laid down in the Sixth Directive as autonomous concepts of Union law which must be placed in the general context of the common system of VAT. Since they constitute exceptions to the general principle that VAT is to be levied on all services supplied for consideration by a taxable person, those exemptions are to be interpreted strictly. However, that requirement of strict interpretation does not mean that the terms used to specify the exemptions should be construed in such a way as to deprive those exemptions of their intended effect. Their interpretation must, first, be consistent with the objectives pursued by those exemptions and must also comply with the requirements of the principle of fiscal neutrality. ⁹

28The Court has observed that the objective of the ‘[e]xemption of exports and like transactions and international transport’ provided for in Article 15 of the Sixth Directive is ‘to respect the principle that the relevant goods or services should be taxed at their place of destination’. ¹⁰

29In line with that objective, the Court has held, for example, that the exemption laid down in Article 15(5) of the Sixth Directive is applicable to the partial chartering of vessels used for navigation on the high seas and for international shipping (Navicon, paragraph 30), but not to the hiring of a vessel to charterers who intend to use the vessel strictly for private purposes, as final consumers (Feltgen and Bacino Charter Company, paragraph 17).

30In the specific case of the exemptions relating to international transport, such transactions must be regarded as like transactions and the same tax treatment is applied to them as to exports because it is to be expected that consumption will take place abroad. ¹¹

31In my view, all this confirms that the exemptions in Article 15 pursues an objective of a functional nature, intended to exempt the entire chain of transactions related to international transport until the point of final consumption. That functional nature is difficult to reconcile with the subjective element which the Commission and the Finnish Government seek to introduce into the interpretation of the exemption.

32In the present case, there is no doubt that the exemption in Article 15(6) is applicable to the hiring of the aircraft by B Oy from A Oy because the hirer is an airline which puts the aircraft to the use required in that provision. The same logic must apply where an aircraft is sold by an intermediary, the exemption of which is perfectly compatible with the exemption of hiring.

2. The principle of neutrality in competition

33The interpretation which I propose of the scope of the exemption at issue is confirmed by the requirements of the principle of fiscal neutrality inherent in the common system of VAT.

34According to settled case-law, the common system of VAT is governed in particular by two principles: ‘[f]irst, each supply of goods and services effected for consideration by a taxable person is subject to VAT. Second, in accordance with the principle of fiscal neutrality, economic operators carrying out the same transactions may not be treated differently in relation to the levying of VAT’. ¹² In reality, as academic writers have pointed out, those two views reflect the two main aspects or applications of the principle of fiscal neutrality. ¹³

35Of relevance for the present purposes is the second of those two aspects or definitions of the principle, which is none other than the reflection, in matters relating to VAT, of the principle of equal treatment. ¹⁴ While the principle of equality means, in general, that like situations should not be treated differently unless such different treatment is objectively justified, ¹⁵ its expression in the sphere of VAT ‘precludes, in particular, treating similar supplies of services, which are thus in competition with each other, differently for VAT purposes’. ¹⁶ In short, it refers to the principle of neutrality in competition, the infringement of which ‘may be envisaged only as between competing traders’, whereas infringement of the general principle of equal treatment ‘may be established, in matters relating to tax, by other kinds of discrimination which affect traders who are not necessarily in competition with each other but who are nevertheless in a similar situation in other respects.’ ¹⁷

36The principle of neutrality in competition must be protected and must be taken into account when interpreting the VAT exemptions. In particular, it is necessary to prevent the application of those exemptions from resulting in the different treatment for VAT purposes of the supply of similar goods or services which are therefore in competition with one another.

37It is quite clear that the risk of unequal treatment of competing activities arises in a case such as the present one. The subjective interpretation of the exemption would benefit an airline which purchases an aircraft directly while, on the other hand, adversely affecting an undertaking which is not itself an airline operating on international routes and acquires an aircraft which it then leases to a company which does carry on that activity.

