C-340/15 Nigl and Others

JUDGMENT OF THE COURT (Third Chamber)

12 October 2016 ( *1 )

‛Reference for a preliminary ruling — Taxation — Value added tax — Sixth Directive 77/388/EEC — Article 4(1) and (4) — Directive 2006/112/EC — Articles 9 and 11 — Concept of ‘taxable person’ — Civil-law partnerships selling their products under a common trade mark and through a limited company — Concept of ‘independent undertaking’ — Refusal of the status of taxable person — Retroactivity — Sixth Directive 77/388 — Article 25 — Directive 2006/112 — Articles 272 and 296 — Flat-rate scheme for farmers — Exclusion from the flat-rate scheme — Retroactivity’

In Case C‑340/15,

REQUEST for a preliminary ruling under Article 267 TFEU from the Bundesfinanzgericht (Federal Finance Court, Austria), made by decision of 29 June 2015, received at the Court on 7 July 2015, in the proceedings

Christine Nigl and Others

v

Finanzamt Waldviertel,

THE COURT (Third Chamber),

composed of L. Bay Larsen, President of the Chamber, M. Vilaras (Rapporteur), J. Malenovský, M. Safjan and D. Šváby, Judges,

Advocate General: M. Szpunar,

Registrar: K. Malacek, Administrator,

having regard to the written procedure and further to the hearing on 13 April 2016,

after considering the observations submitted on behalf of:

Ms Nigl and Others, by H. Nigl, Rechtsanwalt, and J. Auer,

the Austrian Government, by C. Pesendorfer, S. Pfeiffer and F. Koppensteiner, acting as Agents,

the European Commission, by R. Lyal and M. Wasmeier, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 30 June 2016,

gives the following

Judgment

Legal context and the dispute

1This request for a preliminary ruling concerns the interpretation 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 2004/66/EC of 26 April 2004 (OJ 2004 L 168, p. 35) (‘the Sixth Directive’), and of 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 proceedings between the members of the Nigl family, who are members of three civil-law partnerships each engaged in wine production, and the Finanzamt Waldviertel (Tax Office, Waldviertel, Austria; ‘the Tax Office’) concerning, first, the determination of the status of taxable person for the purposes of value added tax (VAT) and, second, the refusal to apply the common flat-rate scheme for farmers to those civil-law partnerships.

Legal context

EU law

The Sixth Directive

3Article 4 of the Sixth Directive, entitled ‘Taxable persons’, provides:

‘1. “Taxable person” shall mean any person who independently carries out in any place any economic activity specified in paragraph 2, whatever the purpose or results of that activity.

2. The economic activities referred to in paragraph 1 shall comprise all activities of producers, traders and persons supplying services including mining and agricultural activities and activities of the professions. The exploitation of tangible or intangible property for the purpose of obtaining income therefrom on a continuing basis shall also be considered an economic activity.

...

4. The use of the word “independently” in paragraph 1 shall exclude employed and other persons from the tax in so far as they are bound to an employer by a contract of employment or by any other legal ties creating the relationship of employer and employee as regards working conditions, remuneration and the employer’s liability.

Subject to the consultations provided for in Article 29, each Member State may treat as a single taxable person persons established in the territory of the country who, while legally independent, are closely bound to one another by financial, economic and organisational links.

...’

4Article 25 of the Sixth Directive, entitled ‘Common flat-rate scheme for farmers’, provides:

‘1. Where the application to farmers of the normal [VAT] scheme, or the simplified scheme provided for in Article 24, would give rise to difficulties, Member States may apply to farmers a flat-rate scheme tending to offset the [VAT] charged on purchases of goods and services made by the flat-rate farmers pursuant to this Article.

...

9. Each Member State may exclude from the flat-rate scheme certain categories of farmers and farmers for whom the application of the normal [VAT] scheme, or the simplified scheme provided for in Article 24(1), would not give rise to administrative difficulties.

...’

The VAT Directive

5Article 9(1) of the VAT Directive, set out in Title III thereof, entitled ‘Taxable persons’, provides as follows:

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

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

6Article 10 of that directive states:

‘The condition in Article 9(1) that the economic activity be conducted “independently” shall exclude employed and other persons from VAT in so far as they are bound to an employer by a contract of employment or by any other legal ties creating the relationship of employer and employee as regards working conditions, remuneration and the employer’s liability.’

7The first paragraph of Article 11 of that directive provides:

‘After consulting the advisory committee on [VAT], each Member State may regard as a single taxable person any persons established in the territory of that Member State who, while legally independent, are closely bound to one another by financial, economic and organisational links.’

8Pursuant to Article 296(1) and (2) of the VAT Directive:

‘1. Where the application to farmers of the normal VAT arrangements, or the special scheme provided for in Chapter 1, is likely to give rise to difficulties, Member States may apply to farmers, in accordance with this Chapter, a flat-rate scheme designed to offset the VAT charged on purchases of goods and services made by the flat-rate farmers.

2. Each Member State may exclude from the flat-rate scheme certain categories of farmers, as well as farmers for whom application of the normal VAT arrangements, or of the simplified procedures provided for in Article 281, is not likely to give rise to administrative difficulties.’

Austrian law

9Paragraph 2 of the Umsatzsteuergesetz 1994 (1994 Law on turnover tax; ‘the UStG’), entitled ‘Trader, undertaking’, provides:

‘1. A trader is any person who independently carries out a commercial or professional activity. An undertaking comprises the whole of a trader’s commercial or professional activity. A commercial or professional activity shall mean any permanent activity carried out for the purpose of obtaining income, even where there is no intention to make a profit or a group of persons carries out its activities only in relation to its members.

2. A commercial or professional activity is not exercised independently:

if natural persons are, individually or as a group, integrated in an undertaking in such a way that they are required to follow the instructions of the trader:

if a legal person is dependent on the will of a trader in such a way that it does not exercise its own will. A legal person is dependent on the will of a trader in such a way that it does not exercise its own will (affiliated entity) if, having regard to all the factual circumstances, it is integrated financially, economically and organisationally into the undertaking.

...’

10Paragraph 22 of the UStG provides that, for traders not under the obligation to keep accounts, who carry out operations on an agricultural and forestry holding, the tax payable in respect of those operations is fixed at 10% of the taxable basis, with such an obligation depending, according to Paragraphs 124 and 125 of the Bundesabgabenordnung (Federal Tax Code), on the level of turnover and on the value of the agricultural holding.

11Moreover, Paragraph 1175 of the Allgemeines Bürgerliches Gesetzbuch (General Civil Code) provides that a civil-law partnership is formed by two or more persons who, by agreement, have decided jointly to carry out an activity aimed at attaining a common objective. Such an agreement is not subject to any requirements with regard to form.

