C-401/06 Commission v Germany

JUDGMENT OF THE COURT (Third Chamber)

In Case C-401/06, 6 December 2007 * ACTION under Article 226 EC for failure to fulfil obligations, brought on 26 September 2006,

Commission of the acting as Agent, with

Federal Republic of

* Language of the case: German. European Communities, represented by D. Triantafyllou, an address for service in Luxembourg,

applicant,

v

Germany, represented by M. Lumma, acting as Agent,

defendant, THE COURT (Third Chamber),

composed of A. Rosas, President of the Chamber, J.N. Cunha Rodrigues, J. Klučka, P. Lindh and A. Arabadjiev (Rapporteur), Judges,

Advocate General: Y. Bot, Registrar: H. von Holstein, Deputy Registrar,

having regard to the written procedure,

after hearing the Opinion of the Advocate General at the sitting on 13 September 2007,

gives the following

Judgment

Legal context and the dispute

1By its application, the Commission of the European Communities asks the Court to declare that, in failing to determine, in accordance with Article 9(2)(e) 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) ('the Sixth Directive'), the place where the services of an executor of a will are supplied when the services are performed for customers established outside the European Community or for taxable persons established within the Community but not in the same State as the supplier, the Federal Republic of Germany has failed to fulfil its obligations under that provision of the Sixth Directive.

Legal context

Community legislation

2Under Article 2(1) of the Sixth Directive, the supply of services 'effected for consideration within the territory of the country by a taxable person acting as such' is to be subject to value added tax ('VAT').

3Article 9(1) of the Sixth Directive provides that the 'place where a service is supplied shall be deemed to be the place where the supplier has established his business or has a fixed establishment from which the service is supplied ...'.

4The third indent of Article 9(2)(e) of that directive states however that:

'(e) the place where the following services are supplied when performed for customers established outside the Community or for taxable persons established in the Community but not in the same country as the supplier, shall be the place where the customer has established his business or has a fixed establishment to which the service is supplied or, in the absence of such a place, the place where he has his permanent address or usually resides:

— services of consultants, engineers, consultancy bureaux, lawyers, accountants and other similar services, as well as data processing and the supplying of information/

National legislation

5Paragraph 3a of the Law relating to Turnover Tax (Umsatzsteuergesetz, 'the UStG') of 26 November 1979 (BGBl. 1979 I, p. 1953), as amended by the Law of 21 February 2005 (BGBl. 2005 I, p. 386), provides:

'1. A supply of services is effected in the place where the trader carries on his business, subject to Paragraphs 3b and 3f ...

3. Where the customer to whom one of the other services mentioned in subparagraph 4 is supplied is an undertaking, by way of exception to subparagraph 1, the service is deemed to be supplied in the place where the customer carries on his business ...

4. For the purposes of subparagraph 3, "other services" shall mean: ... other services as part of the business of a lawyer, ... , of a tax adviser ... and in particular the provision of legal, financial or technical advice.'

6In that regard, the Bundesfinanzhof has stated, in a judgment of 5 June 2003 (V R 25/02, BStBl. 2003 II, p. 734), that an executors services fall under Paragraph 3a(1) of the UStG, whilst services which are specific to lawyers or tax advisers fall under Paragraph 3a(4)(3) of the UStG.

7Title 6 of Section 3 of Book 5 of the German Civil Code (Bürgerliches Gesetzbuch, 'the BGB') concerns executors.

8Under Paragraph 2221 of the BGB, an executor may request an appropriate remuneration for performing his task, provided that the testator has not decided otherwise.

Pre-litigation procedure

9In its letter of formal notice of 12 April 2005, notified on 19 April 2005, the Commission stated that, in its opinion, the national tax provisions cited above are incompatible with the third indent of Article 9(2)(e) of the Sixth Directive and asked the German authorities to submit their observations within two months of the notification. The Federal Republic of Germany replied, by letter of 21 June 2005, that an executors services are not comparable to a lawyer s services and do not fall within the scope of the third indent of Article 9(2)(e) of the Sixth Directive.