38First of all, as regards a finding of unequal treatment, it is true that although a company which acquires aircraft but which is not an airline is not entitled to benefit from the exemption and must pay VAT, there is nothing to preclude that company from subsequently obtaining a refund of the VAT under Article 28f(1)(2)(d) of the Sixth Directive. However, without prejudice to the possibility of such a refund, the mere payment of VAT amounts to a cash advance the financial consequences of which may be important, since that advance may be for a high amount. Accordingly, the choice as to whether to apply the exemption or to charge VAT on the transaction and then later grant the right to a refund is financially significant; the unequal treatment in question is given concrete expression in the cost of financing that cash advance.

39Second, as regards the existence of a competitive situation between the terms of comparison, it could be argued that the principle of neutrality in competition does not apply in this case because the difference in treatment occurs between two companies (the owner of the aircraft and the airline) which do not carry on the same activity and are not in competition with each other. However, it is likely that the owner of the aircraft will pass on the financial costs of any cash advance which the VAT represents, thereby increasing the cost of leasing the aircraft. In that way, airlines which decide to establish all or part of their fleet by leasing aircraft are liable to be placed at a financial disadvantage vis-à-vis airlines which own their own aircraft, for strictly fiscal reasons unrelated to the different structure and different financial consequences of the legitimate and voluntary choice between purchasing and leasing.

40Moreover, if the use of the aircraft concerned is immaterial and all that matters, as regards entitlement to the exemption, is the activity carried on by the acquiring undertaking, in other words, if for the purposes of eligibility for the exemption it is sufficient that the aircraft is purchased by an airline operating for reward chiefly on international routes, it is perfectly possible to envisage a situation where such a difference in treatment occurs between two companies which, ultimately, are operating as intermediaries in the purchase of an aircraft. Thus, for example, a financial institution which purchases an aircraft in order to lease it to an airline would not benefit from the exemption but the exemption could be granted to airline A which operates on international routes and which purchases an aircraft not for its own use but to assign it for consideration to another airline, B. The financial institution and airline A would be carrying out transactions which are, to all intents and purposes, comparable ¹⁸ but are nevertheless subject to different tax rules which, in the case of the financial institution, are more detrimental as a result of an erroneous subjective interpretation of the exemption.

3. The case-law on the supply of goods and services for vessels

41Finally, I must refer to the Velker and Elmeka case-law, although, in my view, that case-law cannot invalidate the finding which results from the purposive interpretation of the exemption and the principle of neutrality in competition.

42At first glance, there is an undeniable connection between the question referred by the Korkein hallinto-oikeus and the questions dealt with in the two cases cited. Both those cases concerned the supply of fuel for vessels. First of all, in Velker the Court was asked whether the supply of goods to an undertaking which does not itself use the goods for fuelling and provisioning vessels but supplies them to another undertaking which does use them for that purpose could be regarded as ‘the supply of goods for the fuelling and provisioning of vessels’ under Article 15(4) of the Sixth Directive. Second, in Elmeka the Court was asked the same question but this time in relation to the exemption laid down in Article 15(8), which exempts the supply of services ‘to meet the direct needs of the sea-going vessels’ referred to in paragraph 5. ¹⁹ In both cases, the Court held that those exemptions applied only to goods and services supplied directly to a vessel owner or operator to meet the direct needs of the vessel and therefore it was not possible to extend them to the supply of those goods or services ‘effected at a previous stage in the commercial chain’. ²⁰

43The Commission and the Finnish Government have argued that that case-law should be applied by analogy in the present case. However, I believe that it is not appropriate to do so because neither of the two main arguments which form the basis of the strict interpretation of the exemptions at issue in those judgments can readily be extended to the context of Article 15(6).

