C-620/21 MOMTRADE RUSE

JUDGMENT OF THE COURT (Seventh Chamber)

11 May 2023 ( *1 )

(Reference for a preliminary ruling – Common system of value added tax (VAT) – Directive 2006/112/EC – Article 132(1)(g) – Exemption for the supply of services closely linked to welfare and social security work, by bodies recognised by the Member State concerned as being devoted to social wellbeing – Supply of services provided to a non-taxable person in a Member State other than that in which the supplier is established – Assessment of the nature of the services and the condition of being a body recognised as being devoted to social wellbeing – Determination of the relevant national law – Concept of ‘Member State concerned’)

In Case C‑620/21,

REQUEST for a preliminary ruling under Article 267 TFEU from the Varhoven administrativen sad (Supreme Administrative Court, Bulgaria), made by decision of 27 September 2021, received at the Court on 6 October 2021, in the proceedings

MOMTRADE RUSE OOD

v

Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’ Varna pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite,

THE COURT (Seventh Chamber),

composed of M.L. Arastey Sahún (Rapporteur), President of the Chamber, F. Biltgen and J. Passer, Judges,

Advocate General: J. Kokott,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

the Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’ Varna pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite, by S. Petkov,

the European Commission, by D. Drambozova and J. Jokubauskaitė, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 1 December 2022,

gives the following

Judgment

Legal context and the dispute

1This request for a preliminary ruling concerns the interpretation of Article 132(1)(g) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1), as amended by Council Directive 2008/8/EC of 12 February 2008 (OJ 2008 L 44, p. 11) (‘the VAT Directive’).

2The request has been made in proceedings between MOMTRADE RUSE OOD (‘Momtrade’) and the Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’ Varna pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite (Director of the ‘Appeals and Tax/Social Insurance Practice’ Directorate, for the city of Varna, within the Central Administration of the National Revenue Agency, Bulgaria) (‘the Direktor’) relating to a value added tax (VAT) assessment notice.

Legal context

European Union law

The VAT Directive

3Article 45 of the VAT Directive states:

‘The place of supply of services to a non-taxable person shall be the place where the supplier has established his business. However, if those services are provided from a fixed establishment of the supplier located in a place other than the place where he has established his business, the place of supply of those services shall be the place where that fixed establishment is located. In the absence of such place of establishment or fixed establishment, the place of supply of services shall be the place where the supplier has his permanent address or usually resides.’

4Title IX of the VAT Directive relates to VAT exemptions.

5Chapter 1 of Title IX, entitled ‘General provisions’, includes Article 131 of the Directive, according to which:

‘The exemptions provided for in Chapters 2 to 9 shall apply without prejudice to other Community provisions and in accordance with conditions which the Member States shall lay down for the purposes of ensuring the correct and straightforward application of those exemptions and of preventing any possible evasion, avoidance or abuse.’

6Chapter 2 of Title IX, entitled ‘Exemptions for certain activities in the public interest’, comprises Articles 132 to 134 of the VAT Directive.

7Article 132(1)(g) of the VAT Directive provides:

‘Member States shall exempt the following transactions:

…

the supply of services and of goods closely linked to welfare and social security work, including those supplied by old people’s homes, by bodies governed by public law or by other bodies recognised by the Member State concerned as being devoted to social wellbeing.’

8Article 133 of the directive reads as follows:

‘Member States may make the granting to bodies other than those governed by public law of each exemption provided for in points (b), (g), (h), (i), (l), (m) and (n) of Article 132(1) subject in each individual case to one or more of the following conditions:

the bodies in question must not systematically aim to make a profit, and any surpluses nevertheless arising must not be distributed, but must be assigned to the continuance or improvement of the services supplied;

those bodies must be managed and administered on an essentially voluntary basis by persons who have no direct or indirect interest, either themselves or through intermediaries, in the results of the activities concerned;

those bodies must charge prices which are approved by the public authorities or which do not exceed such approved prices or, in respect of those services not subject to approval, prices lower than those charged for similar services by commercial enterprises subject to VAT;

the exemptions must not be likely to cause distortion of competition to the disadvantage of commercial enterprises subject to VAT.