10The Commission, standing by its analysis, therefore sent a reasoned opinion, which was dated 13 December 2005 and notified on 19 December 2005, calling on the Federal Republic of Germany to comply with the opinion within two months from its notification. Following the Member States refusal to comply with the opinion, the Commission decided to bring the present action.

The action

Arguments of the parties

11The Commission considers it clear from the provisions of German law cited above, both from their interpretation by the national courts and their administrative application, that the supply of an executors services is always deemed to be effected in the place where he carries on his business. The same is true where that business is carried on by lawyers, tax advisers or auditors. Such practice is contrary to the wording of Article 9(2)(e) of the Sixth Directive, which chooses the place of the customer of the services as the place of supply, where the customer is established outside the Community or in a State other than that of the supplier.

12The Commission claims, first, that the case-law of the Court does not accord to Article 9(1) of the Sixth Directive, laying down the principle that the place of supply is to be determined in relation to the place of business of the supplier, any precedence over Article 9(2) of that directive. Consequently, since it is not an exception, Article 9(2)(e) is not to be construed narrowly (see Case C-108/00 SPI [2001] ECR I-2361, paragraph 17).

13The Commission considers that the services carried out as an executor are to be included among those which are principally and habitually carried out by a lawyer. It is therefore necessary, in order to determine whether the activity of an executor falls under Article 9(1) or Article 9(2) of the Sixth Directive, to rely not on the name of the profession of the person who provides the services at issue, but on the actual nature of those services. The Commission states moreover that the professions mentioned in the third indent of Article 9(2)(e) of the Sixth Directive are only illustrations and that that provision seeks in actual fact to describe categories of services.

14According to the Commission, the role of an executor is to defend the interests of a client, to represent that person and to manage the specific legal situations of third parties. That confirms the overlap between the activities of lawyers and executors, notwithstanding the fact that economic aspects are linked to the legal aspects in the execution of wills. Activity of an economic nature is also involved in a lawyer s normal business, and the administration of an estate is not unique in that respect.

15According to the Commission, it is of little account that the services are provided to beneficiaries of a will as customers of the services, since the supply in question is effected in the light of the testators wishes.

16It states that the development of the legal profession leads to specialisations, including in Germany, and in particular in the field of inheritance law, where there are specialist inheritance lawyers ('Fachanwalt für Erbrecht'), and any specialisation presupposes practical experience in the area concerned and relevant theoretical knowledge.

17In addition, the Commission states that the testator is not in any way required to choose a specialist, but must above all select a person whom he trusts, and that trust is a characteristic of relationships with both lawyers in general and executors in particular.

18The Commission lastly indicates that, even if the Guidelines of the VAT Committee (53rd Meeting of 4 and 5 November 1997, Document XXI/97/1.658), according to which the place of supply of services involving the tracing of heirs is to be determined in accordance with Article 9(2)(e) of the Sixth Directive, are not binding, in this case they are an accurate reflection of the Community legislature's intention to make the tracing of heirs subject to that provision. It is appropriate, therefore, to be guided by the rules applicable to the tracing of heirs and to apply them to the activities of executors, irrespective of any practical difficulties which that method of determining the place of supply may entail.

19The Federal Republic of Germany contends that the Court should dismiss the application and order the Commission to pay the costs in full.

20It submits that an executor's services are not comparable to those which a lawyer normally carries out and also differ from the other services referred to in the third indent of Article 9(2)(e) of the Sixth Directive.

21It maintains that any person with legal capacity may be appointed an executor. It states that an executors activity depends on the testators instructions and covers various situations. It concedes that carrying out the testators wishes upon the disposal of the estate requires legal knowledge, which is why recourse is often had to a lawyer, but submits that this is not a question of giving advice.

22The Federal Republic of Germany adds that it is clear from the judgment in Case C-145/96 von Hoffmann [1997] ECR I-4857 that only the services principally and habitually carried out as part of the professions referred to in the third indent of Article 9(2)(e) of the Sixth Directive fall within the scope of that provision. The same is not true of services carried out as an executor, since that person does not have a client to defend. It is a question of reconciling interests, not representing a party.

