C-331/19 Staatssecretaris van Financiën (Reduced rate of VAT for aphrodisiacs)

JUDGMENT OF THE COURT (Tenth Chamber)

1 October 2020 ( *1 )

(Reference for a preliminary ruling – Taxation – Value added tax (VAT) – Directive 2006/112/EC – Article 98 – Option for the Member States to apply a reduced rate of VAT to certain supplies of goods and services – Annex III, point 1 – Definitions of ‘foodstuffs for human consumption’ and ‘products normally used to supplement foodstuffs or as a substitute for foodstuffs’ – Aphrodisiac products)

In Case C‑331/19,

REQUEST for a preliminary ruling under Article 267 TFEU from the Hoge Raad der Nederlanden (Supreme Court of the Netherlands), made by decision of 19 April 2019, received at the Court on 23 April 2019, in the proceedings

Staatssecretaris van Financiën

v

X,

THE COURT (Tenth Chamber),

composed of I. Jarukaitis, President of the Chamber, E. Juhász (Rapporteur) and M. Ilešič, Judges,

Advocate General: M. Szpunar,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

the Netherlands Government, by L. Noort and K. Bulterman, acting as Agents,

the European Commission, by W. Roels and L. Lozano Palacios, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 27 February 2020,

gives the following

Judgment

Legal context and the dispute

1This request for a preliminary ruling concerns the interpretation of point 1 of Annex III to Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1; ‘the VAT Directive’).

2The request has been made in the context of proceedings between the Staatssecretaris van Financiën (State Secretary for Finance, Netherlands) and X, concerning the application of the reduced rate of value added tax (VAT) for foodstuffs to products sold and used as aphrodisiacs, which are composed essentially of elements of animal or vegetable origin, and consumed orally.

Legal context

EU law

Regulation (EC) No 178/2002

3Regulation (EC) No 178/2002 of the European Parliament and of the Council of 28 January 2002 laying down the general principles and requirements of food law, establishing the European Food Safety Authority and laying down procedures in matters of food safety (OJ 2002 L 31, p. 1) provides, in Article 1 thereof, headed ‘Aim and scope’:

‘1. This Regulation provides the basis for the assurance of a high level of protection of human health and consumers’ interest in relation to food, taking into account in particular the diversity in the supply of food including traditional products, whilst ensuring the effective functioning of the internal market. It establishes common principles and responsibilities, the means to provide a strong science base, efficient organisational arrangements and procedures to underpin decision-making in matters of food and feed safety.

2. For the purposes of paragraph 1, this Regulation lays down the general principles governing food and feed in general, and food and feed safety in particular, at [European Union] and national level.

It establishes the European Food Safety Authority [(EFSA)].

It lays down procedures for matters with a direct or indirect impact on food and feed safety.

…’

4Article 2 of that regulation, headed ‘Definition of “food”’, provides

‘For the purposes of this Regulation, “food” (or “foodstuff”) means any substance or product, whether processed, partially processed or unprocessed, intended to be, or reasonably expected to be ingested by humans.

“Food” includes drink, chewing gum and any substance, including water, intentionally incorporated into the food during its manufacture, preparation or treatment. It includes water after the point of compliance as defined in Article 6 of [Council] Directive 98/83/EC [of 3 November 1998 on the quality of water intended for human consumption (OJ 1998 L 330, p. 32)] and without prejudice to the requirements of [Council] Directives 80/778/EEC [of 15 July 1980 relating to the quality of water intended for human consumption (OJ 1980 L 229, p. 11)] and 98/83/EC.

“Food” shall not include:

feed;

live animals unless they are prepared for placing on the market for human consumption;

plants prior to harvesting;

medicinal products within the meaning of Council Directives 65/65/EEC [of 26 January 1965 on the approximation of provisions laid down by Law, Regulation or Administrative Action relating to proprietary medicinal products (OJ, English Special Edition, Series I Volume 1965-1966 p. 20)] and 92/73/EEC [of 22 September 1992 widening the scope of Directives 65/65/EEC and 75/319/EEC on the approximation of provisions laid down by Law, Regulation or Administrative Action relating to medicinal products and laying down additional provisions on homoeopathic medicinal products (OJ 1992 L 297, p. 8)];

cosmetics within the meaning of Council Directive 76/768/EEC [of 27 July 1976 on the approximation of the laws of the Member States relating to cosmetic products (OJ 1976 L 262, p. 169)];

tobacco and tobacco products within the meaning of Council Directive 89/622/EEC [of 13 November 1989 on the approximation of the laws, regulations and administrative provisions of the Member States concerning the labelling of tobacco products (OJ 1989 L 359, p. 1)];

narcotic or psychotropic substances within the meaning of the United Nations Single Convention on Narcotic Drugs[, signed in New York on 30 March 1961, amended by the 1972 Protocol amending the 1961 Single Convention (United Nations Treaty Series, vol. 520, p. 151),] and the United Nations Convention on Psychotropic Substances[, signed in Vienna on 21 February 1971 (United Nations Treaty Series, vol. 1019, p. 175)];

residues and contaminants.’