…’

9Article 134 of the same directive reads as follows:

‘The supply of goods or services shall not be granted exemption, as provided for in points (b), (g), (h), (i), (l), (m) and (n) of Article 132(1), in the following cases:

where the supply is not essential to the transactions exempted;

where the basic purpose of the supply is to obtain additional income for the body in question through transactions which are in direct competition with those of commercial enterprises subject to VAT.’

Directive 2008/8

10Recitals 3 and 5 of Council Directive 2008/8/EC of 12 February 2008 amending Directive 2006/112/EC as regards the place of supply of services (OJ 2008 L 44, p. 11) state:

For all supplies of services the place of taxation should, in principle, be the place where the actual consumption takes place. If the general rule for the place of supply of services were to be altered in this way, certain exceptions to this general rule would still be necessary for both administrative and policy reasons.

…

Where services are supplied to non-taxable persons, the general rule should continue to be that the place of supply of services is the place where the supplier has established his business.’

Bulgarian law

The Constitution of the Republic of Bulgaria

11Article 26(2) of the Constitution of the Republic of Bulgaria provides:

‘Foreigners residing in the Republic of Bulgaria shall be vested with all rights and obligations proceeding from this Constitution, except those rights and duties for which Bulgarian citizenship is required by this Constitution or by another law.’

The Tax and Social Security Code of Procedure

12Article 122(1) of the Danachno-osiguritelen protsetsualen kodeks (Tax and Social Security Code of Procedure), in the version applicable to the facts of the main proceedings, states:

‘The tax administration may apply the amount of tax determined in accordance with the relevant law under the tax base referred to in paragraph 2 that it determines itself, in the following circumstances:

…

3where false or inaccurate documents were used in the accounts;

4in the absence of accounts kept in accordance with the [Zakon za schetovodsvoto (Law on accounting)], where accounts are not submitted or where the taxable amount cannot be determined from the accounts submitted and where the necessary documentation for determining the taxable amount or calculating outstanding social security contributions have been irregularly destroyed.

…’

The ZDDS

13Under Article 21(1) of the Zakon za danaka varhu dobavenata stoynost (Law on value added tax) (DV No 63 of 4 August 2006), in the version applicable to the facts of the main proceedings (‘the ZDDS’):

‘Where the customer is a non-taxable person, the place of supply of services is the place where the supplier has established his independent economic activity.’

14Article 38 of the ZDDS reads as follows:

‘(1) Exempt transactions are those referred to in this chapter.

(2) Intra-Community transactions that are exempt under the present chapter, where they are carried out in the national territory, are also exempted.

(3) Any intra-Community acquisition of goods whose delivery in the national territory is exempted under the present chapter is also exempt from the tax.

…’

15Article 40 of the ZDDS provides:

‘An exempt transaction is:

1the supply of social services within the meaning of the [Zakon za sotsialnoto podpomagane (Law on social assistance)];

…’

16Article 67 of the ZDDS provides:

‘(1) The amount of the tax is determined by multiplying the taxable amount by the tax rate.

(2) Where, during the negotiation of the transaction, it is not explicitly stated that the tax is separately payable, it is considered as being included in the agreed price.

(3) The tax is also considered as being included in the price stated in the case of the provision of goods subject to a supply in retail trade.

…’

The ZSP

17Article 16 of the Zakon za sotsialno podpomagane (Law on Social Assistance) (DV No 56 of 19 May 1998), in the version applicable to the facts of the main proceedings (‘the ZSP’), states:

‘(1) The supply of social services are based on social work centred on care of the person for:

1the carrying out of day-to-day activities;

2social inclusion.

(2) The social services are provided on the basis of an individual assessment of the needs and taking account of the wishes and personal choices of the person.

…’

18Article 18 of the ZSP provides, in the version applicable to the facts of the main proceedings:

‘(1) Social services are provided by:

1the State;

2the municipal authorities;

3Bulgarian natural persons, registered in accordance with the [Targovski zakon (Commercial Code)], and legal persons;

4natural persons carrying out a commercial activity and legal persons registered according to the law of another Member State of the European Union or of another Member State of the European Economic Area [(EEA)].