23In addition, a lawyer s services or an executors services, even if carried out by a lawyer, serve different purposes, which relate to law and legal advice in the first case, and economic interests and management in the second.

24According to the Federal Republic of Germany, it is also necessary to take into account the objectives of the Sixth Directive. In that regard, it is appropriate, as far as possible, to tax the supply of services at the place where they are supplied or used and enjoyed, in accordance with the principle of the neutrality of VAT. Whilst it is possible to establish a connection as to place between a lawyer and his client, that connection is absent from the executor-beneficiary relationship, since the execution of a will has a link above all with the place where the estate is situated. In addition, difficulties are to be expected in the case of the management of immoveable property, because, under Article 9(2)(a) of the Sixth Directive, the place of taxation must then be that where the property is situated. The fact that the beneficiaries may be located in different Member States and outside the Community also poses a problem in that respect

25The Federal Republic of Germany submits finally that similar services' within the meaning of the third indent of Article 9(2)(e) of the Sixth Directive are also not concerned. In particular, it rejects any comparison with the activities of a researcher tracing heirs.

Grounds

Findings of the Court

26It is appropriate, at the outset, to make the following remarks.

27First, according to settled case-law, in proceedings for failure to fulfil obligations pursuant to Article 226 EC, it is for the Commission to prove the allegation that the obligation has not been fulfilled. It is the Commission which must provide the Court with the evidence necessary for the Court to establish that the obligation has not been fulfilled, and it may not rely on any presumption (Case 62/89 Commission v France [1990] ECR I-925, paragraph 37, and Case C-341/02 Commission v Germany [2005] ECR I-2733, paragraph 35).

28Secondly, in this case, the action for failure to fulfil obligations can refer only to the situation where, first, the supply of services by the executor is effected for consideration, as Paragraph 2221 of the BGB permits, and, secondly, that service is supplied by a taxable person acting as such, within the meaning of Article 2(1) of the Sixth Directive, failing which the supply at issue cannot be subject to VAT.

29Thirdly, as regards the relationship between Article 9(1) and Article 9(2) of the Sixth Directive, the Court has repeatedly held that Article 9(2) sets out a number of specific instances of places where certain services are deemed to be supplied, whereas Article 9(1) lays down the general rule on the matter. The object of those provisions is to avoid, first, conflicts of jurisdiction, which may result in double taxation, and, secondly, non-taxation (see, inter alia, Case 168/84 Berkholz [1985] ECR 2251, paragraph 14; Case C-327/94 Dudda [1996] ECR I-4595, paragraph 20; and SPI, paragraph 15).

30Consequently, when interpreting Article 9 of the Sixth Directive, Article 9(1) in no way takes precedence over Article 9(2). In every situation, the question which arises is whether it is covered by one of the instances mentioned in Article 9(2). If not, it falls within the scope of Article 9(1) (see, inter alia, Dudda, paragraph 21, and SPI, paragraph 16).

31In that regard, it must be stated that the third indent of Article 9(2)(e) of the Sixth Directive refers not to professions, such as those of lawyers, consultants, accountants or engineers, but to services. The Community legislature has used the professions mentioned in that provision as a means of defining the categories of services to which it refers (see von Hoffmann, paragraph 15). The expression 'other similar services' refers not to some common feature of the disparate activities mentioned in the third indent of Article 9(2)(e) of the Sixth Directive but to services similar to those of each of those activities, viewed separately. A service must thus be regarded as similar to those of one of the activities mentioned in that provision when they both serve the same purpose (see, to that effect, Case C-167/95 Linthorst, Pouwels en Scheres [1997] ECR I-1195, paragraphs 19 to 22, and von Hoffmann, paragraphs 20 and 21).

32It is in the light of those considerations that this action for failure to fulfil obligations must be considered.

33In the present case, the Commission criticises the Federal Republic of Germany for considering, in its legislation, that the service of executing a will falls under Article 9(1) of the Sixth Directive, whilst, according to the Commission, either as a service principally and habitually provided by a lawyer or as a service which is similar to those which are part of a lawyers business, it falls within the scope of Article 9(2) of the Sixth Directive.