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

12Since 1998, the appellants in the main proceedings have been engaged in wine production through three civil-law partnerships, each of them operating vineyards on different sites and each being subject to VAT. The first of those civil-law partnerships was formed by Mr Martin Nigl and Ms Christine Nigl, the second by Ms Gisela Nigl (senior) and Mr Josef Nigl, and the third by Mr Martin Nigl and Ms Gisela Nigl (junior). No written contract was drawn up during the creation of the three civil-law partnerships.

13In order to meet increased demand for high-quality wines, a market sector developed by Mr Martin Nigl, the appellants in the main proceedings created, in 2001, Wein-Gut Nigl GmbH (‘the trading company’). In the main, that company either purchases wines from the holdings of the civil-law partnerships in order to sell them to retailers or markets those wines to end consumers, in the name and on behalf of each civil-law partnership concerned. In addition, it produces wine from purchases made from contractually-linked vineyards and operates a hotel and restaurant.

14The civil-law partnerships were the subject of declarations made to the public authorities, including the Tax Office, which classified those partnerships of independent taxable persons as undertakings, for turnover-tax purposes, and as joint ventures, for income-tax purposes.

15The income and expenditure of the three civil-law partnerships is accounted for separately, via bank accounts owned by each of them separately, the profits are distributed within each civil-law partnership between its members and there are no assets or bank account shared by those partnerships. Each civil-law partnership separately operates vineyards belonging to it or leased by it, employs workers and owns its own equipment, such as tractors or machines. The equipment used for carrying out the work — in the amount of 15% to 20% — is purchased centrally by the trading company and then distributed among the civil-law partnerships, according to the quantities of wine produced. The operating costs relating to the buildings and gas and electricity costs are invoiced at the end of the year by the trading company.

16Wine-making takes place separately at each holding, whereas bottling is carried out at a shared facility. The wines produced by the civil-law partnerships are marketed under a common trade mark, ‘Weingut Nigl’, by the trading company, and are sold at jointly-fixed prices, the prices for purchase by that company being determined by applying an allowance to its own sale prices. Neither the advertisements, the website nor the price-lists make reference to the different holdings or producing civil-law partnerships. Finally, the trading company performs all administrative tasks on behalf of the three civil-law partnerships.

17Until 2012, the Tax Office took the view that the holding was being operated by four taxable persons, namely the three civil-law partnerships and the trading company.

18Following a tax inspection in 2012, the Tax Office found that, in view of the closely interconnected economic and organisational nature of the civil-law partnerships, their members had formed, since 2005, a single association of persons. In its view, there was only one source of income, the proceeds of which had to be assigned to the various members of the three civil-law partnerships.

19With regard to VAT, the Tax Office took the view that there existed, with retroactive effect from 2005, two taxable undertakings, namely the single association of persons, made up of the members of the three civil-law partnerships, and the trading company. VAT assessments were issued to all the members of the three civil-law partnerships and to the trading company, and, by a decision of 18 July 2012, the VAT identification number of each of the civil-law partnerships was restricted.

20As a result, the Tax Office called into question the common flat-rate scheme for farmers enjoyed by the civil-law partnerships.

21Dealing with proceedings to determine whether the appellants in the main proceedings were operating, as independent undertakings, four or only two wine-producing holdings, the Bundesfinanzgericht (Federal Finance Court, Austria) notes that, under Austrian law, every structure which conducts itself outwardly as such in relation to third parties and which provides services independently, within the meaning of the Law on turnover tax, has the capacity to be an undertaking, even if it consists of an association of persons lacking legal capacity.

22In addition, that court notes that it has previously held that, as the Republic of Austria had failed to seek consultation from the Advisory Committee on VAT mentioned in Article 29 of the Sixth Directive, joint enterprises independent of each other for income tax purposes do not constitute a single undertaking for turnover tax purposes, whatever the relationships between them.

23It is in that context that the Bundesfinanzgericht (Federal Finance Court) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

Do three associations of persons constitute three independent traders (taxable persons) where those associations consist of different members of one family, conduct themselves outwardly as such independently in relation to their suppliers and to public authorities, possess their own production facilities, with the exception of two business assets, but market under a common trade mark the greater part of their products through a limited company whose shares are held by the members of the associations of persons and other members of the family?

If the three associations of persons are not to be regarded as three independent traders (taxable persons), is any of the following to be regarded as an independent trader (taxable person):

the marketing company, or

an association of persons consisting of the members of the three associations of persons, which does not conduct itself as such on the market in relation either to suppliers or to customers, or

an association of persons consisting of the three associations of persons and the limited company, which does not conduct itself as such on the market in relation either to suppliers or to customers?

If the three associations of persons are not to be regarded as three independent traders (taxable persons), is the refusal of the status of a trader (taxable person)

retrospective,

only for the future, or

not permissible at all

if the associations of persons were at first, after investigations by the tax authorities, recognised by the Tax Office as independent traders (taxable persons)?

If the three associations of persons are to be regarded as three independent traders (taxable persons), are they, as wine producers and therefore farmers, flat-rate farmers if each of those associations of persons which cooperate in practice is in itself covered by the flat-rate scheme for farmers, but the limited company, an association of persons formed of the members of the three associations of persons or an association of persons formed of the limited company and the members of the three associations of persons is, under national law, not covered by the flat-rate scheme on account of the size of the business or its legal form?

If the flat-rate scheme for farmers is in principle excluded for the three associations of persons, is that exclusion

retrospective,

only for the future, or

not effective at all?’

Consideration of the questions referred

24As a preliminary point, it is appropriate to note that, in view of the period for which the Tax Office found that the members of the three civil-law partnerships had created a single association of persons, namely from 2005 to 2012, the respective relevant provisions of the Sixth Directive and the VAT Directive are applicable.

The first question

25By its first question, the referring court essentially asks whether Article 4(1) and the first subparagraph of Article 4(4) of the Sixth Directive, on the one hand, and the first subparagraph of Article 9(1) and Article 10 of the VAT Directive, on the other, must be interpreted as meaning that multiple civil-law partnerships, such as those at issue in the main proceedings, which conduct themselves outwardly independently as such in relation to their suppliers, public authorities and, to a certain extent, their customers, and each of which carries out its own production by using for the most part its means of production, but which market a large proportion of their products under a common trade mark through a limited company the shares in which are held by members of those civil-law partnerships and by other members of the family in question, must be regarded as independent undertakings which are taxable persons for VAT purposes.

26It is important, in this regard, to recall that, under Article 4(1) of the Sixth Directive and Article 9 of the VAT Directive, ‘taxable person’ means any person who independently carries out in any place any economic activity, whatever the purpose or results of that activity (see, inter alia, judgments of26 March 1987, Commission v Netherlands, 235/85, EU:C:1987:161, paragraph 6; of 16 September 2008, Isle of Wight Council and Others, C‑288/07, EU:C:2008:505, paragraph 27; and of 29 October 2009, Commission v Finland, C‑246/08, EU:C:2009:671, paragraph 35).

