C-449/17 A & G Fahrschul-Akademie

JUDGMENT OF THE COURT (First Chamber)

14 March 2019 ( *1 )

(Reference for a preliminary ruling — Common system of value added tax (VAT) — Directive 2006/112/EC — Article 132(1)(i) and (j) — Exemption for certain activities in the public interest — School or university education — Concept — Driving school tuition provided by a driving school)

In Case C‑449/17,

REQUEST for a preliminary ruling under Article 267 TFEU from the Bundesfinanzhof (Federal Finance Court, Germany), made by decision of 16 March 2017, received at the Court on 26 July 2017, in the proceedings

A & G Fahrschul-Akademie GmbH

v

Finanzamt Wolfenbüttel,

THE COURT (First Chamber),

composed of R. Silva de Lapuerta, Vice-President of the Court, acting as President of the First Chamber, A. Arabadjiev, E. Regan (Rapporteur), C.G. Fernlund and S. Rodin, Judges,

Advocate General: M. Szpunar,

Registrar: M. Aleksejev, Head of Unit,

having regard to the written procedure and further to the hearing on 20 June 2018,

after considering the observations submitted on behalf of:

A & G Fahrschul-Akademie GmbH, by D. Hippke, Steuerberater, and A. Hüttl, Rechtsanwalt,

the German Government, by T. Henze and R. Kanitz, acting as Agents,

the Spanish Government, by S. Jiménez García, acting as Agent,

the Italian Government, by G. Palmieri, acting as Agent, assisted by F. Urbani Neri, avvocato dello Stato,

the Austrian Government, by G. Eberhard, acting as Agent,

the Portuguese Government, by L. Inez Fernandes, M. Figueiredo and R. Campos Laires, acting as Agents,

the Finnish Government, by S. Hartikainen, acting as Agent,

the European Commission, by R. Lyal and B.-R. Killmann, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 3 October 2018,

gives the following

Judgment

Legal context and the dispute

1This request for a preliminary ruling concerns the interpretation of Article 132(1)(i) and (j) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1).

2The request has been made in proceedings between A & G Fahrschul-Akademie GmbH (‘A & G’) and Finanzamt Wolfenbüttel (tax office, Wolfenbüttel, Germany; ‘the tax office’) concerning the refusal by the tax office to exempt from value added tax (VAT) services relating to motor vehicle driving tuition provided by A & G for the purpose of acquiring driving licences for vehicles in categories B and C1 referred to in Article 4(4) of Directive 2006/126/EC of the European Parliament and of the Council of 20 December 2006 on driving licences (OJ 2006 L 403, p. 18).

Legal context

EU law

Directive 2006/112

3Title IX of Directive 2006/112 is entitled ‘Exemptions’. That title contains, inter alia, a Chapter 2, headed ‘Exemptions for certain activities in the public interest’, containing Article 132, which provides, in paragraph 1 thereof, that Member States are to exempt the following transactions:

‘…

the provision of children’s or young people’s education, school or university education, vocational training or retraining, including the supply of services and of goods closely related thereto, by bodies governed by public law having such as their aim or by other organisations recognised by the Member State concerned as having similar objects;

tuition given privately by teachers and covering school or university education;

…’

Directive 2006/126

4Recital 8 of Directive 2006/126 states:

‘On road safety grounds, the minimum requirements for the issue of a driving licence should be laid down. Standards for driving tests and licensing need to be harmonised. To this end the knowledge, skills and behaviour connected with driving motor vehicles should be defined, the driving test should be based on these concepts and the minimum standards of physical and mental fitness for driving such vehicles should be redefined.’

5Article 4 of that directive provides:

‘1. The driving licence provided for in Article 1 shall authorise the driving of power-driven vehicles in the categories defined hereafter. It may be issued from the minimum age indicated for each category. A “power-driven vehicle” means any self-propelled vehicle running on a road under its own power, other than a rail-borne vehicle.

…

4. motor vehicles:

…

Category B:

motor vehicles with a maximum authorised mass not exceeding 3500 kg and designed and constructed for the carriage of no more than eight passengers in addition to the driver; motor vehicles in this category may be combined with a trailer having a maximum authorised mass which does not exceed 750 kg.

…

Category C1:

motor vehicles other than those in categories D1 or D, the maximum authorised mass of which exceeds 3500 kg, but does not exceed 7500 kg, and which are designed and constructed for the carriage of no more than eight passengers in addition to the driver; motor vehicles in this category may be combined with a trailer having a maximum authorised mass not exceeding 750 kg;

…’

German law

6In accordance with Paragraph 4(21) of the Umsatzsteuergesetz (Law on Turnover Tax), in the version published on 21 February 2005 (BGB1. 2005 I, p. 386), the following transactions covered by Paragraph 1(1)(1) of that law are exempt from tax:

the services of private schools and other general education or vocational training organisations directly serving the purpose of schooling and education,

where they are approved at federal level as substitute schools in accordance with Article 7(4) of the Basic Law (Grundgesetz) or are permitted under the law of the Land, or

where the competent authority of the Land certifies that they are in due preparation for a profession or for an examination to be taken before a legal person governed by public law,

the tuition services of independent teachers directly serving the purpose of schooling and education

for universities within the meaning of Paragraphs 1 and 70 of the Hochschulrahmengesetz (Framework Law on higher education) and public general education or vocational training schools, or

for private schools and other general education or vocational training organisations, provided they satisfy the requirements set out under letter (a);

…’

7Paragraph 6 of the Verordnung über die Zulassung von Personen zum Straßenverkehr (Regulation on the authorisation of persons to drive on the highway), in the version of 13 December 2010 (BGBl. 2010 I, p. 1980), provides:

‘(1) Driving licences are issued for the following categories:

…

Category B: [Article 4(4)(b) of Directive 2006/126]

…

Category C1: [Article 4(4)(d) of Directive 2006/126]

…’

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

8A & G operates a driving school in the legal form of a limited liability company. It did not show the amount of turnover tax due separately in the invoices which it issued. For the tax year 2010 (‘the period at issue’), it initially declared taxable transactions. The tax office relied on A & G’s turnover tax declaration.