34Accordingly, it is appropriate, first, to determine whether an executor s services are among the services principally and habitually carried out as part of a lawyer s profession.

35The service of executing a will arises from the testators wish to see one or more persons implement the provisions of his will. The BGB provides that the executor can be chosen directly by the testator or by a third party whom the testator will have designated or, in certain cases, by the Nachlassgericht (court with jurisdiction in matters of succession). The transactions which he carries out vary in nature and length according to the instructions he receives.

36As for services principally and habitually carried out as part of a lawyer s profession, the Court has stated that they are those of representing or defending the interests of a person (von Hoffmann, paragraph 17).

37Although lawyers are, particularly in Germany, often chosen to be executors, because of their legal knowledge and the fact that such knowledge is necessary in all inheritance cases, the fact remains that the executor does not represent the testator, but merely carries out his last wishes, remaining neutral vis-à-vis those who benefit from the execution of the will Strictly speaking he does not defend the testators interests, but puts into effect wishes which have crystallised and which he interprets, whereas in a lawyer-client relationship, the lawyer s task is to serve the best interests of his client, as a general rule in the context of a dispute where there are conflicting interests. It follows that the service of executing a will is of a specific nature which distinguishes it from the services principally and habitually carried out by a lawyer.

38It is necessary, next, to verify whether an executor s services can be regarded as comparable to a lawyers services for the purposes of the third indent of Article 9(2)(e) of the Sixth Directive.

39The considerable variety of tasks which can be carried out by an executor, ranging from the management of an estate to the protection of non-material interests, including the simple distribution of sums of money or moveable or immoveable property, makes it difficult to identify what is a standard service in respect of executing a will. The task of an executor is, in fact, to carry out the testator s wishes, which may involve management activities, legal acts and a whole range of factual or legal transactions. However, the service of executing a will more generally involves, as the Federal Republic of Germany rightly states, economic activity, since, in the majority of cases, executors value and distribute the testator s estate for the benefit of the recipients of their services and sometimes, especially in connection with the management of the property of minors, they protect and ensure a return on that estate. Conversely, even though economic considerations are naturally not unrelated to a lawyer s activities, the services carried out by a lawyer seek primarily to ensure that a claim of a legal nature succeeds. Those two services do not therefore serve the same purpose.

40In those circumstances, an executors services cannot be considered to be similar to a lawyer s services.

41It must therefore be concluded that the service of executing a will constitutes neither a service principally and habitually carried out by a lawyer nor a service which is similar to those carried out by a lawyer.

42The Court must accordingly find that the Commission has failed to establish that, by maintaining legislation under which the place where an executor s services are supplied must be determined as the place where the supplier carries on his business, the Federal Republic of Germany has infringed the provisions of the Sixth Directive.

43Therefore, the Court must dismiss this action for failure to fulfil obligations.

Costs

44Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the Federal Republic of Germany has applied for costs and the Commission has been unsuccessful, the Commission must be ordered to pay, in addition to its own costs, those of the Federal Republic of Germany.

Operative part

On those grounds, the Court (Third Chamber) hereby:

1. Dismisses the action.

2. Orders the Commission of the European Communities to pay, in addition to its own costs, those of the Federal Republic of Germany.

[Signatures]

OPINION OF ADVOCATE GENERAL

BOT delivered on 13 September 2007

Introduction

1The present infringement proceedings concern provisions of German law which determine the place of supply of services provided by an executor of a will, for the purpose of levying value-added tax ('VAT') on them. German law provides that those services are supplied in the place where the executor carries on his business.

2The Commission of the European Communities is of the opinion that services must be treated as supplied at the place where the customer has his registered office or place of business, in accordance with the provisions of Article 9(2)(e) of Sixth Council Directive 77/388/EEC 2 and that the customer of those services is the beneficiary under the will.

3In the present action, the Commission asks the Court to hold that, by failing to determine in accordance with those provisions the place where a supply is deemed to have taken place for tax purposes ('the place of supply for tax purposes') in respect of services provided by an executor, the Federal Republic of Germany has failed to fulfil its obligations.