(2) Persons referred to in points 3 and 4 of paragraph 1 may only provide social services upon entry in the register of the [Agentsia za sotsialno podpomagane (Agency for social assistance)].

(3) Persons referred to in points 3 and 4 of paragraph 1 may provide social services for children up to the age of 18 years upon being granted a licence and entry in the register referred to in paragraph 2.

(4) the detailed rules for registration are set out by the implementing regulations of the law.’

19Paragraph 1 of the supplemental provisions of the ZSP, in the version applicable to the facts of the main proceedings, provides:

‘Under the present law, the following definitions shall apply:

…

6“social services” means activities to support people and increase their opportunities to lead an independent life; they are carried out by specialised institutions and in the community;

7“social services in the community” means services provided within a family or family related environment.

…’

ZSP Implementing Regulations

20Article 40 of the Pravilnik za prilagane na ZSP (ZSP Implementing Regulations), in the version applicable to the facts of the main proceedings, states:

‘(1) Persons wishing to avail themselves of social services must submit a written request in accordance with where they are currently residing, respectively to:

1the director of the social assistance service, for the social services falling within the delegated activities of the State in accordance with Annex No 9;

2the mayor of the municipal district, for the social services falling within the municipality;

3the managing body where the supplier of social services is a natural person, registered in accordance with the Commercial Code, or a legal person.

(2) The following shall be attached to the application referred to in paragraph 1:

1an identity document (for reference);

2a copy of their personal medical file, if available;

3a copy, if available, of a decision of the Lekarska consultativna comitsia (LKK) [Consultative medicines commission (LKK)], of the Teritorialna ekspertna lekarska comitsia (TELK) [Expert commission on local health (TELK)], of the Natsionalna ekspertna lekarska comitsia (NELK) [Expert commission on national health (NELK)].

(3) The supplier of social services may, if necessary, request other documents.

(4) On the basis of the accompanying documents, as well as in the cases referred to in Article 27(7), the authority referred to in points 1 to 3 of paragraph 1, within 20 days, makes a social services needs assessment of the person, in accordance with Annex No 10, and records it in a project report consistent with the model contained in Annex No 8. In the cases referred to in Article 27(7) the person submits their request after the social assessment.

…’

21Article 40d of those regulations reads as follows:

‘(1) The suppliers of social services set out an individual plan upon evaluating the needs of each recipient and the definition of the objectives to be attained.

(2) The plan referred to in paragraph 1 comprises activities to meet:

1day-to-day needs;

2healthcare needs;

3education needs;

4rehabilitation needs;

5needs in relation to free time;

6needs in relation to contact with family, friends, relatives and other persons.

…’

22Article 40e of those regulations provides:

‘(1) The supplier of social services shall keep a client register.

(2) The register shall contain the following information:

1the name, domicile and/or current address, date of birth and family situation of the recipients;

2the measure on accommodation or admission to the social service;

3the name, domicile and/or current address and phone number of a guardian, a curator or a close parent of the recipients;

4the name, address and telephone number of the medical practitioner of the recipients;

5the date of accommodation or admission to the social service;

6the date of leaving;

7the date, time and cause of death where the recipient died in a specialised establishment or where it relates to a social supply in the community.

(3) The supplier shall keep a numbered, sealed and stamped book with the stamp of the specialised institution containing:

1the inventory of money and items of value provided by residents for safe-keeping;

2the date on which the money and items of value were lodged;

3the date on which an amount of money or items of value were returned to the residents or were used in their name, at their request, as well as the use made of them;

4the name and role of the person responsible for the safe-keeping of the money and other items of value.’

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

23Momtrade is a limited liability company established in the territory of the Republic of Bulgaria. That company is registered for VAT in that Member State since 24 June 2014. In addition, it is registered with the social assistance agency as a supplier of social services and has certificates of registration for personal care, welfare and home help for elderly people.