9By letter of 22 December 2014, A & G applied for the amount owed by it in terms of VAT to be reduced to zero, a request which the tax office turned down. A & G’s objection and action against that decision of the tax office were dismissed. The Finanzgericht (Finance Court, Germany) held, inter alia, that A & G could not rely on the tax exemption referred to in Article 132(1)(j) of Directive 2006/112. The services provided by A & G, consisting in the provision of theoretical tuition and practical driving instruction, were not, that court found, covered by the concept of ‘school or university education’ within the meaning of that provision, since, by virtue of a recommendation for road safety education at school in force during the period at issue, practical driving instruction was neither a necessary nor a desirable component of such education.

10A & G contests that decision of the Finanzgericht (Finance Court) in its appeal on a point of law (‘Revision’) before the referring court, the Bundesfinanzhof (Federal Finance Court, Germany). To that end, it submits, inter alia, that the national legislature’s objective concerning driving tuition in a driving school is to educate road users to act responsibly.

11Furthermore, according to the applicant, practical driving instruction provided by a driving school and road safety training courses organised by, inter alia, the Allgemeiner Deutscher Automobil-Club (German Automobile Club) serve the same objectives. Therefore, in its view, it would be contrary to the principle of neutrality to tax those comparable activities differently.

12The referring courts states that, under national law, the services offered by A & G are not exempt, as it does not fulfil the requirements laid down in Paragraph 4(21)(a) or (b) of the Law on Turnover Tax, in the version published on 21 February 2005. However, it takes the view that A & G might be able to rely on Article 132(1)(i) or (j) of Directive 2006/112.

13In that regard, the referring court is inclined to the view that the activities of the applicant in the main proceedings come within the concept of ‘school or university education’ within the meaning of Article 132(1)(i) and (j) of Directive 2006/112.

14On the other hand, it has doubts as to whether A & G fulfils the other criteria laid down by those provisions, in so far as it is uncertain whether A & G can be recognised as ‘an organisation … having similar objects’ to bodies governed by public law for the purposes of Article 132(1)(i) of that directive or whether its activities can be regarded as coming within the scope of tuition given privately by teachers and covering school or university education within the meaning of Article 132(1)(j) of that directive.

15In those circumstances, the Bundesfinanzhof (Federal Finance Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

Does the concept of “school or university education” in Article 132(1)(i) and (j) of Directive [2006/112] cover driving school tuition to acquire category B and category C1 driving licences?

If the answer to the first question is in the affirmative, can the applicant [in the main proceedings be recognised] as “an organisation having similar objects” for the purposes of Article 132(1)(i) of Directive [2006/112] on the basis of the provisions on the driving instructor examination and the issue of a driving instruction and driving school licence in [the Gesetz über das Fahrlehrerwesen (Law on driving instructors) of 25 August 1969], and of the public interest in the training of learner drivers to be safe, responsible and environmentally aware road users?

If the answer to the second question is in the negative, does the term “tuition given privately by teachers” contained in Article 132(1)(j) of Directive [2006/112] require that the taxable person be an individual trader?

If the answers to the second and third questions are in the negative, is an instructor always providing tuition privately within the meaning of Article 132(1)(j) of Directive [2006/112] if he acts on his own account and at his own risk, or must further requirements be met to qualify as a private teacher?’

Consideration of the questions referred

The first question

16By its first question, the referring court asks, in essence, whether the concept of ‘school or university education’, within the meaning of Article 132(1)(i) and (j) of Directive 2006/112, must be interpreted as covering motor vehicle driving tuition provided by a driving school, such as that at issue in the main proceedings, for the purpose of acquiring driving licences for vehicles in categories B and C1 referred to in Article 4(4) of Directive 2006/126.

17Article 132 of Directive 2006/112 provides for exemptions which, as indicated by the title of the chapter in which that provision features, are intended to encourage certain activities in the public interest. However, those exemptions do not cover every activity performed in the public interest, but only those listed in that provision and described in great detail (judgment of 4 May 2017, Brockenhurst College, C‑699/15, EU:C:2017:344, paragraph 22 and the case-law cited).

18According to the case-law of the Court, those exemptions constitute autonomous concepts of EU law which have the purpose of avoiding divergences in the application of the VAT system from one Member State to another (see, to that effect, judgment of 26 October 2017, The English Bridge Union, C‑90/16, EU:C:2017:814, paragraph 17 and the case-law cited).

19The terms used to specify the exemptions referred to in Article 132 of Directive 2006/112 are to be interpreted strictly, since they constitute exceptions to the general principle, arising from Article 2 of that directive, that VAT is to be levied on all services supplied for consideration by a taxable person. However, that requirement of strict interpretation does not mean that the terms used to specify the exemptions referred to in Article 132 should be construed in such a way as to deprive them of their intended effect (judgment of 4 May 2017, Brockenhurst College, C‑699/15, EU:C:2017:344, paragraph 23 and the case-law cited).

20It must be recalled that Article 132(1)(i) and (j) of that directive contains no definition of the concept of ‘school or university education’.

21The Court has, however, first, taken the view that the transfer of knowledge and skills between a teacher and students is a particularly important element of educational activity (judgment of 14 June 2007, Horizon College, C‑434/05, EU:C:2007:343, paragraph 18).