I — Legal context

A — Community law

4The Sixth Directive harmonises conditions for the application of VAT within the European Union. According to Article 2(1) of that directive, VAT applies to supplies of services which are effected by a taxable person acting as such within the territory of a Member State.

5The place where a service is supplied for VAT purposes is laid down by Article 9 of the Directive. That article seeks to avoid both conflicts concerning jurisdiction as between Member States liable to lead to double taxation and the absence of taxation.

6Article 9(1) of the Sixth Directive contains a general rule that the place where a service is supplied is that where the supplier has established his principal place of business. Accordingly, under that provision, '[t]he place where a service is supplied shall be deemed to be the place where the supplier has established his business or has a fixed establishment from which the service is supplied or, in the absence of such a place of business or fixed establishment, the place where he has his permanent address or usually resides'.

7Article 9(2) of the Sixth Directive also provides for other criteria for determining the place of supply (place of supply criteria'). Those criteria may be grouped into two different categories.

8The first category comprises those supplies capable of being physically attached to a place. That means supplies of services connected with immovable property, transport services, cultural, artistic, sporting, scientific or other activities and, finally, the hiring out of movable tangible property. Those supplies are localised, respectively, in the place where the property is situated, the place where transport takes place, the place where they are carried out and the place where the movable tangible property hired out is used.

9The second category of supplies uses the customer's country as the criterion for attaching them to a place. Accordingly, under the seventh recital in the preamble to the Sixth Directive, although the place where a supply of services is effected should in principle be defined as the place where the person supplying the services has his principal place of business, that place should none the less be defined as being in the country of the person to whom the services are supplied, in particular in the case of certain services supplied between taxable persons where the cost of the services is included in the price of the goods.

10Those services are listed in Article 9(2)(e) of the Sixth Directive. For example, transfers and assignments of intellectual property rights, advertising services, banking, financial and insurance transactions and the supply of staff are among the services referred to.

11The services of lawyers and other similar services are also to be found in the third indent of that provision. Article 9(2) of the Sixth Directive provides as follows:

'However:

(e) the place where the following services are supplied when performed for customers established outside the Community or for taxable persons established in the Community but not in the same country as the supplier, shall be the place where the customer has established his business or has a fixed establishment to which the service is supplied or, in the absence of such a place, the place where he has his permanent address or usually resides:

— services of consultants, engineers, consultancy bureaux, lawyers, accountants and other similar services, as well as data processing and the supplying of information,

12Finally, Article 9(3) of the Sixth Directive provides:

' In order to avoid double taxation, non-taxation or the distortion of competition the Member States may, with regard to the supply of services referred to in 2(e) and the hiring out of movable tangible property consider:

(a) the place of supply of services, which under this Article would be situated within the territory of the country, as being situated outside the Community where the effective use and enjoyment of the services take place outside the Community;

(b) the place of supply of services, which under this Article would be situated outside the Community, as being within the territory of the country where the effective use and enjoyment of the services take place within the territory of the country.'

B — National law

13Paragraph 3a of the Law relating to Turnover Tax (Umsatzsteuergesetz, 'the UStG') is worded as follows:

'(1) A supply of services is effected in the place where the trader carries on his business, subject to Paragraphs 3b and 3f...

(3) Where the customer to whom one of the other services mentioned in subparagraph 4 is supplied is an undertaking, by way of exception to subparagraph 1, the service is deemed to be supplied in the place where the customer carries on his business ...

(4) For the purposes of subparagraph 3, other services' shall mean:

3. other services as part of the business of a lawyer, ..., of a tax adviser ... and in particular the provision of legal, financial or technical advice:

14Section 33 of the Guidelines on turnover tax (Umsatzsteuer-Richtlinien) provides that Paragraph 3a(1) of the UStG is to apply to the services of an executor.

15In accordance with those provisions and their interpretation by the Bundesfinanzhof (Germany), the services of an executor, even when provided by a lawyer, a tax adviser or an auditor, are deemed to be effected in the place where that executor carries on his business.