27The terms used in Article 4(1) of the Sixth Directive and in Article 9(1) of the VAT Directive, in particular the term ‘any person who’, give to the notion of ‘taxable person’ a broad definition focused on independence in the pursuit of an economic activity to the effect that all persons — natural or legal, both public and private, even entities devoid of legal personality — which, in an objective manner, satisfy the criteria set out in that provision must be regarded as being taxable persons for the purposes of VAT (see, to that effect, judgment of 29 September 2015, Gmina Wrocław, C‑276/14, EU:C:2015:635, paragraph 28).

28In order to establish that an economic activity is being carried out in an independent manner, it is necessary to examine whether the person concerned performs his activities in his own name, on his own behalf and under his own responsibility, and whether he bears the economic risk associated with the carrying-out of those activities (judgments of 27 January 2000, Heerma, C‑23/98, EU:C:2000:46, paragraph 18; of 18 October 2007, van der Steen, C‑355/06, EU:C:2007:615, paragraph 23, and of 29 September 2015, Gmina WrocławC‑276/14, EU:C:2015:635, paragraph 34).

29It is in the light of those factors that the first question should be answered.

30The fact that civil-law partnerships, such as those at issue in the main proceedings, operate separately vineyards that belong to them or are leased by them (also separately), that each of them uses its own means of production almost exclusively and employs its own workers, that they conduct themselves as such outwardly independently in relation to their suppliers, public authorities and, to a certain extent, their customers, reflects the fact that each of those partnerships carries out an activity in its own name, on its own behalf and under its own responsibility.

31In that context, the fact that some degree of cooperation occurs between such civil-law partnerships and a limited company, particularly in relation to the marketing of their products under a common trade mark, cannot suffice to call into question the independence of those civil-law partnerships vis-à-vis that company.

32The fact that such civil-law partnerships share a portion of their activities by entrusting that portion to a third company is the result of a choice made in the organisation of those activities and cannot warrant the conclusion that those civil-law partnerships do not carry out their activities independently or that they would not bear the economic risk associated with their economic activity.

33In addition, the determinative role of one of the members of one of the civil-law partnerships such as those at issue in the main proceedings in producing those partnerships’ wines and in representing them does not appear capable of calling into question the finding that those partnerships carry out their activities independently, in that each of them acts in its own name, on its own behalf and under its own responsibility.

34In view of the foregoing considerations, the answer to the first question is that Article 4(1) and the first subparagraph of Article 4(4) of the Sixth Directive, on the one hand, and the first subparagraph of Article 9(1) and Article 10 of the VAT Directive, on the other, must be interpreted as meaning that multiple civil-law partnerships, such as those at issue in the main proceedings, which conduct themselves outwardly as such and independently in relation to their suppliers, public authorities and, to a certain extent, their customers, and each of which carries out its own production by using for the most part its means of production, but which market a large proportion of their products under a common trade mark through a limited company the shares in which are held by members of those civil-law partnerships and by other members of the family in question, must be regarded as independent undertakings which are taxable persons for VAT purposes.

35In the light of the answer to the first question, there is no need to answer the second and third questions.

The fourth question

36By its fourth question, the referring court essentially seeks to determine whether Article 25 of the Sixth Directive and Article 296 of the VAT Directive must be interpreted as not excluding the possibility of refusing the application of the common flat-rate scheme for farmers, laid down in those articles, to multiple civil-law partnerships such as those at issue in the main proceedings, regarded as independent undertakings which are taxable persons for VAT purposes and which cooperate with each other, on the ground that a limited company, an association of persons made up of members of those civil-law partnerships or of members of that limited company could not be subject to that scheme, on account of the size of its operation or its legal form.

37It must be recalled that the common flat-rate scheme for farmers is a scheme which derogates from and is an exception to the general scheme of the Sixth Directive and the VAT Directive and which must therefore be applied only to the extent necessary to achieve its objective (judgments of 15 July 2004, Harbs, C‑321/02, EU:C:2004:447, paragraph 27; of 26 May 2005, Stadt Sundern, C‑43/04, EU:C:2005:324, paragraph 27; and of 8 March 2012, Commission v Portugal, C‑524/10, EU:C:2012:129, paragraph 49).

38Among the two objectives of that scheme is that relating to the need for simplification, which must be reconciled with the objective of offsetting the input VAT borne by farmers (see, to that effect, judgments of 26 May 2005, Stadt Sundern, C‑43/04, EU:C:2005:324, paragraph 28, and of 8 March 2012, Commission v Portugal, C‑524/10, EU:C:2012:129, paragraph 50).

39It must also be recalled that, pursuant to Article 25(1) of the Sixth Directive and Article 296(1) of the VAT Directive, Member States ‘may’ apply to farmers a flat-rate scheme if application of the normal VAT arrangements, or of the simplified scheme, is likely to give rise to difficulties, particularly difficulties of an administrative nature.

40Moreover, it follows from the wording of Article 25(9) of the Sixth Directive and of Article 296(2) of the VAT Directive that, on the one hand, Member States ‘may exclude’ certain categories of farmers from the flat-rate scheme.

41In the present case, it is apparent from the order for reference that the national legislation does not provide, in general, for exclusion from the flat-rate scheme of a category of farmers on the ground that they are linked by close economic cooperation through a limited company or an association, such as those mentioned in paragraph 36 of the present judgment.

42On the other hand, those provisions provide that farmers for whom the application of the normal arrangements or of the simplified scheme presents no administrative difficulties are excluded from the flat-rate scheme for farmers.

43However, the circumstance, put forward by the referring court, that a limited company, an association of persons made up of the members of multiple civil-law partnerships or an association of persons made up of that limited company and of members of those civil-law partnerships could not be subject to the common flat-rate scheme for farmers, on account of its size or its legal form, cannot have a bearing on the eligibility of those civil-law partnerships for that scheme, since such a circumstance does not, by itself, prove that the application of the normal arrangements or the simplified scheme would not present administrative difficulties for those partnerships.

44It would, however, be otherwise if civil-law partnerships, such as those at issue in the main proceedings, were, owing to their links with a limited company or an association, such as those mentioned in paragraph 36 above, materially capable of assuming the administrative burden of the tasks arising from the application of the normal arrangements or the simplified scheme, this being a matter for the referring court to verify.

45In that situation, the fact that the application of the flat-rate scheme is nevertheless capable of reducing the administrative costs associated with the application of the VAT scheme cannot, however, be taken into account inasmuch as the EU legislature introduced the flat-rate scheme for the sole benefit of farmers for whom the application of the normal VAT arrangements or simplified scheme is likely to give rise to difficulties, particularly difficulties of an administrative nature.