22Second, the Court has stated that the concept of ‘school or university education’, within the meaning of Directive 2006/112, is not limited solely to education which leads to examinations for the purpose of obtaining qualifications or which provides training for the purpose of carrying out a professional or trade activity, but includes other activities which are taught in schools or universities in order to develop pupils’ or students’ knowledge and skills, provided that those activities are not purely recreational (judgment of 28 January 2010, Eulitz, C‑473/08, EU:C:2010:47, paragraph 29 and the case-law cited).

23In that regard, it must be noted, as the Advocate General observes in point 35 of his Opinion, that, in accordance with that settled case-law, activities which are not purely recreational are likely to be covered by the concept of ‘school or university education’ as long as the tuition is provided in schools or universities.

24Thus, the concept of ‘school or university education’ within the meaning of Article 132(1)(i) and (j) of Directive 2006/112 covers activities which are different both because of their specific nature and by reason of the framework in which they are carried out (see, to that effect, judgment of 14 June 2007, Horizon College, C‑434/05, EU:C:2007:343, paragraph 20).

25It follows that, as the Advocate General observes in points 13 to 17 of his Opinion, by that concept, the EU legislature intended to refer to a certain type of education system which is common to all the Member States, irrespective of the characteristics particular to each national system.

26Consequently, the concept of ‘school or university education’ for the purposes of the VAT system refers generally to an integrated system for the transfer of knowledge and skills covering a wide and diversified set of subjects, and to the furthering and development of that knowledge and those skills by the pupils and students in the course of their progress and their specialisation in the various constituent stages of that system.

27It is in the light of those considerations that the Court must examine whether driving tuition provided by a driving school, such as that of the applicant in the main proceedings, for the purpose of acquiring driving licences for vehicles in categories B and C1 referred to in Article 4(4) of Directive 2006/126 may be covered by the concept of ‘school or university education’ within the meaning of Article 132(1)(i) and (j) of Directive 2006/112.

28In the present case, the applicant in the main proceedings submits that the driving tuition which it provides covers the transfer of both the practical and theoretical knowledge necessary for the purpose of acquiring driving licences for vehicles in categories B and C1 and that the objective of such tuition is not purely recreational, since possession of such licences is liable to meet, inter alia, professional needs. Therefore, the tuition provided for that purpose is, it argues, covered by the concept of ‘school or university education’ referred to in Article 132(1)(i) and (j) of Directive 2006/112.

29It should be noted, however, that, even if it covers a range of practical and theoretical knowledge, driving tuition provided in a driving school, such as that at issue in the main proceedings, nevertheless remains specialised tuition which does not amount, in itself, to the transfer of knowledge and skills covering a wide and diversified set of subjects or to their furthering and development which is characteristic of school or university education.

30In the light of the foregoing, the answer to the first question is that the concept of ‘school or university education’, within the meaning of Article 132(1)(i) and (j) of Directive 2006/112, must be interpreted as not covering motor vehicle driving tuition provided by a driving school, such as that at issue in the main proceedings, for the purpose of acquiring driving licences for vehicles in categories B and C1 referred to in Article 4(4) of Directive 2006/126.

The second, third and fourth questions

31In view of the answer to the first question, there is no need to answer the second, third and fourth questions.

Costs

32Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

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

The concept of ‘school or university education’, within the meaning of Article 132(1)(i) and (j) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, must be interpreted as not covering motor vehicle driving tuition provided by a driving school, such as that at issue in the main proceedings, for the purpose of acquiring driving licences for vehicles in categories B and C1 referred to in Article 4(4) of Directive 2006/126/EC of the European Parliament and of the Council of 20 December 2006 on driving licences.

Signatures

[Signatures]

( *1 ) Language of the case: German.

OPINION OF ADVOCATE GENERAL

SZPUNAR

delivered on 3 October 2018 ¹

(Reference for a preliminary ruling — Taxation — Common system of value added tax — Directive 2006/112/EC — Article 132(1)(i) and (j) — Exemption for school or university education — Concepts of school or university education, organisations whose objects are recognised as similar, and tuition given privately by teachers — Inclusion within those concepts of driving school tuition for the acquisition of category B and category C1 driving licences — Limited liability company operating a driving school)

Introduction

1In today’s society the ability to drive a car is almost as common as the ability to read and write — almost everyone has a driving licence. However, does that justify a tax exemption for driving tuition on the same terms on which reading and writing tuition is exempt? That, in extremely simplified terms, is the issue which has been referred to the Court in the present case.

Legal framework

European Union law

2Under Article 132(1)(i) and (j) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax: ²

‘Member States shall exempt the following transactions:

…

the provision of children’s or young people’s education, school or university education, vocational training or retraining, including the supply of services and of goods closely related thereto, by bodies governed by public law having such as their aim or by other organisations recognised by the Member State concerned as having similar objects;

tuition given privately by teachers and covering school or university education.’

German law

3Article 132(1)(i) and (j) of Directive 2006/112 was transposed into German law by Paragraph 4(21) of the Umsatzsteuergesetz (Law on turnover tax). According to the information contained in the request for a preliminary ruling, that provision does not, as the law stands at present, permit an exemption for driving schools.

4Authorisation to exercise the profession of driving instructor and to operate driving schools is set out in the provisions of the Gezetz über das Fahrlehrerwesen (Law on driving instructors).

Facts, procedure and questions referred

5A & G Fahrschul-Akademie GmbH (‘A & G Fahrschul-Akademie’) is a company incorporated under German law which operates a driving school. In the tax year 2010 the company charged value added tax (VAT) on the transactions which it carried out as part of its activity. However, by letter of 22 December 2014, sent to the Finanzamt Wolfenbüttel (tax office, Wolfenbüttel, Germany), it requested that the tax rate be adjusted to zero, claiming an exemption under Article 132(1)(i) and (j) of Directive 2006/112.