II — Procedure and forms of order sought

16The Commission is of the opinion that the place of supply of the services provided as an executor for customers established outside the Community or for taxable persons established in a Member State other than Germany should be fixed in accordance with the provisions of the third indent of Article 9(2)(e) of the Sixth Directive. It informed the German authorities thereof by letter of formal notice dated 19 April 2005.

17The Federal Republic of Germany, by letter of 23 June 2005, disputed that assessment on the ground that supplies of services by an executor are not comparable to those of a lawyer or to the other services referred to in the third indent of Article 9(2) (e) of the Sixth Directive.

18The Commission repeated its analysis that the German legislation is inconsistent with Community law in a reasoned opinion dated 19 December 2005.

19The Federal Republic of Germany confirmed its position by letter of 2 March 2006.

20By application received at the Registry on 27 September 2006, the Commission brought the present action. The Federal Republic of Germany lodged its defence at the Registry on 20 November 2006. The Commission lodged a reply and the Federal Republic of Germany lodged a rejoinder.

21The parties did not request a hearing. The Court also took the view that a hearing was not necessary.

22The Commission claims that the Court should declare that the Federal Republic of Germany has failed to fulfil its obligations under Article 9(2) (e) of the Sixth Directive by failing to determine the place where an executors services are supplied in accordance with those provisions, where the services are performed for customers established outside the Community or for taxable persons established within the Community but not in the same country as the supplier.

23It also claims that the defendant should be ordered to pay the costs.

24The Federal Republic of Germany contends that those claims should be rejected and that the Commission should be ordered to pay the costs.

III — Arguments of the parties

25The Commission maintains that the German position is unfounded and that the place where an executors services are performed must be determined in accordance with the provisions of the third indent of Article 9(2) (e) of the Sixth Directive on the following grounds.

26In accordance with the case-law, in order to determine whether an activity is covered by those provisions, it is necessary to take into consideration not only the professions which are cited therein, but the services which are habitually carried out as part of those professions.

27The role of an executor is to carry out the deceased s wishes. His task might therefore be equated with defending the interests of a lawyers client. He manages a third party's legal affairs. His activity is also of an economic nature. It also requires specific knowledge of inheritance law. It is mainly carried out by lawyers specialising in that subject-matter.

28An executors services could also be connected with the 'other similar services' referred to in the third indent of Article 9(2)(e) of the Sixth Directive. For that, it would be sufficient for the activity of an executor to have the same purpose as one of the activities expressly mentioned in that provision. The activities of a lawyer and those of an executor have in common representing the interests of another person. In both cases, the content of the activities is determined by the third party.

29The Commission also relies on the Guideline, adopted by unanimity by the VAT Advisory Committee, according to which the place of supply of services involving the tracing of heirs must be determined in accordance with the third indent of Article 9(2)(e) of the Sixth Directive. That guideline, even if it is not binding, should be taken into account as evidence of the legislature's intentions. The considerations which led to that position concerning the place of supply of services involving the tracing of heirs apply a fortiori in respect of the services of an executor.

30The Commission also submits that its position is borne out by the scheme and purpose of Article 9(2) of the Sixth Directive. The purpose of that provision is to situate the place of taxation of the supply of services in the place where that supply is actually effected. An executor's services are carried out in the place where the beneficiary is located, since the executor has the task of ensuring that the inheritance reaches the beneficiary.

31Finally, the Commission states that the practical difficulties which might arise from putting its view into effect, where there are a number of beneficiaries residing in different countries, do not go to make up a relevant argument and that the same difficulties are no less present in relation to the activity of tracing heirs.

32The Federal Republic of Germany disputes that analysis for the following reasons.

33According to that Member State, the activity of an executor may be carried out by a relative, a beneficiary, or a spouse, or equally by a lawyer, an association, or a legal person such as a trust company or a bank. The executor may be appointed by a will or by a contract of inheritance. His task is to put into effect the intentions of the deceased.

34An executor may be appointed for various reasons. The purpose can be to protect beneficiaries with little or no experience, to preserve the inheritance of minors until they attain their majority, to prevent disputes between beneficiaries or to discharge obligations and pay legacies.

