C-41/09 Commission v Netherlands

JUDGMENT OF THE COURT (First Chamber)

3 March 2011 (*)

(Failure of a Member State to fulfil obligations – Value added tax – Sixth VAT Directive – Directive 2006/112/EC – Application of a reduced rate – Live animals normally intended for use in the preparation of foodstuffs for human and animal consumption – Supply, importation and acquisition of horses)

In Case C‑41/09,

ACTION under Article 226 EC for failure to fulfil obligations, brought on 29 January 2009,

European Commission, represented by D. Triantafyllou and W. Roels, acting as Agents, with an address for service in Luxembourg,

applicant,

v

Kingdom of the Netherlands, represented by C. Wissels, M. Noort, M. de Grave and J. Langer, acting as Agents,

defendant,

supported by:

Federal Republic of Germany, represented by M. Lumma and C. Blaschke, acting as Agents, with an address for service in Luxembourg,

French Republic, represented by B. Beaupère-Manokha, acting as Agent,

interveners,

THE COURT (First Chamber),

composed of A. Tizzano, President of the Chamber, J.‑J. Kasel, A. Borg Barthet, M. Safjan (Rapporteur) and M. Berger, Judges,

Advocate General: Y. Bot,

Registrar: M. Ferreira, Principal Administrator,

having regard to the written procedure and further to the hearing on 7 September 2010,

after hearing the Opinion of the Advocate General at the sitting on 5 October 2010,

gives the following

Judgment

Legal context and the dispute

1By its application, the Commission of the European Communities requests the Court to declare that, by applying a reduced rate of value added tax (VAT) to the supply, importation and intra-Community acquisition of certain live animals, in particular horses, which are not normally intended for use in the preparation of foodstuffs for human and animal consumption, the Kingdom of the Netherlands has failed to fulfil its obligations under Article 12, read in conjunction with Annex H, 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 2006/18/EC of 14 February 2006 (OJ 2006 L 51, p. 12) (‘the Sixth Directive’), and under Articles 96 to 99(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1), read in conjunction with Annex III thereto (‘Annex III’).

Legal context

European Union legislation

2Directive 2006/112 repealed and replaced, with effect from 1 January 2007, existing European Union (‘EU’) VAT legislation, in particular the Sixth Directive.

3According to recitals 1 and 3 in the preamble to Directive 2006/112, the recasting of the Sixth Directive was necessary in order to present all the applicable provisions in a clear and rational manner and in an improved structure and drafting which would not, in principle, bring about material change to the existing legislation.

4Thus, Articles 96 to 99(1) of Directive 2006/112 correspond to the various provisions of Article 12 of the Sixth Directive and of Annex H thereto.

5Article 96 of Directive 2006/112 provides:

‘Member States shall apply a standard rate of VAT, which shall be fixed by each Member State as a percentage of the taxable amount and which shall be the same for the supply of goods and for the supply of services.’

6Article 97 of Directive 2006/112 provides:

‘1. From 1 January 2006 until 31 December 2010, the standard rate may not be less than 15%.

2. The Council shall decide, in accordance with Article 93 of the [EC] Treaty, on the level of the standard rate to be applied after 31 December 2010.’

7Article 98 of Directive 2006/112 provides:

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

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

...

3. When applying the reduced rates provided for in paragraph 1 to categories of goods, Member States may use the Combined Nomenclature to establish the precise coverage of the category concerned.’

8Article 99(1) of Directive 2006/112 states:

‘The reduced rates shall be fixed as a percentage of the taxable amount, which may not be less than 5%.’

9Annex III, under the heading ‘List of supply of goods and services to which the reduced rates referred to in Article 98 may be applied’, states in point 1 as follows:

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

10That provision corresponds to point 1 of Annex H to the Sixth Directive.

11Point 11 of Annex III, which corresponds to point 10 of Annex H of the Sixth Directive, states as follows:

‘supply of goods and services of a kind normally intended for use in agricultural production but excluding capital goods such as machinery or buildings’.

National legislation

12Article 9 of the Law on turnover tax (Wet op de omzetbelasting) of 28 June 1968 (Staatsblad 1968, No 329; ‘the Law on turnover tax’) provides:

‘1. The tax is set at 19 %.

2. By way of derogation from paragraph 1, the tax is set at:

(a) 6% for the supply of goods and services appearing in Table I annexed to this law;

...’

13Points a.1 and a.4 of Table I read as follows:

‘a.

1. foodstuffs, in particular:

(a) food and beverages normally intended for human consumption;

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

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

...

4.

(a) cattle, sheep, goats, pigs and horses;

(b) animals other than those referred to under point (a), clearly intended for the preparation or production of the foodstuffs referred to in point 1 above, and animals clearly intended for the breeding of such animals;

(c) the offal of the animals referred to under (a) and (b);

(d) products clearly intended for the reproduction of the animals referred to under (a) and (b).’

The pre-litigation procedure and the procedure before the Court of Justice

14Considering that, by applying a reduced rate of VAT to the supply, importation and intra-Community acquisition of certain live animals, in particular horses, which are not normally intended for use in the preparation of foodstuffs for human and animal consumption, the Kingdom of the Netherlands had failed to fulfil its obligations under Article 12, read in conjunction with Annex H, of the Sixth Directive, the Commission decided to initiate the procedure provided for in Article 226 EC. By letter of 10 April 2006, the Commission gave that Member State formal notice and invited it to submit its observations in that regard.

15In its reply of 27 June 2006, the Kingdom of the Netherlands acknowledged that the application of a reduced rate of VAT to the supply of certain live animals, as provided for in national legislation, went beyond that authorised by the Sixth Directive. It stated that a legislative proposal would be presented to the Netherlands Parliament in order to comply with that directive and that the legislative amendment would probably enter into force on 1 January 2007.

16Since the Kingdom of the Netherlands had not enacted that draft legislation, the Commission, on 23 October 2007, sent it a reasoned opinion calling upon it to take the measures necessary to comply with that opinion within a period of two months from the date of notification of the opinion.

17On 26 November 2007, the Kingdom of the Netherlands replied to that reasoned opinion, pointing out that the anticipated legislative proposal was under discussion in the standing finance committee of the second chamber of the Parliament. However, on 31 March 2008, that Member State informed the Commission that it did not consider it appropriate to adopt the legislative proposal at that time.

18In those circumstances, the Commission brought the present action.

19By orders of the President of the Court of 18 September and 20 November 2009, the Federal Republic of Germany and the French Republic respectively were granted leave to intervene in support of the forms of order sought by the Kingdom of the Netherlands.

The action

Arguments of the parties

20The Commission notes that Articles 96 to 99(1) of Directive 2006/112, read in conjunction with Annex III, apply to supplies and, mutatis mutandis, to imports and intra-Community acquisitions.