44The first of those two arguments relates to the practical difficulties entailed in the application of the contrary approach: ‘Extending the exemption to stages prior to the final supply of the goods to the vessel operator would require Member States to set up means of supervision and monitoring in order to be sure of the ultimate use of the goods supplied free of tax’, means which ‘would give rise to constraints for the Member States and the economic agents concerned which would be irreconcilable with the “correct and straightforward application of such exemptions” prescribed by the first sentence of Article 15 of the Sixth Directive’. ²¹

45Those arguments lose some of their weight when, as in the present case, the issue is not the supply of goods or services for fuelling and provisioning or to meet the direct needs of a vessel or an aircraft but rather the sale of that vessel or aircraft. Further, it should be borne in mind that in order for an aircraft to be used for the commercial transportation of cargo or passengers, it is necessary to obtain a number of specific permits which make it easier to establish that that aircraft will in fact be used by an airline. ²² From that point of view, it is difficult to compare the supply of fuel (such as the one at issue in Velker and Elemka) or other goods for the provisioning of a vessel, the use of which is in fact difficult to monitor in a straightforward and effective manner, with the supply of an aircraft or a vessel.

46Accordingly, there is nothing to preclude the application of the exemption in those cases, provided that it is known at the time of purchase of the aircraft that that aircraft is to be used by an airline of the kind referred to in Article 15(6) of the Sixth Directive and proof of that fact is submitted to the tax authorities. ²³ In my opinion, caution of that kind would not preclude ‘the correct and straightforward application of such exemptions’ required by the first sentence of Article 15 of the Sixth Directive, and would, in any event, be a more proportionate approach for the purposes of preventing fraud than the lack of entitlement to the exemption.

47In Velker and Elmeka the Court also relied on a second argument concerning the general nature of VAT and the fact that exemptions from the tax must therefore be interpreted strictly. ²⁴ Clearly, those requirements are applicable, at least as a matter of principle, to the exemption in Article 15(6). However, as stated above, the case-law also stipulates that the interpretation of the VAT exemptions must be consistent with the objectives pursued by those exemptions and must respect the requirements of the principle of fiscal neutrality, both of which are factors which, as concerns the exemption at issue in this case, point to the opposite conclusion to the one in Velker and Elmeka.

4. The reply to the second question

48In the light of the foregoing considerations, it is my view that the wording of the provision (which, in the majority of the language versions, refers explicitly to the use of an aircraft), the objectives of the exemption and the principle of neutrality of VAT mean that there must be a purposive interpretation of the exemption in this case. Therefore, Article 15(6) of the Sixth Directive must be interpreted as meaning that the exemption provided for therein applies to the supply of aircraft to an operator which does not itself operate for reward chiefly on international routes but which in turn supplies those aircraft for the use of an airline which does carry on such an activity.

B – The third question

49In its third question, which to a certain extent supplements the previous question, the referring court asks whether, having regard to the reply given to the second question, any of the facts of the instant case are significant, in particular, the fact that the company which owns the aircraft (A Oy) in turn makes a charge for the use of the aircraft to a private person (X) who is that company’s shareholder and who uses the procured aircraft principally for his own business and/or private use, taking into account the fact that the airline has also been able to use the aircraft for other flights.

50The applicant has disputed the accuracy of that statement of the facts. Nevertheless, it is my view that those facts set out in the order for reference are of no significance in relation to the reply to the second question and do not, in principle preclude the grant of the exemption concerned to an operator which assigns the right to use the procured aircraft to an airline operating on international routes.

51As I pointed out above, it is clear from Article 15(6) of the Sixth Directive that the sole criterion for determining the applicability of the exemption is whether an aircraft is used by an airline operating for reward chiefly on international routes. Since the company which acquired the aircraft is able to prove that the aircraft are effectively used for commercial exploitation by an airline of that kind, any commercial or other relationship which may exist between the company which owns the aircraft, its majority shareholder and the airline itself should not have any effect as regards VAT. Thus, although there is partial use of the aircraft by the owner, which is responsible for meeting certain costs, and although the operation as a whole may be advantageous to the owner from a non-VAT tax perspective, none of those factors is of any significance for the purposes of the exemption if the airline exploits the aircraft commercially in the course of its ordinary activity.

52Only if it can be established that the aircraft are not genuinely intended to be exploited commercially by the airline and that instead they are solely for private use — in short, final consumption — by a natural or legal person, will it be possible to refuse the exemption on the ground that the conditions laid down in Article 15(6) of the Sixth Directive are not satisfied. In any event, it is for the national court seised of the main proceedings to assess all those matters.