46In view of the foregoing considerations, the answer to the fourth question is that Article 25 of the Sixth Directive and Article 296 of the VAT Directive must be interpreted as not excluding the possibility of refusing the application of the common flat-rate scheme for farmers, laid down in those articles, to multiple civil-law partnerships, such as those at issue in the main proceedings, regarded as independent undertakings which are taxable persons for VAT purposes and which cooperate with each other, on the ground that a limited company, an association of persons made up of that limited company and members of the civil-law partnerships in question could not be subject to that scheme, on account of the size of its operation or its legal form, even if those civil-law partnerships do not belong to a category of producers excluded from that flat-rate scheme, in so far as they are, owing to their links with that company or one of those associations, materially capable of assuming the administrative burden of the tasks arising from the application of the normal arrangements or the simplified scheme, this being a matter for the referring court to verify.

The fifth question

47By its fifth question, the referring court essentially seeks to determine whether, in the event that the common flat-rate regime for farmers has, in principle, to be excluded for civil-law partnerships such as those at issue in the main proceedings, that exclusion would apply retroactively, would apply only for the future or would not apply at all.

48It is appropriate to recall that the principle of legal certainty does not preclude the tax authorities from carrying out, within the limitation period, an assessment for VAT relating to the deducted tax or to services already provided and which should have been subject to VAT (see, to that effect, judgments of 6 February 2014, Fatorie, C‑424/12, EU:C:2014:50, paragraphs 47 and 48, and of 9 July 2015, Cabinet Medical Veterinar Dr. Tomoiagă Andrei, C‑144/14, EU:C:2015:452, paragraph 42).

49Such a rule must also prevail when a scheme from which a taxable person for VAT purposes benefits is called into question by the tax authorities, including for a period prior to the date on which such an appraisal is issued, but provided that that appraisal occurs within the limitation period for action on the part of those authorities, and its effects do not apply retroactively to a date earlier than that on which the legal and factual elements on which it is based occurred.

50In those conditions, the fact that the Tax Office initially granted the benefit of the flat-rate scheme to multiple civil-law partnerships is not capable of affecting the answer to be given to the question posed, since the legal and factual elements on which that office’s new appraisal is based arose subsequent to that grant and took place within the limitation period for action on its part.

51In view of the foregoing considerations, the answer to the fifth question is that, in the event that the common flat-rate regime for farmers has, in principle, to be excluded for civil-law partnerships such as those at issue in the main proceedings, such an exclusion would apply to the period prior to the date on which the appraisal on which it is based took place, provided that that appraisal occurs within the limitation period for action on the part of the tax authority and its effects do not apply retroactively to a date earlier than that on which the legal and factual elements on which it is based occurred.

Costs

52Since 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 (Third Chamber) hereby rules:

Article 4(1) and the first subparagraph of Article 4(4) 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 2004/66/EC of 26 April 2004, on the one hand, and the first subparagraph of Article 9(1) and Article 10 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, on the other, must be interpreted as meaning that multiple civil-law partnerships, such as those at issue in the main proceedings, which conduct themselves outwardly as such and independently in relation to their suppliers, public authorities and, to a certain extent, their customers, and each of which carries out its own production by using for the most part its means of production, but which market a large proportion of their products under a common trade mark through a limited company the shares in which are held by members of those civil-law partnerships and by other members of the family in question, must be regarded as independent undertakings which are taxable persons for value-added-tax purposes.

Article 25 of Sixth Directive 77/388, as amended by Directive 2004/66, and Article 296 of Directive 2006/112 must be interpreted as not excluding the possibility of refusing the application of the common flat-rate scheme for farmers, laid down in those articles, to multiple civil-law partnerships, such as those at issue in the main proceedings, regarded as independent undertakings which are taxable persons for value-added-tax purposes and which cooperate with each other, on the ground that a limited company, an association of persons made up of that limited company and members of the civil-law partnerships in question could not be subject to that scheme, on account of the size of its operation or its legal form, even if those civil-law partnerships do not belong to a category of producers excluded from that flat-rate scheme, in so far as they are, owing to their links with that company or one of those associations, materially capable of assuming the administrative burden of the tasks arising from the application of the normal arrangements or the simplified scheme, this being a matter for the referring court to verify.

In the event that the common flat-rate regime for farmers has, in principle, to be excluded for civil-law partnerships such as those at issue in the main proceedings, such an exclusion would apply to the period prior to the date on which the appraisal on which it is based took place, provided that that appraisal occurs within the limitation period for action on the part of the tax authority and its effects do not apply retroactively to a date earlier than that on which the legal and factual elements on which it is based occurred.

Signatures

[Signatures]

( *1 ) Language of the case: German.

OPINION OF ADVOCATE GENERAL

SZPUNAR

delivered on 30 June 2016 ¹

‛Reference for a preliminary ruling — Taxation — Value added tax — Sixth Directive — Article 4(1) and (4) and Article 25 — Directive 2006/112/EC — Articles 9 to 11 and 296 — Concept of taxable person — Economic activity conducted independently — Civil-law partnerships supplying goods under a joint trading name and through a trading company — Refusal to regard as taxable persons — Common flat-rate scheme for farmers — Exclusion from flat-rate scheme’

Introduction

1In the present case the Bundesfinanzgericht (Federal Finance Court, Austria) has referred to the Court of Justice for a preliminary ruling a number of questions concerning the status of traders as separate taxable persons in the context of the application to them of the common flat-rate scheme for farmers laid down in provisions on value added tax (‘VAT’). The Court of Justice will have an occasion to recall and clarify its case-law on the correct understanding of the concept of economic activity conducted independently, the interpretation of the provisions on ‘VAT groups’ and also the abuse of rights.

Legal framework

EU law

2The facts in the main proceedings relate to a period when both 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 ² and Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax ³ were in force. However, since the wording of the two directives relevant to this case is essentially identical, I will cite only the provisions of Directive 2006/112.

3Under the first subparagraph of Article 9(1) of Directive 2006/112:

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

4Under Article 10 of that directive:

‘The condition in Article 9(1) that the economic activity be conducted “independently” shall exclude employed and other persons from VAT in so far as they are bound to an employer by a contract of employment or by any other legal ties creating the relationship of employer and employee as regards working conditions, remuneration and the employer’s liability.’

5Article 11 of that directive provides:

‘After consulting the advisory committee on value added tax …, each Member State may regard as a single taxable person any persons established in the territory of that Member State who, while legally independent, are closely bound to one another by financial, economic and organisational links.

A Member State exercising the option provided for in the first paragraph, may adopt any measures needed to prevent tax evasion or avoidance through the use of this provision.’