21According to the wording of point 1 of Annex III, live animals, seeds, plants and other ingredients can benefit from a reduced rate of VAT only where they are normally intended for use in the preparation of foodstuffs, which is not the case for horses.

22In addition, it follows from the case-law of the Court that point 1 must be interpreted strictly, like every other provision which lays down a reduced rate of VAT.

23Consequently, the Law on turnover tax, by providing a reduced rate of VAT for supplies of certain live animals, in particular horses, even if they are not intended for use in the manufacture or production of foodstuffs, does not comply with the provisions of Directive 2006/112.

24In its reply, the Commission adds that the French, Italian and English versions of point 1 of Annex III confirm that only products which are used in some way in the preparation of foodstuffs for human and animal consumption can be subject to a reduced rate of VAT.

25In addition, the Commission states that animals are not foodstuffs. By using the expression ‘live animals’ in point 1 of Annex III, the EU legislature thus intended to take a whole facet of the production of foodstuffs into account. In the absence of that specific provision, the supply of live animals would have been subject to the usual rate of VAT with the result that the final processed goods which fall, for their part, within the category of foodstuffs would have been more expensive.

26In addition, according to the Commission, point 1 may not be interpreted to mean that all supplies of horses are subject to the normal rate of VAT. That provision provides for the application of a reduced rate of VAT depending on the use of the horse and the transaction concerned. In that regard, elements such as the price and the breed of the animal make it possible to know its intended use.

27Finally, the Commission observes that not all horses are used for agricultural purposes.

28The Kingdom of the Netherlands submits, first, that, during the pre-litigation procedure and in its application initiating proceedings, of the other species of animal referred to in point a.4(a) of Table I of the Law on turnover tax the Commission referred only to horses. Therefore, the action must be dismissed as inadmissible with regard to the application of a reduced rate of VAT to certain live animals other than horses.

29The Kingdom of the Netherlands claims, second, as its principal argument, that neither the Dutch language version nor any other language version of point 1 of Annex III confirms that the phrase ‘normally intended for use in the preparation of foodstuffs’ applies to live animals, seeds and plants. On the contrary, it follows from the German language version of the same provision that that phrase refers only to ingredients. That is the only possible interpretation, since seeds, for example, are not normally intended for use in the preparation of foodstuffs. Therefore horses, being live animals, whether or not they are normally intended for use in the preparation of foodstuffs, are covered by the aforesaid point 1.

30In the alternative, the Kingdom of the Netherlands states that the Commission has failed to provide any factual evidence showing that horses are not normally intended for use in the preparation of foodstuffs. The Commission may not base its arguments on a presumption of any kind when requesting the Court to hold that a Member State has failed to fulfil its obligations.

31In the further alternative, the Kingdom of the Netherlands claims that horses are normally intended for use in the preparation of foodstuffs. In that regard, it follows from the use of the adverb ‘normally’ in point 1 of Annex III that what must be examined is not whether every individual animal, but whether a specific category of animals, is intended for use in the preparation of foodstuffs. Any horse may be taken to the abattoir for slaughter even if the use of a horse can be changed temporarily, for example by using it as a racehorse. The Kingdom of the Netherlands refers in that regard to the order of the Court of 1 June 2006 in Case C‑233/05 V.O.F. Dressuurstal Jespers, and to Article 20 of Commission Regulation (EC) No 504/2008 of 6 June 2008 implementing Council Directives 90/426/EEC and 90/427/EEC as regards methods for the identification of equidae (OJ 2008 L 149, p. 3), according to which equine animals are deemed, in principle, to be intended for slaughter for human consumption.

32In addition, the Commission’s approach is impracticable since it would make it necessary to check, on every supply of a horse, what its intended use is, and even more so because the buyer’s intention may differ from that of the seller.

33Finally, the Kingdom of the Netherlands considers that horses are goods of a kind normally intended for use in agricultural production. Every supply of a horse may therefore benefit from a reduced rate of VAT under point 11 of Annex III.

34In its rejoinder, the Kingdom of the Netherlands adds that the result desired by the Commission, that is to say the application of a reduced rate of VAT to all raw materials and intermediate products, is also attained if the view is taken that point 1 of Annex III applies to all live animals. In addition, it is not possible to prove that the price of the final product would be adjusted upwards.

35Finally, the interpretation proposed by the Commission infringes the principle of legal certainty. The taxpayer would on every occasion have to examine whether the supply of a horse would be subject to VAT at the usual or reduced rate, whereas the use of the animal could be determined only later.

36The Federal Republic of Germany notes that, while none of the language versions cited by the Commission makes it possible to establish clearly the scope of point 1 of Annex III, it follows from the German version of that provision that the phrase ‘normally intended for use in the preparation of foodstuffs’ relates only to ingredients. In addition, to determine the rate of VAT applicable by reference to the purchaser’s use of the horse would infringe the principle of neutrality of that tax.

37The French Republic considers that the aforesaid point 1 allows a reduced rate of VAT to be applied to all supplies of live animals, irrespective of their use. Like plants and seeds, live animals can be distinguished from ingredients normally intended for use in the preparation of foodstuffs. In any case, horses are included in the category of live animals normally intended for use in foodstuffs.

Findings of the Court

38As a preliminary point, it must be noted that, at the hearing, the Commission explained that, of the animals referred to in point a.4(a) of the Law on turnover tax, its action concerned exclusively horses, because the majority of cattle, sheep, goats and pigs are reared for human and animal consumption.

39Consequently, the present action must be understood to the effect that the Commission is complaining only that the Kingdom of the Netherlands applied a reduced rate of VAT to the supply, importation and intra-Community acquisition of horses.

40The parties differ, first, on the interpretation of point 1 of Annex III, each referring to various language versions of that provision in order to support their arguments.

41In that regard, it must be held that the meaning of point 1 is not the same in the various official languages of the European Union.

42On the one hand, according to the German version of point 1 of Annex III (‘Nahrungs- und Futtermittel (einschließlich Getränke alkoholische Getränke jedoch ausgenommen), lebende Tiere, Saatgut, Pflanzen und üblicherweise für die Zubereitung von Nahrungs- und Futtermitteln verwendete Zutaten sowie üblicherweise als Zusatz oder als Ersatz für Nahrungs- und Futtermittel verwendete Erzeugnisse’) and the Dutch version thereof (‘Levensmiddelen (met inbegrip van dranken, maar met uitsluiting van alcoholhoudende dranken) voor menselijke en dierlijke consumptie, levende dieren, zaaigoed, planten en ingrediënten die gewoonlijk bestemd zijn voor gebruik bij de bereiding van levensmiddelen, alsmede producten die gewoonlijk bestemd zijn ter aanvulling of vervanging van levensmiddelen’), on which the Kingdom of the Netherlands bases its arguments, the phrase ‘normally intended for use in the preparation of foodstuffs’ applies only to ingredients, which means that all supplies of live animals, whatever their use, can be the subject of a reduced rate of VAT.