24The recipients of the services supplied by Momtrade are elderly people living in Germany and Austria. In accordance with the contracts concluded between that company and its clients, the supply of services consists in the provision of care to individuals and home help services. The various obligations of the supplier are described in detail in a questionnaire annexed to the contracts drawn up by an agency registered in Germany or Austria that is responsible for finding clients and referring them to the company. Those obligations include home help and home care for elderly people suffering from health issues.

25In the course of an audit carried out by the Bulgarian tax authorities concerning the period from 24 June 2014 to 31 December 2015, the Bulgarian tax authorities considered that as services supplied by Momtrade had been actually carried out on the territories of the Federal Republic of Germany and the Republic of Austria, in order to rely on the VAT exemption under Article 40(1) of the ZDDS, that company had to submit evidence demonstrating the social wellbeing, in accordance with German and Austrian legislation, of the supply of services in the territory of those Member States during that period.

26The Bulgarian tax authorities, having found that Momtrade had not submitted such evidence, issued a notice of assessment on 4 October 2018 in relation to that company establishing a VAT debt for that period. That notice was confirmed by the Direktor.

27Momtrade brought an appeal before the Administrativen sad Ruse (Administrative Court, Ruse, Bulgaria) to challenge the notice of assessment referred to in the preceding paragraph. That court reduced the amount of the debt set out in that notice while confirming the remainder of the notice. In that context, after finding that Article 40(1) of the ZDDS had transposed Article 132(1)(g) of the VAT Directive, the Administrativen sad Ruse (Administrative Court, Ruse) confirmed the lack of social wellbeing of the services provided by Momtrade in the territories of the Federal Republic of Germany and the Republic of Austria on the ground that that company had not produced official documents issued by the competent authorities of those Member States demonstrating social wellbeing.

28The judgment given by the Administrativen sad Ruse (Administrative Court, Ruse) was the subject of two appeals brought, respectively, by the Direktor and by Momtrade before the referring court, the Varhoven administrativen sad (Supreme Administrative Court, Bulgaria).

29That court states that, in accordance with its case-law, Article 132(1)(g) of the VAT Directive must be interpreted as meaning that it does not oblige Member States to exempt supplies of social services carried out for nationals of another Member State outside of their territory. That interpretation is based on Article 26(2) of the Constitution of the Republic of Bulgaria.

30The referring court takes the view that, first, in order to attain the objective pursued by Article 132 of the VAT Directive, it is irrelevant whether the suppliers and recipients of services capable of being exempted from VAT remain or are established in the territory of one Member State or of two Member States.

31Secondly, in so far as the recipients of the supply of services are natural persons, namely non-taxable persons, the place of supply of those services is the place where the supplier has established its business, in the present case the territory of the Republic of Bulgaria. Accordingly, if the interpretation of Article 132(1)(g) of the VAT Directive found by the Varhoven administrativen sad (Supreme Administrative Court) were correct, the suppliers of social services established in Bulgaria would be subject to a difference in tax treatment according to whether they supply services in the territory of the Republic of Bulgaria or in the territory of another Member State to the benefit of foreign nationals, which, in the opinion of the referring court, appears unacceptable, even in the absence of full fiscal harmonisation in VAT.

32In those circumstances, the Varhoven administrativen sad (Varhoven Administrative Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

Can Article 132(1)(g) of the VAT Directive be interpreted as meaning that it allows a commercial company registered as a social service provider in one Member State (in this case, [the Republic of] Bulgaria) to rely on that provision in order to obtain a tax exemption for the social services which it provides in the territory of other Member States to [natural persons] who are nationals of those States? Is the answer to that question affected by the fact that the recipients of the services were referred to the provider by commercial companies registered in the Member States in which the services are provided?

If Question 1 is answered in the affirmative, by what criteria and law (Bulgarian and/or Austrian and German law) is it necessary to assess, for the purposes of the interpretation and application of the aforesaid provision of EU law, whether the company audited is an “[body] recognised as being devoted to social wellbeing” and whether it has been proven that the services are “closely linked to welfare and social security work”?