6The tax office in Wolfenbüttel turned down the request made by A & G Fahrschul-Akademie. The company unsuccessfully appealed against that decision. The company therefore brought an appeal on a point of law against the judgment of the court of first instance before the referring court.

7In those circumstances, the Bundesfinanzhof (Federal Finance Court, Germany) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

Does the concept of school or university education in Article 132(1)(i) and (j) of … Directive [2006/112] cover driving school tuition to acquire category B and category C1 driving licences?

If the answer to the first question is in the affirmative: can the applicant be recognised as an organisation with similar objects for the purposes of Article 132(1)(i) of … Directive [2006/112] on the basis of the provisions on the driving instructor examination and the issue of a driving instruction and driving school licence in the Law on driving instructors …, and of the public interest in the training of learner drivers to be safe, responsible and environmentally aware road users?

If the answer to the second question is in the negative: does the term “tuition given privately by teachers” contained in Article 132(1)(j) of … Directive [2006/112] require that the taxable person be an individual trader?

If the answers to the second and third questions are in the negative: is an instructor always providing tuition privately within the meaning of Article 132(1)(j) of … Directive [2006/112] if he acts on his own account and at his own risk, or must further requirements be met to qualify as a private teacher?’

8The request for a preliminary ruling was received by the Court on 26 July 2017. Written observations were submitted by A & G Fahrschul-Akademie, the German, Spanish, Italian, Austrian, Portuguese and Finnish Governments and the European Commission. A & G Fahrschul-Akademie, the German and Spanish Governments and the Commission were represented at the hearing on 20 June 2018.

Analysis

9The national court has referred to the Court for a preliminary ruling four questions seeking to ascertain whether the activity of providing driving school tuition for the purpose of acquiring category B and category C1 driving licences can be exempt under Article 132(1)(i) or (j) of Directive 2006/112. I will address the four questions in turn. However, the answer to the first question has fundamental relevance in this regard as it will determine the answer to the other questions.

First question referred

10By its first question, the referring court seeks to ascertain whether driving school tuition for the acquisition of category B and category C1 driving licences is included within the concept of school or university education within the meaning of Article 132(1)(i) of Directive 2006/112.

11The opinions of the parties to the proceedings who have submitted observations in the present case are divided as to whether driving school tuition can be regarded as constituting school or university education. The German, Austrian, Portuguese and Finnish Governments, along with the Commission, propose, with varying degrees of emphasis, that the answer to this question should be in the negative. A & G Fahrschul-Akademie, and also the Spanish and Italian Governments, on the other hand, suggest that the answer should be in the affirmative. ³

12I concur with the former view. In my opinion, the concept of school or university education does not cover driving tuition. This is evident from both a literal and a teleological interpretation of Article 132(1)(i) of Directive 2006/112.

Wording of Article 132(1)(i) of Directive 2006/112

13It has to be acknowledged that the authors of the Polish-language version of Directive 2006/112 displayed a certain creativeness in using the phrase ‘kształcenie powszechne lub wyższe’ (general or higher education) in Article 132(1)(i). The overwhelming majority of the other language versions of that provision use an expression that should be translated instead as ‘school or university education’: ‘enseignement scolaire ou universitaire’ in the French version, ‘school or university education’ in the English version, ‘Schul- und Hochschulunterricht’ in the German version, and so on. Paradoxically, however, this terminological deviation makes it easier to understand the intention of the EU legislature as regards the scope of the exemption laid down in Article 132(1)(i) of the directive in question. It relates to education which is general, that is to say, accessible to — and at lower levels even compulsory for — everyone, and general, in the sense that it covers a very broad range of knowledge, provided as part of the school and university system which exists in every Member State. That system, which in some countries is referred to as ‘national education’ and divided into stages which can be broadly defined as primary, secondary and higher, provides the general public with a broad set of knowledge and skills which allow them to operate successfully in modern society in both the private and professional spheres.

14This system of general education is characterised by, inter alia, the fact that it is tightly and comprehensively regulated by the provisions of law. Those provisions set out the structure of the school system and the way in which schools operate, the curriculum, teachers’ qualifications and, finally, the rules on obtaining certificates.

15In most Member States this education system is based on State schools in which tuition is often free or partially free. Where tuition is free, the problem of VAT obviously does not arise. However, the system of State schools may be supplemented by private schools which provide educational services for consideration. In some cases certain educational services are also provided for consideration in State schools. In principle, those services should also be subjected to VAT. However, to avoid, on the one hand, increasing the cost of such services to the recipients and, on the other, distorting competition between State and private sector bodies, the EU legislature introduced the exemption set out in Article 132(1)(i) of Directive 2006/112 for activity defined as school or university education. Therefore, that provision must be construed as meaning that where, in the system of general (school) or higher (university) education operating in a Member State, certain services are provided for consideration, whether by State schools (‘bodies governed by public law’, according to the terminology of that provision), or private schools (‘other organisations recognised … as having similar objects’), those services are exempt from VAT.

16However, as is clear from the information contained in the request for a preliminary ruling in the present case, driving tuition is not an element of the general education system in Germany. As far as I am aware, that is also the case in the other Member States. It is a service consisting in the transfer of certain specialist skills which make it possible to obtain a licence to drive motor vehicles on public roads. That service is provided for consideration by specialised bodies such as A & G Fahrschul-Akademie, which — even though colloquially referred to as schools in some languages (‘auto-école’, ‘Fahrschule’) — do not form part of the school system of the individual Member States.