43On the other hand, the English version of point 1 (‘Foodstuffs (including beverages but excluding alcoholic beverages) for human and animal consumption; live animals, seeds, plants and ingredients normally intended for use in the preparation of foodstuffs; products normally used to supplement foodstuffs or as a substitute for foodstuffs’), the French version thereof (‘Les denrées alimentaires (y compris les boissons, à l’exclusion, toutefois, des boissons alcooliques) destinées à la consommation humaine et animale, les animaux vivants, les graines, les plantes et les ingrédients normalement destinés à être utilisés dans la préparation des denrées alimentaires; les produits normalement utilisés pour compléter ou remplacer des denrées alimentaires’) and the Italian version thereof (‘Prodotti alimentari (incluse le bevande, ad esclusione tuttavia delle bevande alcoliche) destinati al consumo umano e animale, animali vivi, sementi, piante e ingredienti normalmente destinati ad essere utilizzati nella preparazione di prodotti alimentari, prodotti normalmente utilizzati per integrare o sostituire prodotti alimentari’), to which the Commission refers, may be interpreted, to different degrees, as meaning that the expression ‘normally intended for use in the preparation of foodstuffs’ applies not only to ingredients but also to live animals, seeds and plants.

44It is settled case-law that the wording used in one language version of a provision of EU law cannot serve as the sole basis for the interpretation of that provision, or be made to override the other language versions in that regard. Such an approach would be incompatible with the requirement for uniform application of EU law. Where there is divergence between the various language versions, the provision in question must be interpreted by reference to the purpose and general scheme of the rules of which it forms part (see Case C‑372/88 Cricket St Thomas [1990] ECR I‑1345, paragraphs 18 and 19; Case C‑149/97 Institute of the Motor Industry [1998] ECR I‑7053, paragraph 16; and Case C‑451/08 Helmut Müller [2010] ECR I‑0000, paragraph 38).

45With regard to the general scheme of point 1 of Annex III, it must be noted, first, that the original wording, which was the point of reference when Annex III was drafted, is contained in point 1 of Annex H to the Sixth Directive, that annex having been added to the directive by Article 1(5) of Council Directive 92/77/EEC of 19 October 1992 supplementing the common system of value added tax and amending Directive 77/388 (OJ 1992 L 316, p. 1).

46Point 1 of Annex III was slightly amended when the Sixth Directive was replaced by Directive 2006/112. As the Commission correctly stated at the hearing, the phrase ‘[f]oodstuffs … for human and animal consumption’ is followed by a semi-colon inter alia in the Danish, Dutch, French, Italian and English language versions of point 1 of Annex H to the Sixth Directive. With regard to those versions, a comma was substituted for that semi-colon in the Danish, Dutch, French and Italian language versions of point 1 of Annex III.

47However, according to the third recital in the preamble to Directive 2006/112, the recasting of the structure and wording of the Sixth Directive aims to ensure that the provisions are presented in a clear and rational manner, which will not, in principle, bring about material changes in the existing legislation, even if a small number of substantive amendments have, in any event, to be made in so far as that is inherent in such a recasting exercise.

48In the absence of any substantive amendment of point 1 of Annex III, the general scheme of that provision should be examined in the light of the wording of point 1 of Annex H to the Sixth Directive, which expresses the intention of the EU legislature when it drew up the list of goods and services which may be subject to a reduced rate of VAT.

49In that regard, from a semantic point of view, the use of a semi-colon after the phrase ‘[f]oodstuffs … for human and animal consumption’ clearly indicates that the phrase contained in point 1 of Annex H to the Sixth Directive is made up of three quite distinct parts. It must therefore be concluded that, since the intentions of the EU legislature are unchanged, the phrase contained in point 1 of Annex III is made up of the same three parts.

50As pointed out by the Advocate General in point 54 of his Opinion, each of the three parts of the phrase concerns foodstuffs for human and animal consumption. The first refers to foodstuffs as such. The third part concerns products used to supplement foodstuffs or as a substitute for foodstuffs. The second part of the phrase concerns live animals, seeds, plants and ingredients, which are not themselves foodstuffs. Logically, that second part of the phrase, which is enclosed by the two others, must be understood as referring to those items only in so far as they are normally intended for use in the preparation of foodstuffs. That assessment is confirmed by the fact that, contrary to what is stated by the Kingdom of the Netherlands, some seeds and plants may normally be intended for use in the preparation of foodstuffs. Use of the terms ‘live animals’ in that list means that the reduced rate of VAT applies to supplies carried out before the animals are slaughtered.

51Consequently, the general scheme of point 1 of Annex III tends to support the interpretation whereby the supply of live animals may be subject to a reduced rate of VAT only where those animals are normally intended for use in the preparation of foodstuffs.

52With regard to the purpose of point 1 of Annex III, it should be noted that, in response to a written question asked by the Court, the Commission stated, without being contradicted on that point by the other parties, that the EU legislature, by drawing up Annex H to the Sixth Directive, intended that essential commodities and goods and services having social or cultural objectives may be subject to a reduced rate of VAT, provided that those goods or services pose no or little risk of distortion to competition.

53Referred to at the top of Annex III, even before the ‘supply of water’ or ‘pharmaceutical products’, foodstuffs belong to the category of essential commodities. By allowing foodstuffs to be taxed at a reduced rate of VAT, rather than the normal rate, the EU legislature intended to make them less expensive, and therefore more accessible, for the final consumer, who finally bears the VAT (see, inter alia, Case C‑475/03 Banca popolare di Cremona [2006] ECR I‑9373, paragraph 22, and Joined Cases C‑283/06 and C‑312/06 KÖGÁZ and Others [2007] ECR I‑8463, paragraph 30). In order fully to attain that objective, that legislature logically extended the application of that reduced rate of VAT to items which, not themselves being foodstuffs, are normally intended for use in the preparation of those foodstuffs.

54It follows from the foregoing, first, that point 1 of Annex III authorises the application of a reduced rate of VAT only in respect of live animals normally intended for use in the preparation of those foodstuffs and, second, that the objective of that provision is to facilitate the purchase of those foodstuffs by the final consumer.

55By using the adverb ‘normally’ in the second part of the phrase in point 1 of Annex III, the EU legislature intended to refer to animals which, usually and in general, are intended to enter the human and animal food chain. That is the case, in particular, for the cattle, sheep, goats and pigs referred to in point a.4(a) of the Law on turnover tax. All supplies of animals belonging to those species may therefore be subject to a reduced rate of VAT, without it being necessary to examine the particular situation of such-and-such an animal.