6Finally, under Article 296(1) and (2) Directive 2006/112:

‘1. Where the application to farmers of the normal VAT arrangements, or the special scheme provided for in Chapter 1, is likely to give rise to difficulties, Member States may apply to farmers, in accordance with this Chapter, a flat-rate scheme designed to offset the VAT charged on purchases of goods and services made by the flat-rate farmers.

2. Each Member State may exclude from the flat-rate scheme certain categories of farmers, as well as farmers for whom application of the normal VAT arrangements, or of the simplified procedures provided for in Article 281, is not likely to give rise to administrative difficulties.

…’

Austrian law

7Under Paragraph 1175(1) of the Austrian Civil Code (Allgemeines Bürgerliches Gesetzbuch), a civil-law partnership is formed by two or more persons who, by agreement, have decided jointly to carry out activity aimed at attaining a jointly determined objective. Such agreement is not subject to any requirements as regards form.

8Directive 2006/112 was transposed into Austrian law by the VAT Law of 1994 (Umsatzsteuergesetz 1994; ‘the UStG’). Under Paragraph 2(1) of that law, any person who independently carries out a commercial or professional activity is a taxable person for the purposes of VAT. Subparagraph 2 of that paragraph makes it clear that an activity is not to be regarded as independent where it is carried out by natural persons subject to the orders of an undertaking or by a legal person financially, economically or organisationally subject to the will of an (other) undertaking in such a way that it cannot exercise its own will.

9The common flat-rate scheme for farmers laid down in Directive 2006/112 was incorporated in Paragraph 22 of the UStG. It applies to farmers who are not subject to the obligation to keep accounts. Under Paragraph 125(1) of the Austrian Tax Code (Bundesabgabenordnung), that obligation is subject to the turnover and value of the undertaking concerned.

Facts, procedure and questions referred

10The Nigl family has for a long time carried out activity relating to grape growing and wine production. With the development of production and an expansion of the area under cultivation, this activity has encompassed an increasing number of new family members. At present they form three civil-law partnerships, each of which grows wine on its own land. Wine is also produced separately from harvests from land belonging to each partnership and although it is sold under the joint ‘Nigl’ name it bears designations which indicate a vintage belonging to a specific civil-law partnership. In addition, in 2001 the family members formed a limited company, Weingut Nigl GmbH. That company engages primarily in the sale of wine in the name and on behalf of the three civil-law partnerships. It also produces wine in its own name made from fruit acquired from the three civil-law partnerships. The equipment necessary for cultivation and production is essentially owned by the individual civil-law partnerships, with the exception of some immovable property and equipment, such as the bottling plant which is owned jointly.

11All four undertakings (that is to say the three civil-law partnerships and the limited company) were, from the time they were formed, registered as separate taxable persons for the purposes of VAT and the civil-law partnerships were covered by the flat-rate scheme for farmers. Inspections by the tax authorities confirmed that status. However, in 2012 those authorities found, as a result of a subsequent inspection, that all three civil-law partnerships should be regarded as one undertaking, and therefore as a single taxable person for the purposes of VAT, starting from 2005. Only the limited company retained the status of a separate person. For that reason the tax authority, which is the defendant in main proceedings, issued in relation to the applicants in the main proceedings tax a number of tax correction decisions for 2005 to 2012 and also a decision restricting the validity of their tax identification numbers as taxable persons for the purposes of VAT.

12Under Austrian law, the finding that the three trading companies are a single undertaking also means that they are excluded from taxation under the flat-rate scheme for farmers.

13As grounds for those decisions, the tax authorities cite the far-reaching economic and organisational integration of the three civil-law partnerships. They point out in particular that all the partnerships interact with third parties under the name ‘Weingut Nigl’, that is to say also the trade name of their products, that they use joint buildings and installations, and that the vinification process essential to the wine production is in fact carried out by one person, Martin Nigl, who is a recognised specialist in that field.

14The applicants in the main proceedings challenged the abovementioned decisions before the national court. They put forward the following arguments, inter alia: the individual civil-law partnerships were formed separately at different times and it is not possible to conclude that a single civil-law partnership was formed by implication, contrary to the express will of its purported members; the joint use of buildings and equipment is a common practice, particularly in agriculture, and it cannot therefore be presumed that individual undertakings are not independent; and the sale of the final product, that is to say the wine, under a joint trading name is likewise not a decisive factor in this case, particularly since that wine also bears the designation of each of the civil-law partnerships.

15In those circumstances, the Bundesfinanzgericht decided to stay the proceedings and refer the following questions to the Court of Justice for a preliminary ruling:

Do three associations of persons constitute three independent traders (taxable persons) where those associations consist of different members of one family, conduct themselves outwardly as such independently in relation to their suppliers and to public authorities, possess their own production facilities, with the exception of two business assets, but market under a common trade mark the greater part of their products through a limited company whose shares are held by the members of the associations of persons and other members of the family?

If the three associations of persons are not to be regarded as three independent traders (taxable persons), is any of the following to be regarded as an independent trader (taxable person):

the marketing company, or

an association of persons consisting of the members of the three associations of persons, which does not conduct itself as such on the market in relation either to suppliers or to customers, or

an association of persons consisting of the three associations of persons and the limited company, which does not conduct itself as such on the market in relation either to suppliers or to customers?

If the three associations of persons are not to be regarded as three independent traders (taxable persons), is the refusal of the status of a trader (taxable person)

retrospective,

only for the future, or

not permissible at all

if the associations of persons were at first, after investigations by the tax authorities, recognised by the Tax Office as independent traders (taxable persons)?

If the three associations of persons are to be regarded as three independent traders (taxable persons), are they, as wine growers and therefore farmers, flat-rate farmers if each of those associations of persons which cooperate in practice is in itself covered by the flat-rate scheme for farmers, but the limited company, an association of persons formed of the members of the three associations of persons or an association of persons formed of the limited company and the members of the three associations of persons is, under national law, not covered by the flat-rate scheme on account of the size of the business or its legal form?

If the flat-rate scheme for farmers is in principle excluded for the three associations of persons, is that exclusion

retrospective,

only for the future, or

not effective at all?’

16The request for a preliminary ruling was received by the Court on 7 July 2015. Written observations were submitted by the applicant in the main proceedings, the Austrian Government and the European Commission. The same parties were represented at the hearing of 13 April 2016.

Analysis

17The national court does not specifically indicate the provisions of EU law for which it is seeking an interpretation in its request. However, it must be concluded from the wording of the questions referred and the information contained in the order of the national court that the first, second and third questions concern the first subparagraph of Article 9(1) and Article 11 Directive 2006/112, and the fourth and fifth questions also concern the interpretation of the provisions on the common flat-rate scheme for farmers, and in particular Article 296(1) and (2) of that directive. I propose that the legal analysis in this case also be divided thus.