35The executor can thus accomplish two different types of task, the disposal of the estate in accordance with the provisions of the deceased s will, a task which comes to an end once that disposal is accomplished, or the management of the estate during a certain period, for example until a beneficiary attains his majority.

36The Federal Republic of Germany infers from that description that the activities carried out by an executor do not amount to the services of a lawyer, or to other services similar to those, for the purposes of the third indent of Article 9(2) (e) of the Sixth Directive.

IV — Assessment

37I am not convinced that the infringement proceedings brought by the Commission are well founded.

38Admittedly, as indicated by that institution, the provisions of Article 9(2) (e) of the Sixth Directive must not be read as an exception to the general rule contained in Article 9(1) of that directive, and thereby narrowly construed. It is settled case-law that Article 9(2) ofthat directive contains specific place of supply criteria, and therefore the place of supply for tax purposes in respect of an economic activity must be determined in accordance with that provision and not according to the general rule set out in Article 9(1) of the Sixth Directive, if that activity is covered by one of those criteria. 3

39Moreover, it is also accepted that Article 9(2)(e) of the Sixth Directive relates not to professions as such, but to the services principally and habitually provided in the Member States as part of those professions.

40The question which arises in the present case is thus whether the services carried out by an executor are covered by the specific place of supply criterion set out in the third indent of Article 9(2)(e) of the Sixth Directive, as the Commission submits.

41It should be remembered that that provision selects as the place of supply for tax purposes in respect of the services that it lists the place where the customer has established his permanent address or usually resides, when those services were performed, first, for a customer established outside the Community who is not a taxable person and, secondly, for a customer who is established within the Community but not in the same country as the supplier and is a taxable person.

42According to the argument put forward by the Commission, the customer to whom an executor supplies services is the de ceaseds beneficiary or beneficiaries. I am of the opinion that that argument cannot be accepted for the following reasons.

43The concept of a customer', referred to in Article 9(2) (e) of the Sixth Directive, requires, in my opinion, the existence of a legal relationship between that customer and the service supplier.

44That requirement stems, first, from the very nature of VAT, which, it should be remembered, is a tax on consumption. It is the purchase of goods or services which constitutes the chargeable event for that tax and which renders it payable by the purchaser, both when he makes his purchase for the pursuit of his business, in his capacity as a taxable person, and when he makes it to meet his own needs as an end consumer.

45Thus, under the VAT system, that tax is applied at all stages of production or distribution of goods or services and is payable at each stage of that process, every time that there is a legal relationship between two different parties in which there is a reciprocal performance. 5

46The requirement of a legal relationship between the customer and the supplier of services also stems, in my opinion, from the system provided for by Article 9(2) (e) of the Sixth Directive. According to that system, it is the subject of the contract with the supplier which determines whether the service provided for corresponds to one of those listed by that provision. The customer, within the meaning of that provision, is therefore, in my opinion, necessarily the person who is a party to the contract with the supplier.

47However, when examining the relationships between the deceaseds beneficiary or beneficiaries and the executor, it must be observed that those persons have not concluded any agreement. It is the provisions made by the deceased that the executor has undertaken to carry out and it is by the deceased that the services to be effected and their cost have been determined. When the testator dies and the executor s services are to be performed, the only decision for the beneficiary is whether or not to accept his inheritance. That expression of will does not, however, make him a customer for the executors services, since he determines neither their content nor their price.

48I note, in that respect, that the Commission, in the arguments by which it seeks to show that an executor s services are akin to those of a lawyer, states that an executor also defends the interests of a client. It accepts, however, in its pleadings that the executor s task is first and foremost to defend the testators interests.

49That is the reason why the position of the beneficiary in relation to the executor is, it appears to me, different from that of the beneficiary vis-à-vis a supplier of services involving the tracing of heirs, to which the Commission refers in its pleadings. Vis-à-vis a researcher of that type, the beneficiary really does appear to be a customer. When informed by the researcher of his inheritance rights, the beneficiary is requested by that supplier to make an agreement with him fixing the fee in consideration for which the supplier will inform him precisely of his rights and the means by which he can claim them. In that case there is indeed a contract between the beneficiary and that supplier of services.