17Therefore, the concept of school or university education in Article 132(1)(i) of Directive 2006/112 does not cover services which do not come within the scope of the system of schooling in operation in the individual Member States and which are provided by bodies which do not form part of the school system of those States, such as driving tuition provided by specialist schools.

The objective of the exemption laid down in Article 132(1)(i) of Directive 2006/112

18To include driving schools within the scope of the concept of school or university education, or the exemption contained in that provision in general, would also not, in my view, be consistent with that provision’s objective.

19Article 132 of Directive 2006/112 is to be found in Chapter 2 of Title IX thereof, entitled ‘Exemptions for certain activities in the public interest’. Therefore, the justification for the exemptions set out in that article, and thus also in paragraph 1(i) thereof, is the public interest in which the activities covered by the exemptions are carried out.

20In relation to general education services at primary, secondary and higher level that public interest is quite clear. Possessing a certain set of knowledge and skills is necessary for living in modern society and is in the interest not only of each individual but also of that society as a whole in that it enables it to operate smoothly. For that reason, education to a certain level is even compulsory. However, the public interest is not limited to providing tuition only on a compulsory level. Contemporary societies could not function and develop economically, culturally and politically without a set of highly qualified persons who go significantly beyond the compulsory level of education. It is no coincidence that they are referred to as knowledge-based societies. ⁴

21For those reasons, contemporary States, including the Member States, invest very large amounts of money in maintaining and developing education systems. Therefore, it would be contradictory if they at the same time restricted access to that system by increasing the cost of the services provided within it by taxing them. It would also be contrary to the principle of equality as it would make access to the education system difficult for the less affluent. Finally, it should be recalled that the cost of educating children is normally borne by the parents. It is often a very high cost and is not a one-off but has to be borne over a long period. If that cost is going to exceed their financial capabilities, they may decide not only not to provide their children with an education, but also not to bring them into the world in the first place, which, in turn, would result in the demographic problems already familiar in many Member States.

22All of this justifies the exemption for school and university education in Article 132(1)(i) of Directive 2006/112.

23Nonetheless, as the German Government has correctly noted in its observations, it is difficult to identify a public interest which would justify exempting driving tuition from VAT. That skill is certainly very useful, but acquiring it is in the interest of individuals and not of society as a whole. That skill is not in any way a requirement for a properly functioning society, in the same way that the general public having a certain minimum level of education is.

24It is true that, under certain conditions, for example in areas with poor transport links or in order to carry out certain professions, it may simply be necessary to travel by private vehicle. However, the acquisition of the licence necessary to do so is primarily in the interest of individuals, not in the public interest, and does not justify an exemption from VAT. By the same token, essential goods such as food, clothing or housing are not exempt from VAT, or are at most subject to a lower rate. In addition, in order to travel by private vehicle it is necessary not only to obtain a licence to do so, but also to purchase a vehicle. Is it therefore necessary to exempt the purchase of motor vehicles for that reason?

25In respect of driving tuition there is also no risk of distorting competition by taxing it since there is no system of public institutions providing that type of service free of charge with which private institutions would have to compete. Unlike in the case of the school system, driving school tuition is generally provided in return for payment.

26Finally, I am unconvinced by the argument, raised in particular by A & G Fahrschul-Akademie, that there is a public interest in limiting the number of accidents, and thus improving road safety, by teaching drivers appropriately.

27Driving a vehicle on public roads naturally carries certain risks, including the danger of accidents and the consequences thereof. In order to limit those risks, the ability to drive vehicles is regulated by the State through requirements relating to the acquisition of an appropriate licence. It serves precisely to ensure that persons driving vehicles demonstrate the knowledge and skills which enable them to do so safely. The public interest in ensuring road safety is therefore safeguarded by the requirement to hold a driving licence. However, acquiring the knowledge and skills necessary to obtain such licence, by receiving driving tuition, is in the personal interest of those concerned.

28As I have pointed out above, the VAT exemptions laid down in Article 132(1) of Directive 2006/112 concern activities carried out in the public interest which is at the same time the justification for those exemptions. The provisions of this paragraph can therefore not be interpreted as including within the exemption activities which are not carried out in the public interest. This is not merely a requirement of the principle that exemptions, such as VAT exemptions, must be interpreted strictly. The VAT system is based on the general taxation of all transactions at each stage of the economic cycle, with the economic burden of the taxation transferred to the consumption stage. Every tax exemption distorts the proper functioning of that system. Therefore, those exemptions should be applied only where they are necessary or justified by a particular objective, for example lowering the cost of services provided in the public interest. However, exemptions should be avoided in situations where taxation is possible and does not conflict with particular objectives of this kind. ⁵

29For the above reasons, I consider that a VAT exemption for driving tuition services is not justified by the objectives pursued by the exemption laid down in Article 132(1)(i) of Directive 2006/112.

Case-law of the Court concerning the exemptions laid down in Article 132(1)(i) and (j) of Directive 2006/112

30I have no intention here of providing a comprehensive overview of the Court’s case-law on the VAT exemptions laid down in Article 132(1)(i) and (j) of Directive 2006/112 as, in my view, there is no need to do so. However, both the referring court and some of the parties to the proceedings, in particular A & G Fahrschul-Akademie and the Spanish and Italian Governments, point to certain findings in judgments of the Court which, in their view, could lead to different conclusions from those set out above. Therefore, certain clarifications are necessary.