56By contrast, it is well known that, in the European Union, the equine species is in a different situation from the species referred to in the previous paragraph. As the Advocate General noted in point 65 of his Opinion, horses are not, usually and in general, intended for use in the preparation of foodstuffs, even if some of them will be used for human and animal consumption.

57With regard to the particular situation of horses which, while not normally being intended for use in the preparation of foodstuffs, may nevertheless in some cases be supplied for consumption, it must be considered that, in the light of the EU legislature’s objective of making essential commodities cheaper for the final consumer, point 1 of Annex III must be interpreted as meaning that only the supply of a horse for slaughter in order to be used in the preparation of foodstuffs may be subject to a reduced rate of VAT.

58It must be added that, according to settled case-law, provisions which constitute a derogation from a principle must be interpreted strictly (see, inter alia, Case C‑399/93 Oude Luttikhuis and Others [1995] ECR I‑4515, paragraph 23, and Case C‑492/08 Commission v France [2010] ECR I‑0000, paragraph 35). To permit a reduced rate of VAT to be applied to every supply of a horse would be to interpret point 1 of Annex III broadly.

59Point 1 of Annex III does not therefore allow a Member State to apply a reduced rate of VAT to all supplies of live horses, whatever their intended use.

60None of the other arguments relied on by the Kingdom of the Netherlands and the two other Member States which intervened in support of the forms of order sought by the Kingdom of the Netherlands is capable of calling that conclusion into question.

61With regard, first, to Regulation No 504/2008 on methods for the identification of equidae, it is true that, under Article 20(1) of that regulation, an equine animal is to be ‘deemed to be intended for slaughter for human consumption, unless it is irreversibly declared as not so intended’ on the animal’s identification document. Article 20(2) lays down that, prior to any treatment provided for, the veterinarian responsible is to ascertain the equine animal’s status as an animal either intended for slaughter for human consumption, ‘which is the default case’, or an animal not intended for slaughter for human consumption.

62However, it must be pointed out that the purpose of Regulation No 504/2008 is very different from that of point 1 of Annex III. That regulation takes into account the fact that a horse may be consumed by humans and provides, accordingly, rules which seek to ensure that a horse which enters the human food chain is not unfit for consumption. In that context, in order to improve the administration of veterinary medicinal products, that regulation states that an equine animal is in principle intended for slaughter for human consumption.

63However, it is not possible to determine on the basis of Regulation No 504/2008 which horses will finally so be used. In addition, Article 20 of that regulation also states that a horse may be not intended for human consumption.

64In those circumstances, it cannot be inferred from Article 20 of Regulation No 504/2008 that, according to the EU legislature, a horse is normally intended for use in the preparation of foodstuffs.

65Second, with regard to the argument according to which all supplies of horses must be subject to a reduced rate of VAT pursuant to point 11 of Annex III, it must be noted that, in the Member States, horses are not used, usually and in general, in agricultural production. Reasoning analogous to that followed with regard to point 1 of that annex must therefore be applied, that is that only supplies of horses intended for use in agricultural production may be subject to a reduced rate of VAT. Point 11 of Annex III does not allow a reduced rate of VAT to be applied to all supplies of horses, any more than point 1 of that annex does.

66Third, with regard to the argument concerning the principle of neutrality of VAT, which is said to preclude the applicable VAT rate from being determined by reference to the use of the horses, it must be borne in mind that, according to settled case-law, the principle of fiscal neutrality inherent in the common system of VAT precludes treating similar goods and supplies of services, which are thus in competition with each other, differently for VAT purposes, so that those goods or supplies must be subjected to a uniform rate (see, inter alia, Case C‑267/99 Adam [2001] ECR I‑7467, paragraph 36, and Case C‑94/09 Commission v France [2010] ECR I‑0000, paragraph 40). However, taking their respective uses into account, a horse destined for slaughter is not similar to a racehorse or a pet horse where that animal is sold as such. Therefore, as pointed out by the Advocate General in point 78 of his Opinion, those categories of horses are not in competition, meaning that they can be subject to different rates of VAT.

67Accordingly, the action brought by the Commission must be considered well founded.

68Consequently, it must be held that, by applying a reduced rate of VAT to all supplies, imports and intra-Community acquisitions of horses, the Kingdom of the Netherlands has failed to fulfil its obligations under Article 12, read in conjunction with Annex H of the Sixth Directive, and under Articles 96 to 99(1) of Directive 2006/112, read in conjunction with Annex III.

Costs

69Under 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 Commission has applied for costs and the Kingdom of the Netherlands has been unsuccessful in its pleas, the latter must be ordered to pay the costs.

70In accordance with the first paragraph of Article 69(4) of the Rules of Procedure, the Federal Republic of Germany and the French Republic, which have intervened in the proceedings, must bear their own costs.

Operative part

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

1. Declares that, by applying a reduced rate of value added tax to all supplies, imports, and intra-Community acquisitions of horses, the Kingdom of the Netherlands has failed to fulfil its obligations under Article 12, read in conjunction with Annex H, 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 2006/18/EC of 14 February 2006, and under Articles 96 to 99(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, read in conjunction with Annex III thereto;

Signatures

2. Orders the Kingdom of the Netherlands to pay the costs;

3. Orders the Federal Republic of Germany and the French Republic to bear their own costs.

[Signatures]

Notes

* Language of the case: Dutch.

OPINION OF ADVOCATE GENERAL

BOT

delivered on 5 October 2010 (1)

Case C‑41/09

European Commission

v

Kingdom of the Netherlands

(VAT – Reduced rate – Supply, importation and acquisition of certain live animals (in particular, horses) which are not intended for the preparation or production of foodstuffs for human or animal consumption)

Introduction

1European Union legislation on value added tax (‘VAT’) allows Member States to apply a reduced rate to various supplies of services and supplies of goods that are specifically listed in that legislation.

2In these proceedings for failure to fulfil obligations, the European Commission claims that the Kingdom of the Netherlands has incorrectly implemented that legislation as regards horses. It claims that that Member State has applied a reduced rate to the supply of horses regardless of the purpose for which the animal is intended to be used, although, according to the Commission, the application of this reduced rate is possible only on the supply of horses intended for human or animal consumption.

3In this opinion, I will argue, first, that Union legislation should be understood to mean that the application of a reduced VAT rate to live animals is subject to the condition that these animals belong to a species that is generally or habitually intended for human or animal consumption.

4I will then argue that horses cannot be considered to be so intended, since some of them are treated as domestic animals and others as competition animals. I take this to mean that as far as horses are concerned, the application of the reduced VAT rate must be subject to the condition that the horse that is the object of the transaction is destined for human or animal consumption.

5I will therefore propose that the Court declare this action for failure to fulfil obligations to be well-founded.