50Consequently, the fact that the VAT Advisory Committee considered, in a guide line, that the place of supply for tax purposes in respect of services involving the tracing of heirs was to be determined in accordance with Article 9(2)(e) of the Sixth Directive is not such as to establish that the position defended by the Commission in respect of executors is well founded.

51Furthermore, unlike the Commission, I am not convinced that locating an executor s services in the non-member country in which the beneficiary — who, necessarily, can only be an end consumer — is situated would have the effect of locating it in the place of the effective use and enjoyment of the services provided.

52The beneficiary does appear to be the recipient of the executor s services, since, as the Federal Republic of Germany has stated, the executors duty consists in transferring to the beneficiary the rights which pass to him under the deceaseds estate. He also bears the expense thereof, since — save where the testator has chosen to pay the cost of the executor s services during his lifetime — that cost falls to be deducted from the assets of the estate. However, those factors are, in my opinion, insufficient to justify the conclusion that, when the beneficiary has his permanent address or usually resides in a non-member country, the executor's services are actually used or enjoyed outside the Community.

53In that triangular relationship which links him to the testator and the executor, the role which falls to the beneficiary is, subject to specific provisions by the testator, passive. In general it is not the beneficiary who has decided to use the supplier of services or who has defined his tasks. The beneficiary merely receives what is due to him, in accordance with the task which the testator has determined, without necessarily even having a relationship with the executor. It is for that reason that I do not believe that that situation is comparable, for example, to that of an end consumer residing outside the Community who entrusts the defence of his interests to a lawyer established in a Member State so that that lawyer can represent him before the courts of a non-member country.

54In other words, there can be effective use or enjoyment of a service, in my opinion, only on the part of a person who has decided to have recourse to the services of a taxable person and might do so for the purposes of the exercise of his professional activity, particularly the production of goods, as envisaged by the Community legislature in the seventh recital in the preamble to the Sixth Directive.

55Finally, the Commission does not show why making the place of supply of an executor s services the place of establishment of that supplier, in accordance with Article 9(1) of the Sixth Directive, would run counter to the objectives of that provision.

56As I have already pointed out, Article 9 of that directive seeks, in particular, to avoid a failure to tax. Localising the services provided by an executor in the place where that supplier carries on his activities, as provided for under the German legislation at issue, has the effect of taxing in Germany services provided by lawyers established in that Member State who are carrying out such activities, regardless of the place where the beneficiaries reside. The argument put forward by the Commission leads to an executors services being exempt from tax where the beneficiary lives in a non-member country.

V — Conclusion

57In the light of all those considerations, I am of the view that the Commission has not shown that the Federal Republic of Germany has failed to fulfil its obligations under Article 9(2)(e) of the Sixth Directive by failing to determine the place where an executors services are supplied in accordance with those provisions where services are performed for customers established outside the Community or for taxable persons established within the Community but not in the same country as the supplier.

58In accordance with the provisions of Article 69(2) of the Rules of Procedure, if the Court follows my Opinion, the Commission will have to pay the costs.

59In view of the foregoing considerations, I propose that the Court should dismiss the present action for failure to fulfil obligations as unfounded and order the Commission of the European Communities to pay the costs.

Notes

(1) Original language: French.

(2) Directive 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

(197) 7 L 145, p. 1; 'the Sixth Directive')·

(3) Case C-167/95 Linthorst, Pouwels en Scheres [1997] ECR I-1195, paragraphs 10 and 11 and the case-law cited.

(4) Case C-145/96 von Hoffmann [1997] ECR I-4857, paragraph 17.

(5) Case C-210/04 FCE Bank [2006] ECR I-2803, paragraph 34 and the case-law cited.

(6) This is why I also do not believe that the testator may be considered to be the customer to whom the executor's services are supplied, for the purposes of Article 9(2)(e) of the Sixth Directive, since the services are carried out only after his death.