31First, in Commission v Germany (C‑287/00), the Court answered the question whether scientific research activities carried out for consideration can be regarded as services closely related to university education within the meaning of Article 13.A(1)(i) of Directive 77/388/EEC. ⁶ On that occasion the Court found that the concept of services closely related to school and university education should not be interpreted in an especially strict manner. ⁷ However, in my view, no overly far-reaching conclusions can be drawn from this finding. The EU legislature intentionally used the vague term ‘closely related services’ here in order to allow, at the stage at which the law is applied, exemptions for various types of service which in practice may be related to an educational activity proper. Such services could be, for example, restaurant services if they are provided by students of an educational establishment as part of their curriculum. ⁸ Therefore, for the Court to lay down a strict definition of that term would run directly counter to the intention of the legislature and the objective of that provision. This does not mean, however, that an equally liberal interpretation should be applied to the other terms used in Article 132(1)(i) of Directive 2006/112, in particular those which, like the concept of school and university education, define the scope of the VAT exemption laid down in that provision.

32Secondly, A & G Fahrschul-Akademie and the Spanish and Italian Governments refer to a finding of the Court which is worth citing in full at this juncture. The Court found namely that the concept of school and university education within the meaning of the current Article 132(1)(i) and (j) of Directive 2006/112 ‘is not limited only to education which leads to examinations for the purpose of obtaining qualifications or which provides training for the purpose of carrying out a professional or trade activity, but includes other activities which are taught in schools or universities in order to develop pupils’ or students’ knowledge and skills, provided that those activities are not purely recreational’. ⁹

33The abovementioned parties to the proceedings deduce from that finding that every activity transferring knowledge or skills is subject to the exemption laid down in the provision under consideration, provided that it is not purely recreational. Since driving tuition clearly is not purely recreational by nature or design, that exemption must, they argue, also cover the activity of driving schools.

34However, in my opinion this reasoning is based on a selective interpretation of a passage of the Court’s judgment which has been taken out of context.

35First, that interpretation passes over the words ‘in schools or universities’ contained in the passage cited. These words refer directly to the wording of current Article 132(1)(i) and (j) of Directive 2006/112, under which, in the language versions other than Polish, school or university education is to be exempt. As I have noted in points 13 to 17 of this Opinion, that term must be interpreted as relating to the system of general education at primary, secondary and university level. Consequently, it cannot be deduced from the cited passage of the Court's judgment that an activity which is not carried out within that system can be exempt, provided that it is not purely recreational.

36Secondly, in the abovementioned cases the Court did not rule on whether specific institutions form part of that education system, ¹⁰ but on whether a particular teaching subject can be covered by the exemption. In this regard, the Court concluded that that exemption can cover not only subjects which form part of a basic course of tuition according to the curriculum in place in a particular type of school, but also other activities, provided that they are not purely recreational. However, that is all on condition that the tuition takes place within the education system in schools and universities and not entirely outside that system.

37It is true that in Haderer the Court allowed, it would appear, the exemption to cover tuition at a particular type of institution, which in Germany is known as a ‘Volkshochschule’ (adult education institute). It should, however, be noted that in that case the Court answered questions from the referring court which were based on the assumption that this kind of institution formed part of the system of school and university education for the purposes of Article 132(1)(i) and (j) of Directive 2006/112. Furthermore, the Court left it to the referring court finally to dispel the uncertainty raised by the tax authority that was a party to the main proceedings. Therefore, whilst it is possible to question whether the activities of a Volkshochschule form part of school or university education for the purposes of the provision in question, in my view there is no doubt that the activities of driving schools do not form part of that system.

38Finally, it may be concluded from the case-law of the Court that the concept of school or university education for the purposes of Article 132(1)(i) and (j) of Directive 2006/112 should not be interpreted by reference to the education systems in the individual Member States since those systems may differ from one another, and this would result in differing application of the exemptions laid down in those provisions, contrary to the objective of the directive in question. ¹¹ However, that rule cannot be regarded as absolute since Article 132(1)(i) of that directive itself inevitably refers to national education systems, stating that the exemption is to cover activities carried out ‘by bodies governed by public law having such as their aim or by other organisations recognised by the Member State concerned as having similar objects’. In the context of the present case, that finding of the Court means, in my view, merely that the fact that driving schools bear the name ‘school’ in a particular language does not automatically mean that they are recognised as providing school or university tuition for the purposes of the provision in question.

Driving tuition as vocational training

39The Spanish Government contends that driving tuition should be exempt from VAT under Article 132(1)(i) of Directive 2006/112, not as school or university education, but as vocational training. That government argues that a driving licence is necessary in order to carry out certain professions and often also to reach the workplace.

40However, I do not share that view, in any event so far as the present case is concerned.

41As the request for a preliminary ruling shows, the main proceedings concern a possible VAT exemption for driving school tuition for the acquisition of category B and category C1 driving licences. Driving licence categories are currently harmonised in EU law pursuant to Directive 2006/126/EC of the European Parliament and of the Council of 20 December 2006 on driving licences. ¹² Category B concerns cars and vans, ¹³ and category C1 light-duty trucks. ¹⁴

42As regards the category B driving licence, it is the basic category of driving licence required to drive passenger cars intended for private use. Holding that category of licence may be, as the Spanish Government notes, necessary to exercise certain professions, such as providing taxi services. However, this is so in the case of many skills, starting with the ability to read and write. Is it therefore necessary to regard writing tuition as vocational training? In my view, only an activity which leads to the acquisition of knowledge or skills used exclusively, or primarily, for the purposes of vocational activity, or, possibly, activity targeted specifically at persons intending to acquire specific skills for professional purposes, can be regarded as vocational training. On the other hand, regarding a particular kind of education as vocational training merely because the skills acquired in the course thereof can also be used for professional activity would result in a potentially unlimited extension of that concept. Taking this reasoning to the absurd extreme, acquiring any skill can be necessary in order to exercise, for example, the profession of an instructor of that skill. Therefore, I consider that driving tuition for the acquisition of category B driving licences cannot be regarded as vocational training.