Based on that interpretation, does the fact that a commercial company is registered as a provider of social services, as defined by national law, suffice in order for that company to be classed as a [body] “recognised by the Member State concerned as being devoted to social wellbeing”?’

Admissibility of the request for a preliminary ruling

33The Direktor challenges the admissibility of the present request for a preliminary ruling on the grounds that, first, the replies to the questions submitted by the referring court do not leave any doubt, with regard not only to the clarity of Articles 132 and 133 of the VAT Directive but also to the case-law of the Court regarding those provisions and, secondly, that those questions are hypothetical.

34In that regard, it should be noted, in the procedure established by Article 267 TFEU, it is solely for the national court before which the action has been brought, and which must assume responsibility for the subsequent judicial decision, to determine, in the light of the particular circumstances of the case, both the need for a preliminary ruling enabling it to deliver its judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions referred by the national court concern the interpretation of EU law, the Court is, in principle, bound to give a ruling. The Court may refuse to rule on a question referred by a national court for a preliminary ruling only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main proceedings or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (judgment of 31 January 2023, Puig Gordi and Others, C‑158/21, EU:C:2023:57, paragraphs 50 and 51 and the case-law cited).

35In the present case, the questions raised by the referring court, which are raised in proceedings between a company and a national tax authority refusing to exempt that company from VAT under Article 132(1)(g) of the VAT Directive, relate to that exemption’s conditions of application and, in particular, to the interpretation of the concepts of ‘organisations recognised as being devoted to social wellbeing’ and ‘services … closely linked to welfare and social security work’, within the meaning of that provision, in order to enable the referring court to determine whether the supply of services by that company are VAT exempt and to rule thus on the lawfulness of the tax notice at issue in the main proceedings.

36In those circumstances, it does not appear that the interpretation of EU law that is sought bears any relation to the actual facts of the dispute in the main proceedings or its purpose, nor that the problem raised by the referring court is hypothetical, as the Court has before it the factual and legal material necessary to give a useful answer to the questions submitted to it.

37The fact that, according to the Direktor, the interpretation of Article 132(1)(g) of the VAT Directive does not leave any room for doubt and does not have any bearing on the admissibility of those questions.

38As the Court has already held, even if the reply to the questions referred does not leave room for any reasonable doubt, those questions do not for that reason become inadmissible (judgment of 27 March 2014, Consejería de Infraestructuras y Transporte de la Generalitat Valenciana and Iberdrola Distribución Eléctrica, C‑300/13, not published, EU:C:2014:188, paragraph 18 and the case-law cited).

39It follows that the request for a preliminary ruling is admissible.

Consideration of the questions referred

The first question

40By its first question, the referring court asks, in essence, first, whether Article 132(1)(g) of the VAT Directive must be interpreted as meaning that the supplies of social services provided to natural persons residing in a Member State other than that where the supplier has established its business are capable of being exempted under that provision and, secondly, whether the fact that that supplier has had recourse to a company established in that other Member State to contact its clients has a bearing on that interpretation.

41Under Article 132(1)(g) of the VAT Directive, Member States exempt the supply of services and of goods closely linked to welfare and social security work, including those supplied by old people’s homes, by bodies governed by public law or by other bodies recognised by the Member State concerned as being devoted to social wellbeing.

42In accordance with settled case-law of the Court, in interpreting a provision of EU law, it is necessary to consider not only its wording but also the context in which it occurs and the objectives pursued by the rules of which it is part (judgment of 7 April 2022, I (VAT exemption for hospital services), C‑228/20, EU:C:2022:275, paragraph 33 and the case-law cited).

43In that regard, in the first place, it follows from the wording of Article 132(1)(g) of the VAT Directive that the benefit of an exemption referred to in that provision is subject to two cumulative conditions, namely, first, that concerning the nature of the services provided, which must be closely linked to welfare and social security work, and, secondly, that concerning the supplier of the services, which must be a body governed by public law or another body recognised as being devoted to social wellbeing by the Member State concerned.