I – Legal Framework

A – European Union law

6The European Union legislation on VAT that is relevant to these proceedings consists of the Sixth Council Directive 77/388/EEC (2) and Council Directive 2006/112/EC, (3) which repeals and replaces the Sixth Directive as of 1 January 2007.

7According to the first and third recitals in the preamble to Directive 2006/112, the recasting of the Sixth Directive was necessary in order to present all the applicable provisions in a clear and rational manner and in an improved structure and drafting which would not, in principle, bring about material change.

8Thus, Articles 96 to 99(1) of Directive 2006/112 correspond to the provisions of Article 12 of the Sixth Directive.

9Article 96 of Directive 2006/112 provides that:

‘Member States shall apply a standard rate of VAT, which shall be fixed by each Member State as a percentage of the taxable amount and which shall be the same for the supply of goods and for the supply of services.’

10Article 97 of that directive provides that:

‘1. From 1 January 2006 until 31 December 2010, the standard rate may not be less than 15%.

2. The Council shall decide, in accordance with Article 93 of the Treaty, on the level of the standard rate to be applied after 31 December 2010.’

11As provided in Article 98 of Directive 2006/112, in the version that applies to these proceedings:

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

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

3. When applying the reduced rates provided for in paragraph 1 to categories of goods, Member States may use the Combined Nomenclature to establish the precise coverage of the category concerned.’

12Article 99(1) of Directive 2006/112 states:

‘The reduced rates shall be fixed as a percentage of the taxable amount, which may not be less than 5%.’

13Annex III to that directive, headed ‘List of supplies of goods and services to which the reduced rates referred to in Article 98 may be applied’, comprises several points. Point 1 of that annex, which corresponds to point 1 of Annex H to the Sixth Directive, reads as follows:

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

B – National law

14Article 9 of the Netherlands Law on turnover tax (Wet op de omzetbelasting) of 28 June 1968 (4) provides that:

‘1. The tax is set at 19%.

2. By way of derogation from paragraph 2, the tax is set at:

a. 6% for the supply of goods and services appearing in Table I annexed to this Law;

…’

15Table I of the Law on turnover tax contains a list of supplies of goods and services to which a reduced rate of 6% provided for in Article 9(2)(a) of this law may be applied. Points a.1 and a.4 of Table I read as follows:

‘a.

1. foodstuffs, in particular:

a. food and beverages normally intended for human consumption;

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

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

…

4.

a. cattle, sheep, goats, pigs and horses;

b. animals other than those referred to under point (a), clearly intended for the preparation or production of the foodstuffs referred to in point 1 above, and animals clearly intended for the breeding of such animals;

c. the offal of the animals referred to under (a) and (b);

d. products clearly intended for the reproduction of the animals referred to under (a) and (b)’.

II – Pre-litigation procedure

16On 10 April 2006, the Commission sent a letter of formal notice to the Kingdom of the Netherlands relating to a possible incompatibility between the provisions of the Law on turnover tax allowing the application of a reduced VAT rate to the supply of certain live animals, in particular horses, not intended for human or animal consumption, and Article 12 of the Sixth Directive, in conjunction with Annex H to that directive.

17In its letter in reply of 27 June 2006, the Kingdom of the Netherlands recognised that the scope of the reduced VAT rate applied to the supply of certain live animals was broader than that provided for in the Sixth Directive. It stated that a draft law would be prepared in order to bring the rate applied to these animals in line with that laid down by the Sixth Directive.

18By letter of 23 October 2007, the Commission sent a reasoned opinion to the Kingdom of the Netherlands, on the ground that the said draft law had not been adopted.

19By letter of 26 November 2007, the Kingdom of the Netherlands replied to this reasoned opinion that the standing committee on finance of the second chamber of Parliament had begun debating the draft law in question.

20Having received no information from the Kingdom of the Netherlands that would allow it to conclude that this draft law had been adopted, the Commission brought this action.

III – Pleas in law and arguments of the parties

21By its application of 29 January 2009, the Commission brought an action against the Kingdom of the Netherlands seeking a declaration that, by applying a reduced VAT rate to the supply, importation and intra-Community acquisition of certain live animals, in particular horses, which are not normally intended for use in the preparation of foodstuffs for human or animal consumption, the Kingdom of the Netherlands had failed to fulfil its obligations under Article 12 of the Sixth Directive, in conjunction with Annex H to that directive (Articles 96 to 99(1) of Directive 2006/112, in conjunction with Annex III thereto).

22The Kingdom of the Netherlands claimed that the action should be dismissed and the Commission ordered to pay the costs.

23The Federal Republic of Germany and the French Republic, intervening in support of the defendant Member State, also claimed that the action should be dismissed.

24The Commission takes the view that the Law on turnover tax breaches the provisions of Articles 96 to 99(1) of Directive 2006/112, in conjunction with Annex III to that directive, because, according to the Commission, live animals, in particular horses, which are not normally intended for use in the preparation of foodstuffs, do not come under point 1 of Annex III.

25The Commission stresses that, like any other provision on the reduced VAT rate, the terms in which the goods in point 1 of Annex III are described must be subject to strict interpretation.

26The Commission points out that, according to the wording of point 1, the reduced VAT rate is applicable to foodstuffs intended for human and animal consumption. It argues that it appears from that wording that such rates can apply to live animals and to seeds, plants and other ingredients only if they are normally intended for use in the preparation of foodstuffs.

27The Kingdom of the Netherlands points out that the Commission challenges point a.4.a of Table I of the Law on turnover tax, which mentions certain types of animals covered by the reduced VAT rate. However, the Commission did not explain, during the pre-litigation procedure, which live animals, other than horses, its action concerns.

28Moreover, the Commission did not explain the reasons why these types of animals, such as cattle and pigs, are not normally intended for use as foodstuffs either.

29Therefore, according to the Kingdom of the Netherlands, the action should be dismissed as inadmissible, in so far as it concerns the application of a reduced VAT rate to certain live animals other than horses.

30As regards equine animals, the Kingdom of the Netherlands puts forward four arguments in support of the dismissal of the action.

31First, it claims that the Commission, by stating that live animals cannot be subject to a reduced VAT rate unless they are normally intended for use in the preparation of foodstuffs, is basing its argument on an incorrect interpretation of the wording of point 1 of Annex III to Directive 2006/112.

32Moreover, it argues that neither the Dutch language version nor any other language version of this provision confirms the interpretation that the expression ‘normally intended for use in the preparation of foodstuffs’ applies not only to ingredients but also to live animals, seeds and plants.

33On the contrary, from the German language version it is evident that this expression applies only to ingredients. This limitation is a logical one, given that seeds are not normally intended for use in the preparation of foodstuffs.