43The situation regarding category C1 driving licences is more complicated. This category of licence is for driving trucks with a maximum authorised mass of up to 7.5 tonnes. These vehicles are used most frequently for the carriage of goods by road for consideration, and thus for professional activity. However, that category of licence may be necessary also for private purposes, for example to drive certain camping vehicles, since their maximum authorised mass often exceeds 3.5 tonnes. Consequently, driving school tuition for the acquisition of category C1 driving licences could be regarded as vocational training if the national court ruled, for example, that it was targeted at persons intending to carry out an activity relating to the carriage of goods by road or formed an integral part of the training of those persons. However, in the present case it is not clear from the order for reference that the referring court would make such a finding and the questions referred for a preliminary ruling expressly do not include interpretation of the term ‘vocational training’ within the context of Article 132(1)(i) of Directive 2006/112. Therefore, there are likewise no grounds, in the present case, for regarding driving school tuition for the acquisition of category C1 driving licences as amounting to vocational training.

Final observation and proposed answer

44As I have noted above, the provisions concerning driving licences are harmonised in EU law pursuant to Directive 2006/126. Article 2(1) of that directive stipulates that driving licences issued by all Member States are to be mutually recognised. This means that any person resident in the territory of the European Union may obtain a driving licence in any Member State and use it in any Member State, including in the Member State of current domicile. Therefore, driving schools in different Member States can be in direct competition with one another. For that reason, I consider it essential that the Court give an unequivocal answer to the question whether they can be covered by the VAT exemption, without reference to additional findings of the national courts, since contradictory national rulings on the exemption in question could result in distortion of that competition. Such an unequivocal ruling should be made much easier by the fact that in practice the organisation of driving tuition is, as far as I am aware, similar in all Member States, in the sense that it is based on specialised, private schools outside the general education system, which provide such tuition for consideration as their core activity.

45In the light of all the foregoing considerations, I propose that the Court’s answer to the first question should be that Article 132(1)(i) of Directive 2006/112 must be interpreted as meaning that driving school tuition for the acquisition of category B and category C1 driving licences is not covered by the concept of school or university education within the meaning of that provision.

Second question referred

46In its second question, the referring court appears to start from the premiss that recognising organisations carrying out activities relating to school or university education as having objects similar to bodies governed by public law carrying on that activity is a separate and independent condition for applying the exemption laid down in Article 132(1)(i) of Directive 2006/112. That court seeks to ascertain, in the event that the first question is answered in the affirmative, the basis on which driving tuition schools can be recognised as ‘organisations … having similar objects’.

47However, in my view those two matters are inextricably linked. As I noted above, the concept of school or university education for the purposes of the provision in question must be interpreted as covering the system of universal and general education provided in schools and universities which exists in every Member State. Every organisation providing education within that system has, in that sense, objects similar to bodies governed by public law since the wording of the provision in question is based on the assumption that that system is generally made up of bodies governed by public law. However, even if the system of school and university education in a particular Member State were based solely on bodies governed by private law, they would have to be recognised as having similar objects for the purposes of that provision and covered by the exemption. Nonetheless, if the activity of the body concerned does not come within the scope of school or university education, that body cannot, by definition, be recognised as having a similar object to bodies governed by public law providing such education, regardless of how much its activity is regulated by the law.

Third and fourth questions referred

48By its third and fourth questions, the referring court essentially seeks to ascertain whether driving school tuition organised by a body such as A & G Fahrschul-Akademie can be regarded as tuition given privately by teachers and covering school or university education for the purposes of Article 132(1)(j) of Directive 2006/112. The referring court raises these questions, it must be assumed, in the event that the answer given to the second question is in the negative and that given to the first is in the positive. In the light of the answer which I propose should be given to the first question, there is in principle no need to give an answer to the third and fourth questions. However, I consider it necessary to add certain clarifications concerning the interpretation of Article 132(1)(j) of the directive in question.

49That provision constitutes a supplement to the exemption laid down in Article 132(1)(i) of that directive. School and university education is generally provided by institutions competent to do so, broadly speaking schools and higher education establishments. Sometimes, however, certain supplementary classes, although they concern the same topics, are provided individually to specific students by individual teachers outside the normal timetable at a particular school. Furthermore, some students do not, for health or other reasons, receive tuition in the normal manner, that is to say at school, but rather individually, often at home. Such lessons would not be covered by the exemption laid down in Article 132(1)(i) of Directive 2006/112 as they are not provided by bodies governed by public law but by other organisations. Article 132(1)(j) of the directive in question serves to fill that gap.

50In my view, that gives rise to two conclusions.

51Firstly, the term ‘school or university education’ used in Article 132(1)(j) of Directive 2006/112 should be interpreted in exactly the same way as the term used in subparagraph (i) of that paragraph (1). Therefore, if, in accordance with my proposed answer to the first question referred for a preliminary ruling, the concept of school and university education does not cover driving school instruction, that applies both to Article 132(1)(i) and (j). That therefore means that schools providing such tuition cannot be covered by the exemption laid down in the latter provision, regardless of the other conditions contained therein.

52Secondly, the term ‘teacher’ used in Article 132(1)(j) of Directive 2006/112 must be interpreted literally, in accordance with the meaning of that word in general language usage. In all the languages with which I am familiar, the word ‘teacher’ (‘nauczyciel’, ‘enseignant’, ‘Lehrer’, and so forth), as the name of a profession, denotes only a natural person. ¹⁵ Therefore, a literal interpretation of the provision in question rules out the application thereof to legal persons.

53This conclusion is not undermined by the principle of tax neutrality to which the national court and also A & G Fahrschul-Akademie refer. In their view, that principle means that no distinction can be drawn between taxable persons on the basis of their legal form if they carry out the same activity.