44Article 132(1)(g) of the VAT Directive does not, therefore, make the granting of the exemption concerned dependent on any condition relating to the place where the supply of services referred to in that provision must be actually carried out. Furthermore, that provision does not make the benefit of such an exemption dependent on the condition that the supplier and customer of those services are established in the same Member State.

45In those circumstances, it cannot be inferred from the terms of Article 132(1)(g) of the VAT Directive that, where the services are actually carried out in a Member State other than that where the supplier established its business, the services referred to in that provision are excluded from the benefit of exemption provided for by that provision.

46In the second place, as regards the context of which Article 132(1)(g) of the VAT Directive forms part, that provision is to be found in Chapter 2 entitled ‘Exemptions for certain activities in the public interest’, of Title IX of that directive, that contains Articles 132 to 134 of that directive. The heading of that chapter indicates that it is the public interest nature of transactions referred to in that chapter that is the aspect considered by the EU legislature as being the decisive factor for the purpose of exempting transactions from VAT. The fact that those transactions are actually carried out in the territory of one Member State more than another Member State is not relevant to that public interest nature.

47Furthermore, it should be recalled, first, that the first subparagraph of Article 133 of the VAT Directive makes the granting by Member States of the exemption provided for in Article 132(1)(g) of that directive subject to one or more of the conditions referred to therein, conditions that relate to the objectives pursued by private bodies supplying the services covered by that exemption, their management and prices charged by those bodies.

48Secondly, Article 134 of the VAT Directive excludes from the benefit of the exemption the supply of services provided for in Article 132(1)(g) of the VAT Directive where the supply of services is not essential to the transactions covered by welfare and social security work or where the basic purpose of the supply is to obtain additional income for the body in question through transactions which are in direct competition with those provided by commercial enterprises subject to VAT.

49Since Articles 133 and 134 of the VAT Directive do not provide for restrictions as regards the place where the supply of services concerned are actually carried out, the Member States cannot have the right to exclude from the benefit of the exemption the supply of services provided for in Article 132(1)(g) of the VAT Directive where they are actually carried out in a Member State other than that where the supplier is established (see, by analogy, judgment of 19 December 2013, Bridport and West Dorset Golf Club, C‑495/12, EU:C:2013:861, paragraph 27 and the case-law cited).

50As regards, in the third place, the objective of the exemption provided for in Article 132(1)(g) of the VAT Directive, it is intended, by treating certain supplies of public-interest services in the social sector more favourably for purposes of VAT, to reduce the cost of those services and thus to make them more accessible to the individuals who may benefit from them (judgment of 8 October 2020, Finanzamt D, C‑657/19, EU:C:2020:811, paragraph 29 and the case-law cited).

51An interpretation of Article 132(1)(g) of the VAT Directive restricting the scope of the exemption that it sets out to solely supplies of services actually carried out in the Member State where the supplier is established would be contrary to the objective set out in the preceding paragraph provided that the supply of services satisfies the two conditions referred to in that provision, provided in a Member State other than that where the supplier is established to people in need of assistance or care, are subject to VAT, which would necessarily have the effect of increasing the cost of the services concerned, accordingly making it more difficult for those people to have access to those services.

52Accordingly, it follows from a literal, systematic and teleological interpretation of Article 132(1)(g) of the VAT Directive that the exemption provided for in that provision applies to any supply of services satisfying the two conditions stated in that provision and recalled in paragraph 43 of the present judgment, without regard to whether such a supply is actually carried out in the Member State where the supplier is established or in another Member State.

53Finally, it follows from the foregoing considerations that a supplier who carries out services closely linked to welfare and social security work and that are provided to natural persons residing in a Member State other than where that supplier is established, had recourse to an intermediary established in that other Member State to contact its clients is irrelevant for the purpose of determining whether the supply of services at issue can be exempted under Article 132(1)(g) of the VAT Directive.

54As the European Commission has noted, in such a case, the supply of services closely linked to welfare and social security work provided by the supplier to natural persons, on the one hand, and the supply of services provided by the intermediary called for by the supplier, on the other hand, are separate and independent transactions that must therefore be assessed separately and be subject to a different tax treatment.