5Article 5 of Regulation No 178/2002, headed ‘General objectives’, provides, in paragraph 1 thereof:

‘Food law shall pursue one or more of the general objectives of a high level of protection of human life and health and the protection of consumers’ interests, including fair practices in food trade, taking account of, where appropriate, the protection of animal health and welfare, plant health and the environment.’

The VAT Directive

6Under Article 96 of the VAT Directive, Member States are to apply a standard rate of VAT, which must be fixed by each Member State and which must be the same for the supply of goods and for the supply of services.

7Article 97 of the VAT Directive provides that the standard rate cannot be less than 15%.

8Article 98(1) and (2) of that directive provides:

‘1. Member States may apply either one or two reduced rates.

2. The reduced rates shall apply only to supplies of goods or services in the categories set out in Annex III.

…’

9Annex III to the VAT Directive, which contains the list of supplies of goods and services to which the reduced rates referred to in Article 98 may be applied, includes, in points 1 to 4:

Foodstuffs (including beverages but excluding alcoholic beverages) for human and animal consumption; live animals, seeds, plants and ingredients normally intended for use in preparation of foodstuffs; products normally intended to be used to supplement foodstuffs or as a substitute for foodstuffs;

supply of water;

pharmaceutical products of a kind normally used for health care, prevention of illnesses and as treatment for medical and veterinary purposes, including products used for contraception and sanitary protection;

medical equipment, aids and other appliances normally intended to alleviate or treat disability, for the exclusive personal use of the disabled, including the repair of such goods, and supply of children’s car seats;

…’

Netherlands law

10At the material time, pursuant to Article 9(2)(a) of the Wet houdende vervanging van de bestaande omzetbelasting door een omzetbelasting volgens het stelsel van heffing over de toegevoegde waarde (Law on replacing turnover tax by the system of taxing added value) of 28 June 1968 (Stb. 1968, No 329), the rate of VAT was 6% for the supply of goods set out in Table I of that law.

11Point a.1 of that table lists:

foodstuffs, in particular:

food and beverages normally intended for human consumption;

products clearly intended for use in the preparation of food and beverages as referred to under point (a) and that are wholly or partly contained therein;

products intended for use to supplement or as a substitute for food or beverages as referred to under (a), with the proviso that alcoholic drinks are not considered foodstuffs;

…’

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

12X, a trader subject to VAT, sells items in his sex shop which include capsules, drops, powders and sprays presented as aphrodisiacs that stimulate libido. Those products, which are composed essentially of elements of animal or vegetable origin, are intended for human consumption and are to be taken orally.

13Between 2009 and 2013, the taxable person applied the reduced VAT rate for foodstuffs to those products.

14The tax authorities challenged the application of that rate, taking the view that the products in question did not constitute ‘foodstuffs’ within the meaning of the relevant provisions of VAT legislation, and decided to issue additional assessments.

15The taxable person contested that decision of the tax authorities before the Rechtbank den Haag (District Court and court of first instance, The Hague, Netherlands).

16On appeal, the Gerechtshof den Haag (Court of Appeal, The Hague, Netherlands) found in favour of the taxable person, ruling that the use of the products in question as aphrodisiacs did not preclude them from being taxed at the reduced rate applicable to foodstuffs. That court took into account the fact that the products were intended to be consumed orally and were made from ingredients that may be found in foodstuffs. The court stated, furthermore, that the definition of the concept of ‘foodstuffs’ was so broad that it could cover products not directly associated with foodstuffs, such as sweets, chewing gum or cakes.

17The State Secretary for Finance brought an appeal on a point of law against the judgment of the Gerechtshof den Haag (Court of Appeal, The Hague) before the referring court, the Hoge Raad der Nederlanden (Supreme Court of the Netherlands).

18Taking the view that resolution of the dispute before it required an interpretation of provisions of the VAT Directive, the Hoge Raad der Nederlanden (Supreme Court of the Netherlands) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

Must the term “foodstuffs for human consumption” used in point 1 of Annex III to the [VAT] Directive be interpreted as covering, in accordance with Article 2 of Regulation [No 178/2002], any substance or product, whether processed, partially processed or unprocessed, intended to be, or reasonably expected to be ingested by humans?

If this question is answered in the negative, how must that term then be defined?

If edible or potable products cannot be regarded as foodstuffs for human consumption, on the basis of which criteria must it then be assessed whether such products can be regarded as products normally used to supplement foodstuffs or as a substitute for foodstuffs?’

Consideration of the questions referred

19By its questions, which it is appropriate to examine together, the referring court asks, in essence, how the concepts of ‘foodstuffs for human consumption’ and ‘products normally used to supplement foodstuffs or as a substitute for foodstuffs’, set out in point 1 of Annex III to the VAT Directive, are to be interpreted.

20Under Article 96 of the VAT Directive, each Member State is to apply the same standard rate of VAT in respect of the supply of goods and in respect of the supply of services.