54However, as I noted above, Article 132(1)(j) of Directive 2006/112 is a mere supplement to the exemption laid down in subparagraph (i) of that paragraph and should not be interpreted in isolation from it. The latter provision lays down an exemption for school or university education provided by bodies governed by public law and other organisations. The term ‘other organisations’ is certainly broad enough to include any legal person who carries out the above activity. ¹⁶ Therefore, if school or university education is provided by a legal person, it is exempt under Article 132(1)(i) of the directive in question, and if it is in the form of individual lessons taught by a teacher as a natural person, it is exempt under Article 132(1)(j). The principle of tax neutrality is not jeopardised in any way.

55Nor is the conclusion that Article 132(1)(j) of Directive 2006/112 concerns only natural persons undermined by the fact, raised by A & G Fahrschul-Akademie and the Italian and Austrian Governments, that, according to the case-law of the Court, an activity covered by that provision must be carried out on a person’s own account and at his own risk. ¹⁷ That is because it is not the only condition for applying that provision and all the cases in which the Court has interpreted it thus far ¹⁸ have concerned natural persons. ¹⁹ Therefore, it is not sufficient, as some of the parties concerned claim, for lessons to be provided on a person’s own account and at his own risk, it is also necessary to satisfy the other conditions for applying the provision in question, including the status of teacher, which is available only to natural persons.

56Naturally, a driving school employs instructors who are natural persons. However, that does not justify a VAT exemption for that driving school under Article 132(1)(j) of Directive 2006/112. As the Court has already held, the exemption laid down in that provision cannot apply to an activity carried out by a natural person but through a third party. ²⁰ Therefore, it would be illogical now to rule that that exemption can apply to that third party.

57Therefore, irrespective of whether or not driving tuition constitutes school or university education, an organisation which organises such tuition, such as A & G Fahrschul-Akademie, is not a teacher for the purposes of Article 132(1)(j) of Directive 2006/112 and the VAT exemption laid down therein does not apply to it. The position might possibly be different in the case of driving school instructors who gave individual driving lessons on their own account and at their own risk. However, the questions referred for a preliminary ruling in the present case do not concern such a situation.

Conclusion

58In the light of all the above considerations, I propose that the following answer should be given to the questions referred for a preliminary ruling by the Bundesfinanzhof (Federal Finance Court, Germany):

Article 132(1)(i) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that driving school tuition for the purpose of acquiring category B and category C1 driving licences is not covered by the concept of school or university education within the meaning of that provision.

¹ Original language: Polish.

² OJ 2006 L 347, p. 1.

³ More precisely, the Spanish Government proposes that the Court should rule that driving tuition is covered by the exemption laid down in Article 132(1)(i) of Directive 2006/112 as vocational training. I will address that matter in the final part of my analysis of the first question referred.

⁴ See, for example, UNESCO, Towards Knowledge Societies, 2005.

⁵ See, to that effect, most recently, judgment of 21 September 2017, Aviva (C‑605/15, EU:C:2017:718, paragraphs 28 to 30 and the case-law cited).

⁶ Sixth Council 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), repealed and replaced by Directive 2006/112. Article 13.A(1)(i) of that directive corresponds to Article 132(1)(i) of Directive 2006/112.

⁷ Judgment of 20 June 2002, Commission v Germany (C‑287/00, EU:C:2002:388, paragraph 47).

⁸ See judgment of 4 May 2017, Brockenhurst College (C‑699/15, EU:C:2017:344, operative part).

⁹ Judgments of 14 June 2007, Haderer (C‑445/05, EU:C:2007:344, paragraph 26), and of 28 January 2010, Eulitz (C‑473/08, EU:C:2010:47, paragraph 29).

¹⁰ See, in particular, judgment of 14 June 2007, Haderer (C‑445/05, EU:C:2007:344, paragraph 27), in which the Court expressly left it to the referring court to verify this matter afresh.

¹¹ See, in particular, judgment of 14 June 2007, Haderer (C‑445/05, EU:C:2007:344, paragraphs 25 and 26).

¹² OJ 2006 L 403, p. 18.

¹³ ‘Motor vehicles with a maximum authorised mass not exceeding 3500 kg and designed and constructed for the carriage of no more than eight passengers in addition to the driver …’ (Article 4(4)(b) of Directive 2006/126).

¹⁴ ‘Motor vehicles other than those in categories D1 or D, the maximum authorised mass of which exceeds 3500 kg, but does not exceed 7500 kg, and which are designed and constructed for the carriage of no more than eight passengers in addition to the driver …’ (Article 4(4)(d) of Directive 2006/126).

¹⁵ See, to that effect, judgment of 7 September 1999, Gregg (C‑216/97, EU:C:1999:390, paragraph 14).

¹⁶ See, to that effect, judgment of 7 September 1999, Gregg (C‑216/97, EU:C:1999:390, paragraph 17).

¹⁷ Judgment of 14 June 2007, Haderer (C‑445/05, EU:C:2007:344, paragraph 30 and the operative part).

¹⁸ To be precise, the interpretation of its equivalent under Directive 77/388.

¹⁹ It is true that in the case in which the judgment of 28 January 2010, Eulitz (C‑473/08, EU:C:2010:47) was delivered the taxable person and claimant in the main proceedings was a legal person (company). However, as the Court itself noted in that judgment (paragraph 19), the activity at issue was not carried out by that legal person, but by one of its partners as a graduate engineer. The Court reiterated that in the operative part (see paragraph 2 of the operative part).

²⁰ Judgment of 28 January 2010, Eulitz (C‑473/08, EU:C:2010:47, paragraph 2 of the operative part).