First, second and third questions referred — interpretation of the first subparagraph of Article 9(1) and Article 11 of Directive 2006/112

First question referred

18By its first question the national court essentially seeks to ascertain whether the first subparagraph of Article 9(1) and Article 11 of Directive 2006/112 must be interpreted as allowing or requiring a Member State to refuse the status of separate taxable persons to persons who, in carrying on a taxable activity, are economically or organisationally bound to one another to such an extent that it is possible to regard them as a single undertaking. In replying to the question thus worded, it is necessary, in my view, to separate the interpretation of the first subparagraph of Article 9(1) and Article 11 of that directive.

– Interpretation of the first subparagraph of Article 9(1) of Directive 2006/112

19In the present case it is common ground that the activity carried out by the applicants in the main proceedings constitutes economic activity within the meaning of the second subparagraph of Article 9(1) of Directive 2006/112. Therefore, the question remains whether it is an activity which they carry out independently within the meaning of the first subparagraph of Article 9(1) or, more precisely, whether each of the civil-law partnerships formed by the applicants carries out that activity independently, thus acquiring the status of taxable person.

20According to the settled case-law of the Court of Justice, the independent nature of an activity within the meaning of the first subparagraph of Article 9(1) of Directive 2006/112 must be viewed in the light of Article 10 of that directive. That provision indicates unequivocally that the term ‘independently’ is intended to exclude from VAT activities conducted by persons bound to an employer by a contract of employment or by any other legal ties. This means that an activity is not carried out independently only where the person carrying it out is subordinate to another person in such a way that he does not carry out that activity in his own name and on his own behalf, does not direct that activity in person, and does not bear the economic risk associated with it. ⁴

21The very fact that there is cooperation, even close cooperation, between several persons in the form of civil-law partnerships in the conduct of an activity does not, in my view, indicate that they are subordinate to another person. Therefore, persons cooperating with one another necessarily carry on activity on their behalf, in their own name and under their own direction and bear the economic risk associated with carrying out that activity since there is no other, overarching entity on whose behalf and in whose name that activity could be carried out. It should be added that, according to the information contained in the national court’s order, in the main proceedings the limited company formed by the applicants does not appear to fulfil such function.

22In that situation it cannot be held that the first subparagraph of Article 9(1) of Directive 2006/112 constituted a basis for refusing the persons concerns the status of taxable persons on account of the non-independent nature of the activity which they carry out.

– Interpretation of Article 11 of Directive 2006/112

23Article 11 of Directive 2006/112 permits the Member States to regard as a single taxable person persons who are legally independent but closely bound to one another by financial, economic and organisational links (such a taxable person is defined as a ‘VAT group’). Both actual or potential separate taxable persons and persons not having the status of a taxable person can be regarded as a single taxable person. ⁵

24That provision has a two-fold purpose. Firstly, it can allow administration to be simplified for both the tax authorities and the persons concerned. ⁶ Secondly, it can be used to combat abuses such as, for example, the splitting-up of one undertaking among several taxable persons so that each might benefit from a special tax scheme. ⁷

25However, for that provision to be applied in national law two conditions must be satisfied.

26First, that provision must be expressly transposed into domestic law. It is not unconditional and consequently cannot be applied directly. ⁸ That is so even where the effects thereof are intended to be beneficial for taxable persons and thus a fortiori, as the Commission correctly noted in its observations, where they are applied to their detriment, as in the present case.

27Secondly, for a Member State to avail itself of the option provided for in Article 11 of Directive 2006/112, there must be prior consultation of the VAT Committee. ⁹

28Against this background, uncertainty arises in the present case as to whether there exists in Austrian law a legal basis for regarding the civil-law partnerships formed by the applicants in the main proceedings as a VAT group for the purposes of Article 11 of Directive 2006/112. As the Commission stated at the hearing, the provision on which the Republic of Austria consulted the VAT Committee in that context is the second subparagraph of Paragraph 2(2) of the UStG. That provision restricts the option of regarding persons as a single taxable person to legal persons financially, economically or organisationally subordinate to an undertaking in such a way that they cannot exercise their own will.

29The undertakings formed by the applicants in the main proceedings which the Austrian tax authorities refused to regard as separate taxable persons in the decisions challenged in those proceedings do not have legal personality and are not subordinate to any other undertaking. Therefore, the Austrian Government claims that there is an option to apply the second subparagraph of Paragraph 2(2) to them.

30That is a matter of interpretation of national law over which the national courts alone have jurisdiction I would merely like to point out that, in my view, the assessment of that matter is unaffected by the possible incompatibility between that provision of Austrian law and Article 11 of Directive 2006/112 in the light of the Court’s judgment in Larentia + Minerva and Marenave Schiffahrt, ¹⁰ which the Commission appears to suggest in its observations. In that judgment the Court in fact ruled that the restriction on forming a VAT group contained in German law, similar to that contained in the Austrian provision under consideration in the present case, is contrary to the second subparagraph of Article 4(4) of the Sixth Directive, since the latter does not make application thereof subject to requirements other than a close tie between the persons concerned. ¹¹ At the same time, however, the Court ruled out the possibility of taxable persons relying directly on that provision of the directive, even where the national provision transposing it introduces a restriction which is incompatible with it. ¹² Therefore, a fortiori tax authorities cannot rely directly on Article 11 of Directive 2006/112 in order to apply it to the detriment of a taxable person.

31In the light of the foregoing, I consider that any incompatibility between the second subparagraph of Paragraph 2(2) of the UStG and Article 11 of Directive 2006/112 can have no bearing on the assessment of the possibility of applying the former provision to civil-law partnerships formed by the applicants in the main proceedings.

– Answer to the first question referred

32In the light of the above, I propose that the Court’s answer to the first question should be that the first subparagraph of Article 9(1) of Directive 2006/112 must be interpreted as not forming a basis for refusing the status of taxable person to a person bound by organisational, economic or financial ties to another person where the those links are legal ties as referred to in Article 10 of that directive. Article 11 of that directive must be interpreted as meaning that for it to be applied there must exist in national law an express legal basis adopted after prior consultation with the VAT Committee. It is for the national courts to determine whether such a basis exists in national law and whether it applies in a specific case.

Second question referred

33By its second question, the national court essentially seeks to ascertain which of the parties to the main proceedings should be regarded as a single taxable person, if such a possibility exists from a legal point of view.

34As is clear from the answer which I propose be given to the first question, such possibility would arise from Article 11 Directive 2006/112, if the national court holds that the second subparagraph of Paragraph 2(2) of the UStG, which transposes it, applies in the circumstances of the main proceedings. However, a finding that the persons concerned should belong to a VAT group is a finding of fact which is entirely a matter for the national tax authorities and courts. I do not believe that EU law can provide any guidance in this regard.