34Such a limitation also follows from the fact that certain ingredients, such as pepper or nutmeg, are intended for use in the preparation of foodstuffs. Live animals, on the other hand, cannot be used in the preparation of foodstuffs, as food is produced from dead animals.

35The Kingdom of the Netherlands takes this to mean that horses, as live animals, may come under the reduced VAT rate whether or not they are normally intended for use in the preparation of foodstuffs.

36Secondly, and in the alternative, the Kingdom of the Netherlands points out that the Commission has adduced no factual evidence to establish that horses are not normally intended for use in the preparation of foodstuffs.

37According to settled case-law, the Commission, when seeking a declaration by the Court that a Member State has failed to fulfil its obligations, may not rely on any presumption whatsoever.

38Thirdly, and in the further alternative, the Kingdom of the Netherlands maintains that horses are in fact normally intended for use in the preparation of foodstuffs.

39In that regard, the question should be not whether every horse supplied, taken individually, is intended for consumption, but whether a given category of animals is normally intended for use in the preparation of foodstuffs.

40The Kingdom of the Netherlands argues that the category of ‘equine animals’ is normally intended for use in the preparation of foodstuffs, even if the use to which a particular horse is put is temporarily changed. It refers to the order of 1 June 2006 in Case C‑233/05 V.O.F. Dressuurstal Jespers.

41It also refers to Article 20 of Commission Regulation (EC) No 504/2008, (5) which indicates that an equine animal is deemed to be intended for slaughter for human consumption.

42It stresses, moreover, that the position advocated by the Commission would be impossible to implement in practice, since it would make it necessary, on the supply of every horse, to verify its intended use, despite the fact that the use of the term ‘normally’ in point 1 of Annex III to Directive 2006/112 demonstrates that it was not the intention of the EU legislature to classify each horse individually.

43Fourthly, and purely in the alternative, the Kingdom of the Netherlands considers that horses are goods of a sort that is normally intended for use in agricultural production, within the meaning of point 11 of Annex III to Directive 2006/112. It alleges that a large proportion of the horses bred in the Netherlands and in the rest of Europe are to be found on farms.

44The Federal Republic of Germany adds, for its part, that making the applicable rate of VAT depend on the use to which the buyer will put the horse is contrary to the principle of the neutrality of value added tax, by virtue of which similar products must be subject to a uniform rate.

45The French Republic, which intervened in these proceedings at the oral stage, maintained on the one hand that point 1 of Annex III to Directive 2006/112 must be understood as referring to all live animals, regardless of their use, and on the other hand, that horses are in any case normally intended for human consumption.

IV – Assessment

A – On the scope of the action

46By this action, the Commission seeks a declaration by the Court that the Kingdom of the Netherlands has failed to fulfil its obligations under Union law on VAT by applying a reduced rate to the supply, importation and intra-Community acquisition of certain live animals, in particular horses, which are not normally intended for use in the preparation of foodstuffs.

47The Kingdom of the Netherlands challenged the admissibility of the action in so far as, by using the adverbial phrase ‘in particular’, it may apply to animals other than horses.

48During the hearing, the Commission explained that its action should be understood as referring only to horses. This should be acknowledged. These proceedings for failure to fulfil an obligation should therefore be examined only with regard to horses.

B – Merits

49Union law, let us recall, provides that Member States may apply a reduced VAT rate to the supply of the following goods: ‘Foodstuffs (including beverages but excluding alcoholic beverages) for human and animal consumption; live animals, seeds, plants and ingredients normally intended for use in the preparation of foodstuffs; products normally used to supplement foodstuffs or as a substitute for foodstuffs’.

50The dispute between the parties as to the interpretation of point 1 of Annex III to the directive raises two questions. First, is the reduced VAT rate applicable only to live animals intended for human or animal consumption, or to all live animals, regardless of their intended use? Secondly, if the first solution must prevail, is it none the less necessary that the animal being supplied should itself be intended for human or animal consumption, or is it sufficient that it belong to a species that is ‘normally’ intended for that purpose?

51On the first question, the Kingdom of the Netherlands is right to maintain that, from a strictly literal point of view, the wording of that provision in German and Dutch means that the reduced VAT rate is applicable to all live animals, regardless of their use, since the condition relating to use in foodstuffs applies only to ingredients. (6)

52On the other hand, this analysis is not borne out by the other language versions of the provision in question. If we examine the wording of this provision in the languages of the other Member States that took part in its drafting, (7) such as in the English version, (8) we see that the wording is clearly consistent with the Commission’s interpretation or is closer in meaning to the latter. (9)

53According to case-law, in the case of divergence between the various language versions, the provision in question must, in order to ensure uniform application within the European Union, be interpreted by reference to its general scheme and purpose. (10) It should be noted that, in this case, an examination of these two criteria confirms the interpretation put forward by the Commission.

54Thus, if we examine the general scheme of the provision in question, we see that it is made up of three phrases, each dealing with foodstuffs. Moreover, all the items on the list in the second phrase, namely, live animals, seeds and plants, may be used for feeding humans or animals, where necessary after preparation, that is, after slaughter in the case of animals.

55As a consequence, the position of this list between two phrases referring explicitly to foodstuffs leads logically to the conclusion that each item on the list is in fact subject to the condition set out at the end of the list, after the word ‘ingredients’, that it be normally used in the preparation of foodstuffs.

56Finally, this analysis is consistent with the objective sought by Annex H to the Sixth Directive or Annex III to Directive 2006/112.

57Since VAT constitutes a tax on consumption borne entirely by the final consumer, the application of a reduced rate has the effect of reducing the price of a product purchased by the consumer, thereby making it more accessible. Annex H to the Sixth Directive and Annex III to Directive 2006/112 provide a list of transactions selected by the European Union legislature as deserving of this more advantageous tax treatment for consumers.

58From this perspective, it is logical to place at the head of the list, under point 1 of these annexes, foodstuffs and therefore any ingredients used for their preparation, such as live animals. However, other animals that, according to prevailing customs in Europe, are not capable of being used for that purpose, such as domestic animals, do not come under point 1.

59If the European Union legislature had wished these items to be eligible for the reduced VAT rate as well, it would have had to add an additional category to Annex H to the Sixth Directive or to Annex III to Directive 2006/112, as indeed it does under point 11 of Annex III to Directive 2006/112 for animals intended for agricultural production.

60The objective sought by the provision at issue thus confirms, in my view, the Commission’s interpretation, according to which horses are not covered by the said provision except in so far as they are intended for the preparation of foodstuffs.

61It remains to be determined whether this condition must be verified for each particular horse. This question arises because of the use, in the second phrase in the sentence of the provision in question, of the adverb ‘normally’.