21As an exception to that principle, Article 98(1) of the VAT Directive gives the Member States the option of applying either one or two reduced rates of VAT. In accordance with the first subparagraph of Article 98(2) of that directive, the reduced rates of VAT can apply only to supplies of goods and services in the categories set out in Annex III to the directive.

22More specifically, point 1 of Annex III to the VAT Directive allows Member States to apply a reduced rate of VAT, in particular, to ‘foodstuffs (including beverages but excluding alcoholic beverages) for human and animal consumption’ and to ‘products normally used to supplement foodstuffs or as a substitute for foodstuffs’.

23The VAT Directive contains no definition of the concepts of ‘foodstuffs for human consumption’ or ‘products normally used to supplement foodstuffs or as a substitute for foodstuffs’, and Council Implementing Regulation No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112 (OJ 2011 L 77, p. 1) also does not provide any definition of those concepts. Furthermore, neither the VAT Directive nor Implementing Regulation No 282/2011 contains any reference to the law of the Member States in that respect.

24Under those circumstances, the concepts of ‘foodstuffs for human consumption’ and ‘products normally used to supplement foodstuffs or as a substitute for foodstuffs’, set out in point 1 of Annex III to the VAT Directive, must be interpreted in accordance with the usual meaning of their words in everyday language, whilst also taking into account the legislative context in which they occur and the purposes of the rules of which they are part (see, to that effect, judgment of 29 July 2019, Spiegel Online, C‑516/17, EU:C:2019:625, paragraph 65).

25As regards, in the first place, the usual meaning in everyday language of the words constituting those concepts, first, it should be observed that, as the Advocate General essentially observes in points 18, 19 and 27 of his Opinion, all products containing nutrients which serve as building blocks, generate energy and regulate its functions, which are necessary to keep the human body alive and enable it to function and develop, and which are consumed for the purposes of providing it with those nutrients, are in principle ‘foodstuffs for human consumption’.

26Since that nutritional role is a decisive factor for a product to be classed as a ‘foodstuff for human consumption’, according to the usual meaning of those words in everyday language, the question whether that product has health benefits, its ingestion entails a certain pleasure for the consumer or its use is part of a certain social context, is irrelevant. Consequently, the circumstance that consumption of that product has positive effects on the libido of the person ingesting it is irrelevant in that respect.

27Second, as regards the usual meaning in everyday language of the words ‘products normally used to supplement foodstuffs or as a substitute for foodstuffs’, it should be noted that those words cover products the consumption of which also provides nutrients which serve as building blocks, generate energy and regulate its functions, which are necessary to keep the human body alive and enable it to function and develop.

28It is clear that such a nutritional role cannot be lacking in that category of products, as such products are intended to supplement or replace foodstuffs.

29Given that those two categories of product perform the same nutritional role, there is consequently no reason to apply different VAT systems to them.

30As regards, in the second place, the context of which the concepts of ‘foodstuffs for human consumption’ and ‘products normally used to supplement foodstuffs or as a substitute for foodstuffs’, set out in point 1 of Annex III to the VAT Directive, are part, it should be noted that, as is clear from paragraphs 20 to 22 of the present judgment, those two concepts designate products the supply of which is subject to a reduced rate of VAT, which constitutes an exception to the principle of the application of the standard rate of VAT. They must, therefore, be interpreted strictly (see, to that effect, judgment of 19 December 2019, Segler-Vereinigung Cuxhaven, C‑715/18, EU:C:2019:1138, paragraph 25).

31It should be observed, moreover, that the definition of the concept of ‘foodstuff’, set out in Article 2 of Regulation No 178/2002, is not relevant for the purposes of defining those concepts since that regulation – the aim of which, as is clear from Article 1 thereof, is the protection of human health – concerns all substances contributing to food safety. That regulation thus refers, by way of the particularly broad concept of ‘foodstuffs’, to any substance intended to be ingested or which is reasonably likely to be ingested by humans, including alcoholic beverages and water. Consequently, the scope of that concept exceeds that of the concepts of ‘foodstuffs for human consumption’ or ‘products normally used to supplement foodstuffs or as a substitute for foodstuffs’, set out in point 1 of Annex III to the VAT Directive.

32Moreover, neither the concept of ‘foodstuffs’ nor that of ‘products normally used to supplement foodstuffs or as a substitute for foodstuffs’, set out in point 1 of that annex, can cover medicines, as Annex III to the VAT Directive makes separate reference to ‘pharmaceutical products’ in point 3 thereof.

33As regards, in the third place, the aim pursued by Annex III to the VAT Directive, the Court has held that, in establishing Annex III to the VAT Directive, the EU legislature intended that essential commodities, and goods and services serving social or cultural objectives, may be subject to a reduced rate of VAT, provided that they pose little or no risk of distortion to competition (judgment of 4 June 2015, Commission v United Kingdom, C‑161/14, not published, EU:C:2015:355, paragraph 25 and the case-law cited).