35I therefore propose that the Court’s answer to the second question be that it is entirely for the tax authorities and courts of the Member States to establish which persons in a particular set of circumstances can be regarded as a single taxable person.

Third question referred

36By its third question, the national court essentially seeks to ascertain whether the tax authorities can, when applying the provisions of national law transposing Article 11 Directive 2006/112, regard as members of a VAT group taxable persons who were previously regarded as separate taxable persons, and if so, whether they can do so retrospectively or only for the future.

37In replying the question thus worded, I must point out at the outset that, in my view, neither Article 11 of Directive 2006/112, nor the general principles of tax law indicate that the provision is to apply only to persons who have never carried out a taxable activity before and thus had the status of a taxable person for the purposes of VAT. Such a restrictive interpretation of that provision would preclude its objectives from being attained. On the one hand, it would prevent taxable persons already carrying out taxable activity as separate taxable persons from forming a VAT group. On the other, it would also prevent the tax authorities from reacting accordingly to taxable persons’ changing situation and applying the provisions on VAT groups to them, either to simplify tax assessments or combat abuses.

38Nor, in my view, do the principles of tax law, including in particular the principle of legal certainty, preclude persons previously regarded as separate taxable persons from being regarded as members of a VAT group. In so far as that principle requires the tax position of the taxable person, having regard to his rights and obligations vis-à-vis the tax authorities, not to be open to challenge indefinitely, ¹³ clear and predictable rules which allow the tax authorities to verify earlier tax decisions do not breach that principle. ¹⁴

39As regards whether previously separate taxable persons can be regarded as members of a VAT group retrospectively or only for the future, it is, in my view, necessary to distinguish between two situations.

40As I have noted in point 24 of this Opinion, application of the provisions on VAT groups can be aimed inter alia at combating abuses such as, for example, the splitting-up of one undertaking among several taxable persons so that each might benefit from a special tax scheme. In that case regarding taxable persons as members of a VAT and the associated consequences for their taxation will be aimed at correcting the previously existing irregularity and restoring the situation which would have existed had the abuse not taken place. That can also cover correction, retrospectively, of earlier decisions. ¹⁵ Consequently, in my view it must be concluded that the tax authorities have the right retrospectively to regard as a VAT group persons who were previously regarded by those authorities as separate taxable persons, where that action is aimed at combating abuse consisting, for example, in the artificial splitting-up of one undertaking.

41However, where no abuse on the part of the taxable persons is found the principles of legal certainty and protection of legitimate interests preclude, in my view, the retrospective application of the provisions on VAT groups to persons who previously had the status of separate taxable persons. That is so in particular in a situation, as in the main proceedings, where that status of separate taxable persons was confirmed as a result of an inspection carried out by the tax authorities.

42In this regard it is worth adding further that, according to the case-law of the Court, for an abuse of law to be found in tax cases two conditions must be satisfied. First, the taxable person’s transactions must, notwithstanding formal application of the conditions laid down by the relevant provisions, result in the accrual of a tax advantage the grant of which would be contrary to the purpose of those provisions. Second, it must also be apparent from a number of objective factors that the essential aim of the transactions concerned is to obtain a tax advantage, which means that they cannot have some explanation other than the mere attainment of tax advantages. ¹⁶ The assessment of whether those conditions have been satisfied and the general finding as to whether there has been an abuse of law in a specific case naturally falls within the jurisdiction of the national courts.

43In the light of the above, I propose that the Court’s answer to the third question be that Article 11 of Directive 2006/112 must be interpreted as meaning that in the application thereof the tax authorities may regard as a single taxable person persons who earlier carried out a taxable activity as separate taxable persons. Those persons can be regarded as a single taxable person retrospectively where they have abused rights arising from their status as separate taxable persons.

Fourth and fifth questions referred — common flat-rate scheme for farmers

44The fourth and fifth questions concern the application to the applicants in the main proceedings of the common flat-rate scheme for farmers referred to in Article 295 et seq. of Directive 2006/112. The fourth question specifically concerns applying or disapplying that scheme, depending on whether the applicants in the main proceedings are regarded as separate taxable persons or members of a VAT group. The fifth question, however, concerns the time from which it is possible to disapply that flat-rate scheme.

Fourth question referred

45By its fourth question the national court essentially seeks to ascertain whether it is possible to disapply the flat-rate scheme to the applicants in the main proceedings who were treated as separate taxable persons (more precisely as three civil-law partnerships which are separate taxable persons) on account of their close economic ties, even though from a formal point of view they meet the criteria for the application of that scheme laid down in national law.

46I must point out from the outset that the question thus worded would appear to go beyond the scope of the dispute in the main proceedings. As is clear from the order for reference, that dispute concerns a decision of the tax authorities to regard the applicants as members of a VAT group, to correct their tax assessments accordingly, and to restrict the validity of their identification numbers for the purposes of VAT. Naturally, as is clear from the order for reference and the observations of the parties, against that background the question arises as to the application of the flat-rate scheme — the applicants treated as separate taxable persons would have a right to benefit from it, but as a VAT group they would not as they would cease to meet the criteria for the application of the flat-rate scheme. However, non-application of that scheme would precisely follow from the applicants being regarded as members of a VAT group. The main proceedings do not concern the disapplication of the flat-rate scheme irrespective of the status of the applicants as taxable persons or on any basis other than them being regarded as members of a VAT group. In my view, the Court’s answer to the fourth question must consequently relate only to whether the disapplication of the flat-rate system can be made subject on the applicants being regarded as members of a VAT ground since otherwise it would be hypothetical in nature.

47It must next be recalled that under Article 296(1) of Directive 2006/112 Member States may apply a flat-rate scheme to farmers where the application to them of the normal VAT arrangements or one of the simplified procedures ‘is likely to give rise to difficulties’. Under Article 296(2) of that directive, Member States may exclude from the flat-rate scheme certain farmers or certain categories of farmers, for whom application of the normal VAT arrangements, or of the simplified procedures, is not likely to give rise to difficulties. Finally, under Article 296(3) of that directive every flat-rate farmer covered by that scheme may opt instead for taxation under normal arrangements or the simplified procedures.

48That configuration of the flat-rate scheme in the provisions of the directive appears to indicate that it is exceptional in nature. That nature is also confirmed in the case-law of the Court, according to which the flat-rate scheme must be applied only to the extent necessary to achieve its objective, ¹⁷ that is to say, as it must be construed, to the extent to which application of the normal arrangements or simplified procedure are likely to give rise to difficulties.