62I agree with the analysis of the Kingdom of the Netherlands according to which the use of this adverb shows that the European Union legislature intended the reduced VAT rate to apply automatically to each of the products referred to in this provision, as long as the product is habitually and generally intended for the production of foodstuffs.

63European Union law should thus be understood to mean that as long as a product or animal can be considered to be used generally and habitually for the production of foodstuffs, the reduced VAT rate may be applied to the transactions involving these products without having to verify, for each individual transaction, that this purpose is in fact respected.

64As a result, transactions involving animals such as cattle, goats or pigs may be subject to the reduced VAT rate because these animals, unlike domestic animals, are habitually and generally intended for consumption.

65However, the situation of horses is different from that of the above-mentioned animals because, unlike the latter, they are not habitually and generally intended for human consumption. While it is true that certain horses are intended for human consumption, others are treated as true domestic animals. For their holder or owner, it would be as inconceivable to eat a horse or sell it to a butcher’s shop as it would be to eat a cat or a dog.

66Most importantly, many horses are intended for use in competition. They can yield considerable profit and may thus give rise to transactions involving very high sums of money. (11)

67Admittedly, animals bred for competition may, at the end of their lives or if they fail to perform as expected, be used for slaughter. This use makes it possible for the horses to retain at least a modest value and to be cared for in an appropriate manner until their slaughter, if they are not fortunate enough to be taken in by a charitable owner who has decided to look after them until their natural death.

68The possibility of such use led the European Union legislature to make provision, in order to ensure that that use does not pose any health risk, in Regulation No 504/2008 which the Kingdom of the Netherlands relies on, that any medical treatment of a horse should be prescribed on the presumption that, unless it is irreversibly declared as not so intended on the animal’s identification document, the animal is intended for slaughter for human consumption.

69In my view, that presumption does not, however, justify subjecting to a reduced VAT rate all transactions involving horses, regardless of their use. On the one hand, that presumption can be rebutted, under Article 20 of Regulation No 504/2008, thus demonstrating that the European Union legislature recognised that not all horses are intended for slaughter for human and animal consumption. On the other hand, such a presumption as regards race horses covers only a marginal aspect, in economic terms, of the animal’s use. That presumption should not obscure the fact that horses, before being used for slaughter in some cases, are bred for purposes other than food production and are thus intended to yield considerable revenue if they are sold as competition animals or, in some cases, as pets.

70It should be remembered, therefore, that the provisions of the Sixth Directive and of Directive 2006/112 at issue here were adopted precisely in order to reduce the sale price of foodstuffs and that these provisions, allowing for a VAT rate that is lower than the standard one, must be subject to a strict interpretation. (12) Those provisions, as already indicated, are not intended to support the breeding of horses in general.

71I therefore share the view of the Commission that horses cannot be considered to be normally intended for human or animal consumption. It follows that the application of the reduced VAT rate in a transaction involving a horse must be subject to the condition that that particular horse be intended for that use.

72In response to this analysis, the Kingdom of the Netherlands and the Federal Republic of Germany argue that fulfilment of that condition would be difficult to ensure in practice. I am not convinced by that argument.

73As the Commission indicates, the use of a horse that confers the right to apply the reduced VAT rate may be determined by objective criteria such as the buyer of the horse, the horse’s breed and the price of the transaction.

74This rate must therefore be applicable, for instance, if a horse is acquired by a professional of the horsemeat industry, since the buyer’s professional activity allows one to presume the use to which the animal will be put.

75Similarly, the breed of the horse may be a relevant factor, in so far as draught horses, for example, unlike lighter horses, are for the most part intended for human consumption. Finally, and most importantly, the price may itself constitute a decisive objective criterion, given that, as the Commission pointed out during the hearing, a horse for slaughter is sold by weight, whereas the price of a horse intended for a different use is a comprehensive price determined on the basis of all the characteristics of the animal, which is often quite a high figure.

76The Federal Republic of Germany further argues that the interpretation of the provisions at issue defended by the Commission would be contrary to the principle of neutrality of VAT. I am not convinced by this argument either.

77The principle of the neutrality of VAT, which is inherent in the common system of this tax, is incompatible, according to case-law, with treating merchandise or services that are similar, and therefore in competition, differently from each other. (13)

78Making the VAT rate depend on the use to which a horse will be put does not seem to me contrary to this principle because that difference in use relates to distinct economic situations, in which the horses in question are not in competition with each other. Thus, a race horse or a pet horse, when sold as such, is not in competition with a horse for slaughter, and vice versa.

79Moreover, the fact that the same horse, at different periods in its life, may have each of these uses in succession does not seem to me to contradict this analysis, since in any one of these periods it is competing only with animals that are capable of being used for the same purpose.

80I do not believe, therefore, that reserving the application of the reduced VAT rate to those horses that are specifically intended for human or animal consumption is contrary to the principle of the neutrality of VAT.

81Moreover, the Kingdom of the Netherlands maintains that these proceedings for failure to fulfil an obligation should be rejected on the ground that the Commission failed to adduce factual evidence that horses are not normally intended for use in the preparation of foodstuffs.

82I do not believe that this argument can be upheld. The burden of proof was not on the Commission, in my view, to adduce such evidence. Even supposing that horses in the Netherlands today are bred exclusively for food, the fact remains that it is incumbent upon the Kingdom of the Netherlands to bring its legislation into line with European Union law.

83It is settled case-law that the fact that an activity covered by a directive is not carried on in a Member State does not release the Member State in question from its obligation to transpose the directive in question. (14) The fact that this activity does not exist was held not to be relevant because, according to the Court, it is important not only to anticipate a change to that factual state, but above all to guarantee in all circumstances the effective application of European Union law. In other words, the Court considered that the Member States were obliged to adopt the legal framework permitting them to ensure the effective application of the directive concerned within the period prescribed therein, even if, on the facts, that legal framework did not have to be applied immediately.

84In the light of that case-law, the fact that the breeding of horses for competition may not be carried on in the Netherlands and the fact that horses are not considered pets there would not exempt the Kingdom of the Netherlands from providing, in its legislation, that the application of a reduced VAT rate to transactions involving horses is subject to the condition that the horse in question be intended for human or animal consumption, because even if that were the case now, the situation might none the less change in future.

85In view of these facts, the Commission is justified in maintaining that, by providing for the application of a reduced VAT rate to transactions involving horses without subjecting the application of that rate to the condition that the horse that is the object of the transaction be intended for human or animal consumption, the Kingdom of the Netherlands has misconstrued Article 12 of the Sixth Directive, in conjunction with Annex H to that directive and Articles 96 to 99(1) of Directive 2006/112, in conjunction with Annex III to that directive.