34The Court has added that the purpose of that annex is to make less onerous, and thus more accessible for the final consumer, who ultimately pays the VAT, certain goods regarded as being particularly necessary (see, to that effect, judgment of 9 March 2017, Oxycure Belgium, C‑573/15, EU:C:2017:189, paragraph 22 and the case-law cited).

35Under those circumstances, any product intended for human consumption which provides the human body with the nutrients necessary to keep the human body alive and enable it to function and develop comes within the scope of the category set out in point 1 of Annex III to the VAT Directive, even if the consumption of that product also aims to produce other effects.

36By contrast, a product which does not contain nutrients or contains a negligible amount thereof, the consumption of which serves solely to produce effects other than those necessary to keep the human body alive and enable it to function and develop, cannot fall within the scope of that category.

37Although it would appear from the information before the Court that that is the case in so far as concerns the aphrodisiacs at issue in the main proceedings, that is a matter for the referring court to ascertain.

38Furthermore, that interpretation is supported by the aim pursued by Annex III to the VAT Directive of making essential commodities subject to a reduced rate of VAT in order to make them more accessible to the end consumer.

39In the light of all the foregoing considerations, the answer to the questions referred is that the concepts of ‘foodstuffs for human consumption’ and ‘products normally used to supplement foodstuffs or as a substitute for foodstuffs’, set out in point 1 of Annex III to the VAT Directive, must be interpreted as meaning that they refer to all products containing nutrients which serve as building blocks, generate energy and regulate its functions, which are necessary to keep the human body alive and enable it to function and develop, and which are consumed in order to provide it with those nutrients.

Costs

40Since 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 (Tenth Chamber) hereby rules:

The concepts of ‘foodstuffs for human consumption’ and ‘products normally used to supplement foodstuffs or as a substitute for foodstuffs’, set out in point 1 of Annex III to Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, must be interpreted as meaning that they refer to all products containing nutrients which serve as building blocks, generate energy and regulate its functions, which are necessary to keep the human body alive and enable it to function and develop, and which are consumed in order to provide it with those nutrients.

Signatures

[Signatures]

( *1 ) Language of the case: Dutch.

OPINION OF ADVOCATE GENERAL

SZPUNAR

delivered on 27 February 2020 ¹

(Reference for a preliminary ruling — Taxation — Value added tax — Directive 2006/112/EC — Article 98 — Reduced rates — Point 1 of Annex III — Foodstuffs for human consumption and products normally used to supplement foodstuffs or as a substitute for foodstuffs — Libido stimulants)

Introduction

1Value added tax (‘VAT’) is an indirect tax, that is to say, its economic burden is entirely passed on to consumers of goods and services, thereby increasing their price. In order to limit the effect of this tax on the price of certain goods and services considered to be of particular public importance, the legislature has provided for a number of VAT exemptions as well as for the possibility of applying a reduced VAT rate. The latter possibility concerns, inter alia, foodstuffs as well as goods used in their production, supplements for them and their substitutes.

2However, it appears that the classification of certain goods in these categories is difficult, as evidenced by the Court’s case-law on the subject. ² In the present case, the Court will have the opportunity to clarify these concepts, which should reduce the number of such disputes in the future, although it will certainly not prevent them entirely.

Legal framework

EU law

3The first sentence of Article 1(1) of Regulation (EC) No 178/2002 of the European Parliament and of the Council of 28 January 2002 laying down the general principles and requirements of food law, establishing the European Food Safety Authority and laying down procedures in matters of food safety ³ provides:

‘This Regulation provides the basis for the assurance of a high level of protection of human health and consumers’ interest in relation to food, taking into account in particular the diversity in the supply of food including traditional products, whilst ensuring the effective functioning of the internal market.’

4Under Article 2 of that regulation:

‘For the purposes of this Regulation, “food” (or “foodstuff”) means any substance or product, whether processed, partially processed or unprocessed, intended to be, or reasonably expected to be, ingested by humans.

“Food” includes drink, chewing gum and any substance, including water, intentionally incorporated into the food during its manufacture, preparation or treatment. …

“Food” shall not include:

feed;

live animals unless they are prepared for placing on the market for human consumption;

plants prior to harvesting;

medicinal products within the meaning of Council Directives 65/65/EEC … and 92/73/EEC …;

cosmetics within the meaning of Council Directive 76/768/EEC …;

tobacco and tobacco products within the meaning of Council Directive 89/622/EEC …;

narcotic or psychotropic substances within the meaning of the United Nations Single Convention on Narcotic Drugs, 1961, and the United Nations Convention on Psychotropic Substances, 1971;

residues and contaminants.’

5Under Article 96 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, ⁴ Member States have to apply a standard rate of VAT, which must be fixed by each Member State as a percentage of the taxable amount and which must be the same for the supply of goods and for the supply of services.

6Article 98(1) and the first subparagraph of Article 98(2) of that directive provides:

‘1. Member States may apply either one or two reduced rates.