C – The first question

53By its first question, the Korkein hallinto-oikeus asks the Court whether the concept ‘airline operating for reward chiefly on international routes’ in Article 15(6) of the Sixth Directive also refers to airlines operating chiefly on international charter routes.

54Once again, the doubts as to the interpretation of the provision appear to be the result of differences between the language versions of the Sixth Directive.

55A number of versions use language which could suggest that the airlines concerned must be scheduled airlines. That is the case, for example, of the English-language version, which refers to ‘international routes’, an expression which could indicate the existence of scheduled routes and flights. However, the majority of the language versions emphasise that the airline which uses the aircraft must operate chiefly on international routes, without any direct or indirect reference to whether that activity takes place via charter flights or scheduled flights.

56The case-law clearly supports that broad interpretation. Cimber Air, ²⁵ the only judgment to date concerning the exemption in Article 15(6) of the Sixth Directive, dealt with the problem of whether that exemption applies to the acquisition of aircraft used by airlines operating for reward chiefly on international routes but also operating domestic flights using those aircraft. In that judgment, the Court held that the decisive factor for the purposes of the application of the exemption is the nature of the activities chiefly carried on by the airline which uses the aircraft, rather than the specific use to which the particular aircraft is put.

57Applying that same logic, the nature of the routes must also be irrelevant for the purposes of application of the exemption.

58Finally, that approach is more consistent with the principle of fiscal neutrality, since there is no objective reason for treating differently for VAT purposes two airlines operating on international routes because one of them operates mainly by providing charter flights while the other provides scheduled flights or because the aircraft concerned is used either for charter flights or for scheduled flights.

59In conclusion, I believe that Article 15(6) of the Sixth Directive must be interpreted as meaning that the concept ‘airline operating for reward chiefly on international routes’ also refers to a commercial airline operating for reward chiefly on international charter routes for the requirements of companies and private persons.

VI – Conclusion

Conclusion

60Accordingly, I propose that the Court of Justice should reply as follows to the questions referred for a preliminary ruling by the Korkein hallinto-oikeus:

Article 15(6) of the Sixth Directive must be interpreted as meaning that the concept ‘airline operating for reward chiefly on international routes’ also refers to a commercial airline operating for reward chiefly on international charter routes for the requirements of companies and private persons.

Article 15(6) of the Sixth Directive must be interpreted as meaning that the exemption provided for therein applies not only to that supply of aircraft which takes place directly to airlines operating for reward chiefly on international routes, but also to the supply of aircraft to an operator which does not itself operate for reward chiefly on international routes, but which in turn supplies the aircraft for the use of an airline which carries on that activity.

The fact that the owner of the aircraft in turn makes a charge for the use of the aircraft to a private person who is its shareholder and who uses the procured aircraft principally for his own business and/or private use, taking into account the fact that the airline has also been able to use the aircraft for other flights, does not alter the conclusion reached in the reply given to the second question, with the sole proviso that those factors could indicate that the aircraft was not really intended to be exploited commercially by the airline and instead was intended for the exclusive private use of a natural or legal person, a matter which it falls to the national court to determine.

¹ Original language: Spanish.

² 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’).

³ In its pleadings, A Oy explains that B Oy took care of ‘management, maintenance and repairs, dealt with the ground staff and crew, was responsible for the necessary permits and corresponding documents and for the schedules, and also for marketing and selling under its own name the air transport services supplied by means of those aircraft’. A Oy goes on to state that, in addition to the two aircraft concerned, B Oy operates a large number of other aircraft which form part of its fleet and which make international flights.

⁴ In that connection, the Spanish version states ‘aeronaves utilizadas por las compañías de navegación aérea’; the French version states ‘utilisés par des compagnies de navigation aérienne’; the English version states ‘used by airlines’; the German version states ‘die von Luftfahrtgesellschaften verwendet werden’; the Italian version states ‘usati da compagnie di navigazione aerea’; and the Dutch version states ‘die worden gebruikt door luchtvaartmaatschappijen’.