55Having regard to the foregoing considerations, the answer to the first question is that Article 132(1)(g) of the VAT Directive must be interpreted as meaning that, first, the supplies of social services provided to natural persons residing in a Member State other than that where the supplier has established its business are capable of being exempted under that provision and, secondly, it is irrelevant in that regard whether that supplier has had recourse to a company established in that other Member State to contact its clients.

The second question

56By its second question, the referring court asks, in essence, whether Article 132(1)(g) of the VAT Directive must be interpreted as meaning that, where a company provides the supply of social services to natural persons residing in a Member State other than that where that company established its business, the nature of those supplies and the characteristics of that company for the purpose of determining whether those supplies fall within the concept of ‘services … closely linked to welfare and social security work … by … [a body recognised] by the Member State concerned as being devoted to social wellbeing’, within the meaning of that provision, must be examined in accordance with the law of the Member State where the company has established its business or in accordance with the law of the Member State where the supplies at issue are actually carried out.

57It should be recalled that the exemptions referred to in Article 132 of the VAT Directive 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 (judgment of 28 April 2022, Happy Education, C‑612/20, EU:C:2022:314, paragraph 27 and the case-law cited), and that the same is true concerning the specific conditions laid down for those exemptions to apply and the concepts and terms used to specify those conditions (see, to that effect, judgments of 26 May 2005, Kingscrest Associates and Montecello, C‑498/03, EU:C:2005:322, paragraphs 23 and 27, and of 5 October 2016, TMD, C‑412/15, EU:C:2016:738, paragraphs 24 and 25).

58As the Court has already held, although the introductory sentence of Article 131 of the VAT Directive states that Member States are to lay down the conditions for exemptions in order to ensure the correct and straightforward application of the exemptions and to prevent any possible evasion, avoidance or abuse, those conditions cannot affect the definition of the subject matter of the exemptions envisaged (judgment of 26 May 2005, Kingscrest Associates and Montecello, C‑498/03, EU:C:2005:322, paragraph 24 and the case-law cited).

59As regards, in the first place, the requirement referred to in Article 132(1)(g) of the VAT Directive that the supply of services must be closely linked to welfare and social security work, it should be recalled that, in accordance with the case-law of the Court, that requirement must be read in the light of Article 134(a) of the VAT Directive, which requires, in any event, that the supply of goods or services concerned be essential to the transactions relating to welfare and social security work (judgment of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA, C‑846/19, EU:C:2021:277, paragraph 59 and the case-law cited).

60Furthermore, the Court has held that the provision of care and home help by an out-patient care service to persons in a state of physical or economic dependence is in principle closely linked to welfare and social security work within the meaning of Article 132(1)(g) of the VAT Directive. Similarly, the supply of services provided to persons in a state of mental dependence and intended to protect them in civil matters must also be regarded as such where those persons are not in a position to do so themselves without running the risk of damaging their own financial or other interests, that risk precisely justifying the finding that they lack legal capacity (judgment of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA, C‑846/19, EU:C:2021:277, paragraphs 62 and 63 and the case-law cited).

61Therefore, where a body governed by public law or a private entity recognised as a body devoted to social wellbeing for the purposes of Article 132(1)(g) of the VAT Directive supplies services such as those referred to in the preceding paragraph for persons in a state of physical, economic or mental dependence, the Member State where the VAT is due, in accordance with that provision, is required to exempt those supplies from VAT.

62Thus, in such circumstances, that Member State cannot, without (negatively) affecting the autonomous interpretation that must be given to that concept of the ‘supply of services … closely linked to welfare and social security work’ referred to in Article 132(1)(g) of the VAT Directive and thus fail to have regard to that provision, make the benefit of the exemption that is provided for therein subject to the condition that the supplies at issue have, under the national law of another Member State, social wellbeing.

63In the present case, it follows from the request for a preliminary ruling that the supply of social services at issue in the main proceedings are provided by a company established in Bulgaria to natural persons residing in Germany and Austria.

64In accordance with Article 45 of the VAT Directive, the place of supply of services to a non-taxable person is to be the place where the supplier has established its business.