2. The reduced rates shall apply only to supplies of goods or services in the categories set out in Annex III.

…’

7Annex III to Directive 2006/112 lists the following in point 1:

‘Foodstuffs (including beverages but excluding alcoholic beverages) for human and animal consumption; live animals, seeds, plants and ingredients normally intended for use in the preparation of foodstuffs; products normally used to supplement foodstuffs or as a substitute for foodstuffs.’

Netherlands law

8Netherlands law provides for the application of a reduced rate of VAT to the products listed in point 1 of Annex III to Directive 2006/112 under Article 9(2)(a) of Wet houdende vervanging van de bestaande omzetbelasting door een omzetbelasting volgens het stelsel van heffing over de toegevoegde waarde (Law on replacing turnover tax by the system of taxing added value) of 28 June 1968, read in conjunction with points 1(a), (b) and (c) of Table I annexed to that law.

Facts, procedure and the questions referred

9X, a VAT taxable person, manages a sex shop. The articles sold in the shop include capsules, drops, powders and sprays that are intended to be taken orally and are designed to stimulate libido (aphrodisiacs). The ingredients of these products are natural in origin.

10Between 2009 and 2013, the taxable person applied the reduced VAT rate for foodstuffs to those goods. However, the tax authorities challenged the application of that rate, taking the view that the goods in question did not constitute foodstuffs within the meaning of the relevant VAT legislation, and decided that the standard rate must be applied to them.

11The taxable person lodged an appealed against that decision before the Rechtbank den Haag (District Court and court of first instance, The Hague, Netherlands). At second instance, the Gerechtshof den Haag (Court of Appeal, The Hague, Netherlands) agreed with the taxable person that the use of the goods in question as aphrodisiacs did not preclude them from being taxed at the rate for foodstuffs. That court took into account the fact that the goods were intended to be taken orally and were made from ingredients that may be found in foodstuffs. Furthermore, the court noted that the definition of foodstuffs adopted by the legislature was so broad that it included goods not clearly associated with food, such as sweets, chewing gum or cakes.

12The Staatssecretaris van Financiën (State Secretary for Finance, Netherlands) lodged an appeal on a point of law against that judgment to the referring court.

13In those circumstances the Hoge Raad der Nederlanden (Supreme Court of the Netherlands) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

Must the term “foodstuffs for human consumption” used in point 1 of Annex III to [Directive 2006/112] be interpreted as covering, in accordance with Article 2 of [Regulation No 178/2002], any substance or product, whether processed, partially processed or unprocessed, intended to be, or reasonably expected to be, ingested by humans?

If this question is answered in the negative, how must that term then be defined?

If edible or potable products cannot be regarded as foodstuffs for human consumption, on the basis of which criteria must it then be assessed whether such products can be regarded as products normally used to supplement foodstuffs or as a substitute for foodstuffs?’

14The request for a preliminary ruling was lodged at the Court on 23 April 2019. Written observations were submitted by the Netherlands Government and the European Commission. The Court decided to give a ruling on the case without a hearing.

Analysis

15The referring court has submitted two questions to the Court for a preliminary ruling concerning the interpretation of the concepts of ‘foodstuffs for human consumption’ and ‘products normally used to supplement foodstuffs or as a substitute for foodstuffs’ within the meaning of point 1 of Annex III to Directive 2006/112. This interpretation is intended to clarify whether those terms, or one of them, cover products designed to be taken orally for the stimulation of libido (aphrodisiacs).

The first question

16The first question referred for a preliminary ruling concerns the interpretation of the term ‘foodstuffs for human consumption’. In particular, the referring court seeks to determine whether that interpretation should be based on the definition of the term ‘foodstuff’ set out in Article 2 of Regulation No 178/2002. The answer to this question requires a linguistic and teleological interpretation of point 1 of Annex III to Directive 2006/112, read in conjunction with Article 98(1) and (2) of that directive, and also an interpretation of the aforementioned Article 2 of Regulation No 178/2002.

Linguistic interpretation

17As the Netherlands Government and the Commission rightly point out in their observations, and as the referring court itself notes in its order for reference, Directive 2006/112 neither defines the concept of ‘foodstuffs for human consumption’ nor does it refer in that regard to the national law of the Member States. Therefore, this concept must be interpreted by considering its usual meaning in everyday language, while also taking into account the legislative context in which it occurs and the purposes of the rules of which it is part. ⁵

18The common understanding is that foodstuffs for human consumption should be equated with the term ‘food’, that is to say, products which are ingested by humans in the process of nutrition. The purpose of this process is to provide the body with nutrients which serve as building blocks, generate energy and regulate its functions, as well as to provide it with water. These nutrients keep the human body alive and enable it to function and develop.

19Therefore, the definition of the term ‘foodstuffs for human consumption’ will cover all products, whether processed or unprocessed, which provide nutrients to the human body and which are consumed in order to provide those nutrients.