49At the same time, however, the factual nature of the flat-rate scheme, and the exclusions therefrom provided for in Article 296(2) of Directive 2006/112, indicate the broad discretion granted to the Member States in implementing that scheme. In particular, as the Commission correctly pointed out in its observations, it would not appear that the Member States are required to examine on a case-by-case basis, in relation to each farmer individually, whether or not the application to him of the normal arrangements or simplified procedure is likely to give rise to difficulties and whether therefore the flat-rate system should be applied. The Member States can generally lay down the criteria to be met to benefit from the flat-rate scheme and apply that scheme automatically to farmers who meet those criteria.

50In Austrian law the right to benefit from the flat-rate scheme is connected with an exemption from the obligation to keep accounts, which in turn depends on the size of the holding measured by turnover and value. That criterion would appear to be entirely rational since the obligation to keep accounts is precisely one of the administrative difficulties associated with VAT under the normal arrangements and the simplified procedure.

51It would also appear entirely rational to disapply the flat-rate scheme where, because several farmers are regarded as a single taxable person for the purposes of VAT, they lose their right to exception from the obligation to keep accounts since their holding, as a single entity, exceeds the specified size.

52I therefore propose that the answer to the fourth question be that Article 296(1) and (2) of Directive 2006/112 must be interpreted as not precluding national legislation under which the flat-rate scheme referred to in that provision is disapplied only where a farmer ceases to meet the criteria for the application of that scheme based on the size of the holding, for example as a result of several economically linked farmers being regarded as a single taxable person.

Fifth question referred

53By its fifth question, the national court seeks to establish whether the disapplication of the flat-rate scheme for farmers may relate to farmers to whom that scheme was applied in the past and, if so, whether it can be done retrospectively or only for the future.

54Since in this case we are considering disapplication of the flat-rate scheme as a result of several farmers being regarded as members of a VAT group, the answer to the fifth question must be similar to the answer to the third question.

55Firstly, I can therefore see no obstacles to disapplying the flat-rate scheme to farmers to whom it was applied in the past. Such a prohibition would prevent Member States from reacting to a changing situation and would also run counter to the exceptional nature of that scheme and the requirement that it be applied only to the extent necessary.

56Secondly, I consider that if it is found that application of the flat-rate system entailed an abuse of the right, for example if the agricultural holding was artificially split up solely for the purpose of meeting the criteria which make it possible to benefit from that scheme, disapplication thereof can be retroactive. Otherwise, however, the principles of legal certainty and protection of legitimate expectations preclude, in my view, disapplication of the flat-rate system retrospectively. In that case the tax authorities, if they claim that the farmer’s changed situation no longer justifies his benefitting from that scheme, can disapply it, but only for the future.

57In the light of the foregoing, I propose that the Court’s answer to the fifth question be that Article 296(1) and (2) of Directive 2006/112 must be interpreted as not precluding disapplication of the flat-rate scheme referred to in that provision to a farmer to whom that scheme was applied earlier. Such disapplication can be retrospective where application of the flat-rate system entailed abuse of the right.

Conclusion

58In the light of all the foregoing considerations, I propose that the Court give the following answer to the questions referred for a preliminary ruling by the Bundesfinanzgericht (Federal Finance Court, Austria):

The first subparagraph of Article 9(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as not forming a basis for refusing the status of taxable person to a person bound by organisational, economic or financial ties to another person where those links are legal ties as referred to in Article 10 of that directive. Article 11 of that directive must be interpreted as meaning that for it to be applied there must exist in national law an express legal basis adopted after prior consultation with the VAT Committee. It is for the national courts to determine whether such a basis exists in national law and whether it applies in a specific case.

It is entirely for the tax authorities and courts of the Member States to establish which persons in a particular set of circumstances can be regarded as a single taxable person.

Article 11 of Directive 2006/112 must be interpreted as meaning that in the application thereof the tax authorities may regard as a single taxable person persons who earlier carried out a taxable activity as separate taxable persons. Those persons can be regarded as a single taxable person retrospectively where they have abused rights arising from their status as separate taxable persons.

Article 296(1) and (2) of Directive 2006/112 must be interpreted as not precluding national legislation under which the flat-rate scheme referred to in that provision is disapplied only where a farmer ceases to meet the criteria for the application of that scheme based on the size of the holding, for example as a result of several economically linked farmers being regarded as a single taxable person.

Article 296(1) and (2) of Directive 2006/112 must be interpreted as not precluding disapplication of the flat-rate scheme referred to in that provision to a farmer to whom that scheme was applied earlier. Such disapplication can be retrospective where application of the flat-rate system entailed abuse of the right.

¹ Original language: Polish.

² OJ 1977 L 145, p. 1 (hereinafter ‘the Sixth Directive’).

³ OJ 2006 L 347, p.1.

⁴ See inter alia the judgments in Heerma (C‑23/98, EU:C:2000:46, paragraph 18), and Gmina Wrocław (C‑276/14, EU:C:2015:635, paragraphs 33 and 34 and the case-law cited).

⁵ See inter alia judgment in Commission v Ireland (C‑85/11, EU:C:2013:217).

⁶ Judgment in Commission v Ireland (C‑85/11, EU:C:2013:217, paragraph 48).

⁷ See inter alia judgment in Larentia + Minerva and Marenave Schiffahrt (C‑108/14 and C‑109/14, EU:C:2015:496, paragraph 40).

⁸ Larentia + Minerva and Marenave Schiffahrt (C‑108/14 and C‑109/14, EU:C:2015:496, paragraphs 50 and 51).

⁹ See, to that effect, in relation to the second subparagraph of Article 4(4) of the Sixth Directive, judgment in Ampliscientifica and Amplifin (C‑162/07, EU:C:2008:301, paragraph 23).

¹⁰ Judgment in C‑108/14 and C‑109/14, EU:C:2015:496.

¹¹ Judgment in Larentia + Minerva and Marenave Schiffahrt (C‑108/14 and C‑109/14, EU:C:2015:496, paragraph 2 of the operative part).

¹² Judgment in Larentia + Minerva and Marenave Schiffahrt (C‑108/14 and C‑109/14, EU:C:2015:496, paragraph 3 of the operative part).

¹³ See judgment in Fatorie (C‑424/12, EU:C:2014:50, paragraph 46). See also, to that effect, judgment in Halifax and Others (C‑255/02, EU:C:2006:121, paragraph 72).

¹⁴ Judgment in Fatorie (C‑424/12, EU:C:2014:50, paragraphs 47 and 48).

¹⁵ See, to that effect, judgment in Halifax and Others (C‑255/02, EU:C:2006:121, paragraphs 94 and 95).

¹⁶ See, to that effect, judgments in Halifax and Others (C‑255/02, EU:C:2006:121, paragraphs 74 and 75), and WebMindLicenses (C‑419/14, EU:C:2015:832, paragraph 36).

¹⁷ Judgments in Harbs (C‑321/02, EU:C:2004:447, paragraph 27), and Commission v Portugal (C‑524/10, EU:C:2012:129, paragraph 49).