⁵ This has changed in the Finnish version of Directive 2006/112/EC, Article 145 of which includes in all the language versions the criterion of use of the aircraft.

⁶ See, for example, Case 30/77 Bouchereau [1977] ECR 1999, paragraph 14.

⁷ Case C-185/89 [1990] ECR I-2561.

⁸ Joined Cases C-181/04 to C-183/04 [2006] ECR I-8167.

⁹ Case C-89/05 United Utilities [2006] ECR I-6813, paragraphs 21 and 22; Case C-106/05 L.u.P [2006] I-5123, paragraph 24; Case C-284/09 Temco Europe [2004] I-11237, paragraph 17; Case C-434/05 Horizon College [2004] I-4793, paragraph 16; Case C-97/06 Navicon [2007] ECR I-8755, paragraph 22; and Case C-473/08 Eulitz [2010] ECR I-907, paragraph 27.

¹⁰ Navicon, paragraph 29, and Case C-116/10 Feltgen and Bacino Charter Company [2010] ECR I-14187, paragraph 16.

¹¹ In that connection, see the Opinion of Advocate General Lenz in Velker.

¹² Navicon, paragraph 21.

¹³ In that connection, see Martínez Muñoz, Y., ‘El principio de neutralidad en el IVA en la doctrina del TJCE’, Revista española de Derecho Financiero, 145, January-March 2010, p. 182. See also Guichard, M., ‘“L’Esprit des Lois” communautaires en matière de TVA: du principe de neutralité’, Revue de Droit Fiscal, No 36, 2001, p. 1205, and Vanistendael, F., ‘Neutrality and the limits of VAT’, Selected issues in European tax law, 1999, p. 13.

¹⁴ L.u.P., paragraph 48.

¹⁵ See, for example, Case 281/82 Unifrex [1984] ECR 1969, paragraph 30.

¹⁶ Case C-216/97 Gregg [1999] ECR I-4947, paragraph 20; Case C-267/99 Adam [2001] ECR I-7467, paragraph 36; Case C-141/00 Kügler [2002] ECR I-6833, paragraph 40; Case C-109/02 Commission v Germany [2003] ECR I-12691, paragraph 20; Case C-498/03 Kingscrest Associates and Montecello [2005] ECR I-4427, paragraph 41; Case C-246/04 Turn-und Sportunion Waldburg [2006] ECR I-589; Case C-169/04 Abbey National [2006] ECR I-4027, paragraph 56; L.u.P., paragraph 32; and Case C-288/07 Isle of Wight Council and Others [2008] ECR I-7203, paragraph 42.

¹⁷ Case C-309/06 Marks & Spencer [2008] ECR I-2283, paragraph 49.

¹⁸ In that connection, it should be recalled that, according to settled case-law, ‘the identity of the manufacturer or the provider of the services and the legal form by means of which they exercise their activities are, as a rule, irrelevant in assessing whether products or services supplied are comparable’. See Joined Cases C-453/02 and C-462/02 Linnweber and Akitidis [2005] ECR I-1131, paragraphs 24 and 25, and Turn-und Sportunion Waldburg, paragraph 34.

¹⁹ Which in turn refers to paragraph 4(a) and (b).

²⁰ Velker, paragraph 22.

²¹ Velker, paragraph 24, and Elmeka, paragraph 23.

²² A Oy refers in its pleadings to the so-called AOC (Air Operation Certificate), stating how expensive it is to obtain and retain (according to A Oy, this entails an additional annual cost of between EUR 138 000 and EUR 195 000). That makes it unlikely that that certificate, which is not required where an aircraft is for private use, would be applied for and obtained fraudulently.

²³ A Oy states in its pleadings that the Belgian authorities have introduced caution of that kind into their internal administrative rules, while the Netherlands authorities regard as sufficient proof a declaration signed by the purchaser concerning the use of the aircraft.

²⁴ Velker, paragraph 19, and Elmeka, paragraph 15.

²⁵ Case C-382/02 [2004] ECR I-8379.