20I therefore do not share the concern of the referring court, as expressed in its order for reference, that including a teleological element in the definition of the concept in question would pose a threat to legal certainty. According to that court, certain food products are consumed for purposes other than maintaining the body’s vital functions, yet there is no doubt that they fall under the concept of ‘foodstuffs for human consumption’. Therefore, the purpose of their consumption cannot be decisive as regards their classification. This was also the argument underlying the ruling of the court of second instance in the main proceedings.

21I believe that this argument is based on a misunderstanding.

22Satisfying basic human needs does not have to be limited to the simplest means of achieving that purpose. On the contrary, the pursuit of sophistication and luxury has accompanied humanity since the dawn of history, and where that pursuit is limited, it is most often for want of material means. This is clearly visible in the case of houses or clothes; apart from their basic protective function, they also serve other purposes, such as aesthetic or prestigious ones. Nevertheless, they remain what they are in essence: a rococo palace is still a house, and a dress designed by a famous designer is still a garment — to the same extent as, respectively, a wooden cabin and a raw linen shirt.

23The same goes for food. The fact that some dishes are more sophisticated and more expensive than others does not change the fact that they serve the same basic need of providing the body with the nutrients necessary for life. It is a completely separate matter that, apart from their nutritional values, they also have other qualities such as taste. This idea is perfectly reflected by the words uttered in an entirely different context and attributed to the French Queen Marie Antoinette: if the peasants have no bread, let them eat cake.

24It should also be borne in mind that, in addition to nutrients, food products may contain a number of other substances, whether naturally occurring or added in order to preserve them, improve their taste, and so on. There is obviously no reason why these substances or products containing these substances should not be classified as foodstuffs within the meaning of the provision in question.

25It is irrelevant in this regard, as the Netherlands Government rightly points out in its observations, that people do not always eat optimally from the point of view of their health, for example, by eating too much fat or sugar. Misuse of foodstuffs, from a health point of view, does not deprive those foodstuffs of their essential nutritional characteristics.

26Similarly, the circumstances in which foodstuffs are consumed are irrelevant. Human culture has given rise to a number of customs and rituals which accompany inherently simple activities such as eating. However, we should not put the cart before the horse. The social functions of food, even where very extensive, are secondary to its nutritional function. Even the most sumptuous banquet primarily serves to satisfy hunger, and its other purposes are merely secondary. ⁶

27For the foregoing reasons, I consider that foodstuffs for human consumption should include all those products which contain nutrients and are consumed principally to provide the human body with those nutrients, notwithstanding the fact that those products may also have other functions, such as maximising the pleasure resulting from taste sensations, and that their consumption may be associated with social events.

28By contrast, products such as those referred to in the request for a preliminary ruling, namely hallucinogenic mushrooms or chewing gum, when they are consumed by humans, are not intended to supply the body with nutrients and as such are not to be classified as foodstuffs within the meaning of point 1 of Annex III to Directive 2006/112.

29The same applies to the aphrodisiacs at issue in the main proceedings. These are consumed, not to provide the body with nutrients, but rather to stimulate sex drive, and thus, while they may affect certain bodily functions, they do not have a nutritional purpose.

30This is not altered by the fact, which is referred to in the order for reference, that the ingredients of those aphrodisiacs are substances which may also be included in food products. This is because if a product is a complex one, then its classification as a foodstuff within the meaning of the provisions in question should depend on the nature of the product as a whole rather than on that of its individual ingredients. The ingredients of aphrodisiacs are selected and combined because of their effect on sex drive, not because of their nutritional value.

31This characteristic distinguishes these aphrodisiacs from foodstuffs, including those foodstuffs which are said to have an aphrodisiac effect in addition to their nutritional value, such as certain kinds of seafood.

Teleological interpretation

32The foregoing analysis is confirmed by the teleological interpretation of the aforementioned provisions of Directive 2006/112.

33The Court has already had the opportunity to rule that the purpose of Article 98 of Directive 2006/112 and of Annex III thereto is to make less expensive, and thus more accessible for the final consumer, who ultimately pays the VAT, certain goods regarded as being particularly necessary. ⁷ As regards the foodstuffs listed in point 1 of that annex, the Court has classified them as essential commodities. ⁸

34In my opinion, this purpose of the provisions in question supports an interpretation that limits the application of a reduced rate of VAT to products that are consumed in order to satisfy one of the basic human needs, namely, the need for nutrition, understood as providing the body with nutrients.

35As regards the claim that not all products normally classed as food are essential from the nutritional point of view, I would like to repeat the arguments set out in points 22 to 26 of this Opinion: the fact that some food products have additional qualities apart from purely nutritional ones, such as taste, and that they can be misused, does not alter the fact that the primary purpose of their consumption is to address nutritional needs.

36Additionally, it would be difficult to draw an objective line between the foodstuffs necessary for nutritional purposes and those that should be classed as luxuries, since plain buttered bread can also be eaten for its taste, and not merely to satisfy hunger.