86Finally, the Kingdom of the Netherlands maintains that the application of a reduced VAT rate to transactions involving horses is justified because the latter come under point 11 of Annex III to Directive 2006/112, in that they ought to be considered goods normally intended for use in agricultural production. (15) For instance, according to that Member State, a large proportion of horses bred in the Netherlands and the rest of Europe are found on farms. Similarly, the use of the adverb ‘normally’ in the text of point 11 of the annex is said to demonstrate that the temporary use of a horse as a race horse, for instance, does not constitute a ground for not applying that provision.

87The Commission contests this argument. I share its view. As the Kingdom of the Netherlands itself recognises, point 11 in Annex III to Directive 2006/112 covers goods and services intended for use in agricultural production, whereas participation in horse races does not come under that activity. A transaction involving a horse intended to participate in races does not, therefore, fall within the scope of that provision.

88As a consequence, point 11 of Annex III to Directive 2006/112 cannot be used to justify the application of a reduced VAT rate to transactions involving a horse regardless of the use to which it will be put.

89The arguments put forward by the Kingdom of the Netherlands regarding the use of the adverb ‘normally’ in the provision at issue ought not to call this analysis into question, because the reasoning concerning the meaning of this adverb in the context of point 1 of Annex III to Directive 2006/112 as regards horses can be transposed, in my view, to the interpretation of point 11 of the same annex.

90In light of all the foregoing considerations, I propose that the Court declare this action for failure to fulfil obligations to be well-founded and order the Kingdom of the Netherlands to pay the costs, as required of the unsuccessful party by Article 69(2) of the Rules of Procedure.

91The other Member States which intervened in the proceedings should be ordered to bear their own costs, pursuant to the first subparagraph of Article 69(4) of those Rules.

V – Conclusion

92In the light of the foregoing considerations, I propose that the Court should:

– declare the present action for failure to fulfil obligations admissible and well-founded in so far as it alleges that the Kingdom of the Netherlands has applied a reduced rate of value added tax to the supply, importation and intra-Community acquisition of horses without subjecting the application of that reduced rate to the condition that the horse that is the object of the transaction be intended for human or animal consumption, in breach of Article 12 of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, in conjunction with Annex H to that directive (Articles 96 to 99(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, in conjunction with Annex III to that directive);

– dismiss the remainder of the action;

– order the Kingdom of the Netherlands to pay the costs, with the Federal Republic of Germany and the French Republic bearing their own 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 1977 L 145, p. 1, ‘the Sixth Directive’).

(3) Directive of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1).

(4) Staatsblad 1968, No 329.

(5) Commission Regulation (EC) No 504/2008 of 6 June 2008 implementing Council Directives 90/426/EEC and 90/427/EEC as regards methods for the identification of equidae (OJ 2008 L 149, p. 3).

(6) In German, the provision reads as follows:

‘1. Nahrungs- und Futtermittel (einschließlich Getränke, alkoholische Getränke jedoch ausgenommen), lebende Tiere, Saatgut, Pflanzen und üblicherweise für die Zubereitung von Nahrungs- und Futtermitteln verwendete Zutaten sowie üblicherweise als Zusatz oder als Ersatz für Nahrungs- und Futtermittel verwendete Erzeugnisse’.

Similarly, the Dutch version reads:

‘(1) Levensmiddelen (met inbegrip van dranken, maar met uitsluiting van alcoholhoudende dranken) voor menselijke en dierlijke consumptie, levende dieren, zaaigoed, planten en ingrediënten die gewoonlijk bestemd zijn voor gebruik bij de bereiding van levensmiddelen, alsmede producten die gewoonlijk bestemd zijn ter aanvulling of vervanging van levensmiddelen’.

(7) The harmonisation of VAT rates and the addition of Annex H to the Sixth Directive come from Council Directive 92/77/EEC of 19 October 1992 supplementing the common system of value added tax and amending Directive 77/388/EEC (approximation of VAT rates) (OJ 1992 L 316, p. 1). This is a text adopted by the ‘Europe of Twelve’.

(8) The English version reads as follows:

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

(9) The Italian, Greek, Spanish and Portuguese versions read as follows:

‘(1) Prodotti alimentari (incluse le bevande, ad esclusione tuttavia delle bevande alcoliche) destinati al consumo umano e animale, animali vivi, sementi, piante e ingredienti normalmente destinati ad essere utilizzati nella preparazione di prodotti alimentari, prodotti normalmente utilizzati per integrare o sostituire prodotti alimentari’.

‘(1) Τα τρόφιμα (περιλαμβανομένων των ποτών, εκτός των αλκοολούχων) που προορίζονται για κατανάλωση από ανθρώπους ή από ζώα, τα ζώντα ζώα, οι σπόροι, τα φυτά και τα συστατικά που χρησιμοποιούνται συνήθως στην παρασκευή τροφίμων, τα προϊόντα που χρησιμοποιούνται συνήθως για τη συμπλήρωση ή υποκατάσταση τροφίμων’.

‘(1) Los productos alimenticios (incluidas las bebidas, pero con exclusión de las bebidas alcohólicas) para consumo humano o animal, los animales vivos, las semillas, las plantas y los ingredientes utilizados normalmente en la preparación de productos alimenticios; los productos utilizados normalmente como complemento o sucedáneo de productos alimenticios’.

‘(1) Produtos alimentares (incluindo bebidas, com excepção das bebidas alcoólicas) destinados ao consumo humano e animal, animais vivos, sementes, plantas e ingredientes normalmente destinados à preparação de alimentos, bem como produtos normalmente destinados a servir de complemento ou de substituto de produtos alimentares’.

(10) See, in particular, Case C‑263/08 Djurgården-Lilla Värtans Miljöskyddsförening [2009] ECR I‑9967, paragraphs 25 and 26 and the case-law cited there.

(11) In Deauville, France, one of the main centres in the world for the sale of race horses, the sale of 285 yearlings (young horses of 18 months) between 13 and 16 August 2010 generated a turnover of EUR 26 898 000, which represents an average price of EUR 94 379 per animal sold (www.arqana.com).

(12) See, in particular, Case C‑83/99 Commission v Spain [2001] ECR I‑445, paragraphs 18 and 19, and the case-law cited there.

(13) See, in particular, Case C‑267/99 Adam [2001] ECR I‑7467, paragraphs 36 and 41.

(14) See Case C‑339/87 Commission v the Netherlands [1990] ECR I‑851, points 22, 25 and 32; Case C‑214/98 Commission v Greece [2000] ECR I‑9601, points 22 to 27; Case C‑372/00 Commission v Ireland [2001] ECR I‑10303, point 11, and Case C‑441/00 Commission v United Kingdom [2002] ECR I‑4699, point 15.

(15) Point 11 of Annex III of Directive 2006/112 reads as follows:

‘supply of goods and services of a kind normally intended for use in agricultural production but excluding capital goods such as machinery or buildings’.