37Furthermore, it should be noted that the application of a reduced rate of VAT under Article 98 of Directive 2006/112 is exceptional and optional. Member States therefore have the option to apply a reduced rate only to certain categories of goods or services listed in individual points of Annex III to Directive 2006/112 or to exclude its application to certain categories of those goods or services. The only condition here is that these categories of goods or services must be precisely defined and the principle of fiscal neutrality respected. ⁹

38Therefore, Member States have the option of excluding certain categories of food products from the application of a reduced VAT rate if they consider that those products do not serve needs that would justify the application of such a rate.

39The EU legislature has itself exercised this option by excluding alcoholic beverages from the scope of point 1 of Annex III to Directive 2006/112. That legislature apparently considered that such beverages, although they are commonly classified as foodstuffs, may also cause addiction and numerous diseases, and therefore their consumption should not be encouraged by reducing the VAT rate.

40Therefore, the teleological interpretation of Article 98 of Directive 2006/112, read in conjunction with point 1 of Annex III thereto, does not allow products which serve to satisfy needs other than nutritional needs, such as the aphrodisiacs at issue in the main proceedings, to be covered by that provision.

Principle of fiscal neutrality

41Finally, it should be added, as the Netherlands Government rightly points out in its observations, that an interpretation according to which aphrodisiacs that are intended to be taken orally, such as those at issue in the main proceedings, should come within the material scope of point 1 of Annex III to Directive 2006/112, and therefore be subject to a reduced rate of VAT, could lead to a breach of the principle of fiscal neutrality.

42That principle precludes similar goods or services which are in competition with each other from being treated differently for VAT purposes. ¹⁰

43As is well known, apart from aphrodisiacs intended to be taken orally, there are also products with a similar effect that are meant to be administered in different ways. Those products must be regarded as being in competition with the aphrodisiacs intended to be taken orally that are at issue in the main proceedings. However, they cannot benefit from a reduced VAT rate since they do not come under any of the categories listed in Annex III to Directive 2006/112.

44Consequently, treating different categories of products designed to stimulate sex drive differently on the basis of how they are administered would be contrary to the principle of fiscal neutrality.

Impact of Article 2 of Regulation No 178/2002

45The question posed by the referring court concerns, in particular, whether the term ‘foodstuffs for human consumption’ used in point 1 of Annex III to Directive 2006/112 must be interpreted with reference to the definition of the term ‘foodstuff’ set out in Article 2 of Regulation No 178/2002.

46In my view, that question should be answered in the negative. As the Netherlands Government and the Commission rightly point out in their observations, that regulation serves completely different purposes from those of Article 98 of Directive 2006/112 and Annex III thereto.

47According to Article 1 of Regulation No 178/2002, its purpose is to ensure a high level of protection of human health and consumers’ interest in relation to food. Therefore, the definition of the term ‘foodstuff’ for the purposes of that regulation covers all products and substances ‘intended to be, or reasonably expected to be, ingested by humans’, as all products and substances which may be reasonably expected to be ingested by humans may also have an effect (including an adverse effect) on human health irrespective of the purpose for which they are consumed. The only exceptions in this regard are products subject to other regulations that ensure their safety for human health, such as medicinal products. By contrast, the definition in the regulation does not cover products which do not have a direct effect on human health because they are not normally consumed by humans, such as animal feed, live animals or plants prior to harvesting. ¹¹

48However, the material scope of point 1 of Annex III to Directive 2006/112 is different, since that annex serves to determine the scope of application of a reduced rate of VAT under Article 98 of that directive. The purpose of reducing the VAT rate is to lower the price of certain goods and services which, according to the legislature, meet the basic needs of consumers. ¹² Consequently, point 1 of Annex III to Directive 2006/112 covers not only products intended for human consumption but also goods used in their production, such as feed and live animals, seeds, plants and ingredients normally intended for use in the preparation of foodstuffs. ¹³ On the other hand, the EU legislature excluded alcoholic beverages from the scope of that provision, since they did not meet the criteria for a reduction in the VAT rate from the teleological point of view.

49Point 1 of Annex III to Directive 2006/112 and Article 2 of Regulation No 178/2002 thus serve different purposes, and this is reflected in their different respective material scopes. For that reason, Article 2 of the regulation cannot serve as a reference point for the interpretation of point 1 of Annex III to Directive 2006/112.

50As the Commission rightly points out in its observations, the Court reached similar conclusions when examining the relationship between the concept of ‘live animals normally intended for use in the preparation of foodstuffs’ within the meaning of point 1 of Annex III to Directive 2006/112 and the material scope of Regulation (EC) No 504/2008 ¹⁴ with regard to horses. ¹⁵

51In view of the foregoing, Article 2 of Regulation No 178/2002 does not, in my opinion, have any bearing on the interpretation of the concept of ‘foodstuffs for human consumption’ within the meaning of point 1 of Annex III to Directive 2006/112.

52I propose, therefore, that the answer to the first question referred for a preliminary ruling should be that point 1 of Annex III to Directive 2006/112 must be interpreted as meaning that the term ‘foodstuffs for human consumption’ contained therein means products which contain nutrients and which are consumed principally in order to provide the human body with those nutrients.

The second question

53By its second question, the referring court seeks to determine how the concept of ‘products normally used to supplement foodstuffs or as a substitute for foodstuffs’ is to be interpreted. That question has been raised in the context of the possible classification of the aphrodisiacs referred to in the first question as such products.

54I would like to reiterate that, in line with my proposed answer to the first question, foodstuffs within the meaning of the provision in question should include products consumed because of the nutrients which they contain or because of their role in the nutritional process.

55Similar reasoning may be applied to the interpretation of the concept of ‘products normally used to supplement foodstuffs or as a substitute for foodstuffs’. If it is an essential characteristic of foodstuffs that they contain nutrients and that they are consumed in order to provide the body with those nutrients, foodstuff supplements and substitutes should have the same characteristics.

56In particular, foodstuff substitutes should, in my opinion, be understood to mean products that are not foodstuffs but that contain nutrients and are consumed instead of foodstuffs in order to provide the body with those nutrients when the normal diet is deficient in them.

57In addition, foodstuff supplements may include products which are consumed in order to enhance the nutritional functions of foodstuffs, for example by improving nutrient absorption. Obviously, these are products which differ from pharmaceutical products, since the latter are subject to separate regulation in point 3 of Annex III to Directive 2006/112.

58Such a conclusion is also in line with the purposes of Article 98 of Directive 2006/112 as discussed in point 33 of this Opinion.

59This means excluding from the scope of the concept of ‘products normally used to supplement foodstuffs or as a substitute for foodstuffs’ those products which, although they may be consumed by humans, are unconnected with the consumption of foodstuffs in the foregoing sense as they are consumed for purposes other than that of providing nutrients to the body. This applies, inter alia, to the aphrodisiacs at issue in the main proceedings.

Conclusion

60In the light of the foregoing considerations, I propose that the Court reply as follows to the questions referred by the Hoge Raad der Nederlanden (Supreme Court of the Netherlands):

Point 1 of Annex III to Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that the term ‘foodstuffs for human consumption’ contained therein means products which contain nutrients and which are consumed principally in order to provide the human body with those nutrients, whereas the term ‘products normally used to supplement foodstuffs or as a substitute for foodstuffs’ means products which are not foodstuffs but which contain nutrients and are consumed in place of foodstuffs in order to provide the body with those nutrients, and also products consumed with a view to enhancing the nutritional functions of foodstuffs or their substitutes.

¹ Original language: Polish.

² See, in particular, judgments of 3 March 2011, Commission v Netherlands (C‑41/09, EU:C:2011:108); of 10 March 2011, Bog and Others (C‑497/09, C‑499/09, C‑501/09 and C‑502/09, EU:C:2011:135); and of 9 November 2017, AZ (C‑499/16, EU:C:2017:846).

³ OJ 2002 L 31, p. 1.

⁴ OJ 2006 L 347, p. 1.

⁵ See, most recently, judgment of 29 July 2019, Spiegel Online (C‑516/17, EU:C:2019:625, paragraph 65).

⁶ According to a well-known aphorism, ‘The Creator, who made man such that he must eat to live, incites him to eat by means of appetite, and rewards him with pleasure.’ (‘Le Créateur, en obligeant l’homme à manger pour vivre, l’y invite par appétit et l’en récompense par le plaisir’; Brillat-Savarin, J.A., Physiologie du goût, Paris 1825; English version: idem, The Physiology of Taste, translated by Anne Drayton, London, Penguin Books, 1994).

⁷ See, most recently, judgment of 9 March 2017, Oxycure Belgium (C‑573/15, EU:C:2017:189, paragraph 22), and also, as regards foodstuffs, judgment of 3 March 2011, Commission v Netherlands (C‑41/09, EU:C:2011:108, paragraph 53).

⁸ Judgment of 3 March 2011, Commission v Netherlands (C‑41/09, EU:C:2011:108, paragraph 53).

⁹ See, with respect to a specific category of foodstuffs, judgment of 9 November 2017, AZ (C‑499/16, EU:C:2017:846, paragraphs 23 and 24).

¹⁰ See, in particular, judgment of 9 November 2017, AZ (C‑499/16, EU:C:2017:846, paragraph 30).

¹¹ See the exclusions listed in points (a), (b) and (c) of the third subparagraph of Article 2 of Regulation No 178/2002.

¹² See point 33 of this Opinion.

¹³ This purpose of including live animals in point 1 of Annex III to Directive 2006/112 was confirmed by the Court in its judgment of 3 March 2011, Commission v Netherlands (C‑41/09, EU:C:2011:108, paragraphs 54 to 57).

¹⁴ Commission Regulation of 6 June 2008 implementing Council Directives 90/426/EEC and 90/427/EEC as regards methods for the identification of equidae (OJ 2008 L 149, p. 3).

¹⁵ Judgment of 3 March 2011, Commission v Netherlands (C‑41/09, EU:C:2011:108, paragraphs 61 to 64).