65Thus, for VAT purposes, the supply of social services provided to a private individual residing in a Member State other than that where the supplier established its business are deemed to be made in the territory of the Member State where the supplier is established, in such a way that those supplies are subject to VAT in that Member State.

66It follows that, in the present case, the Member State of taxation is the Republic of Bulgaria.

67Accordingly, as noted by the Advocate General in points 47 and 48 of her Opinion, assessing the character of the supply of social services at issue in the main proceedings for the purpose of determining whether they are the ‘supply of services … closely linked to welfare and social security work’ within the meaning of Article 132(1)(g) of the VAT Directive, must be made having regard to the Bulgarian legislation in relation to VAT, bearing in mind that that legislation must transpose correctly the VAT Directive and that, where such were not the case, the supplier, namely the applicant in the main proceedings, could directly rely on Article 132(1)(g) of that directive before the referring court in order to oppose national rules incompatible with that provision (judgment of 15 November 2012, Zimmermann, C‑174/11, EU:C:2012:716, paragraph 32 and the case-law cited).

68In that context, if it followed from the determinations that are for the referring court to make, that the supply of social services at issue in the main proceedings are, having regard in particular to elements of interpretation in the case-law referred to in paragraphs 59 and 60 of the present judgment, the ‘supply of services … closely linked to welfare and social security work’, within the meaning of Article 132(1)(g) of the VAT Directive, and that the applicant in the main proceedings has the status of a ‘[body recognised] by the Member State concerned as being devoted to social wellbeing’, within the meaning of that provision, the applicant is justified in relying on the exemption provided for in that provision.

69As regards, in the second place, the requirement referred to in Article 132(1)(g) of the VAT Directive, that the supply of services, in order to be exempt, must be supplied by bodies governed by public law or by other organisations recognised by the Member State concerned as being devoted to social wellbeing, it should be recalled that that provision does not specify the conditions or the procedures for recognising bodies other than those governed by public law as being devoted to social wellbeing. In consequence, it is generally for the national law of each Member State to lay down the rules in accordance with which that recognition may be granted to such bodies, the Member States having a discretion in that regard (judgment of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA, C‑846/19, EU:C:2021:277, paragraph 69 and the case-law cited).

70In that context, under Article 133 of the VAT Directive, Member States may make the grant of the exemption provided for in Article 132(1)(g) of that directive to bodies other than those governed by public law subject to one or more of the conditions listed in Article 133. Those optional conditions that are set out in the VAT Directive for the grant of that exemption may be imposed additionally by Member States (see, in relation to Article 13(A)(2)(a) 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 (OJ 1977 L 145, p. 1) (now Article 133 of the VAT Directive), judgment of 21 January 2016, Les Jardins de Jouvence, C‑335/14, EU:C:2016:36, paragraph 33 and the case-law cited).

71Accordingly, the right that Member States have in relation to the recognition of an entity as a body devoted to social wellbeing for the purposes of the exemption provided under Article 132(1)(g) of the VAT Directive, does not entitle Member States to change the sense of that exemption, by characterising, for example, a body devoted to social wellbeing, within the meaning of that provision, as a private entity that doesn’t carry out services of general interest in the social sector or that its manner of carrying out and conditions for the supply of social services are incompatible with a body devoted to social wellbeing.

72As regards the question as to which Member State has the right to recognise the social wellbeing of bodies other than those governed by public law for the purposes of the VAT exemption provided for in Article 132(1)(g) of the VAT Directive, and in particular, whether, where, in the present case, the supply of social services at issue are provided to natural persons residing in a Member State other than that where the supplier established its business, such recognition falls within the right of the Member State in which the supplier is established or the right of the Member State where the supplies are actually carried out, it should be recalled that, as the VAT Directive does not contain any definition of the concepts referred to in Article 132(1)(g) thereof, the importance and the scope of those concepts must be established taking into consideration not only the wording of that provision, but also the context in which it occurs and the objectives pursued by the rules of which it is part (judgment of 22 December 2022, EUROAPTIEKA, C‑530/20, EU:C:2022:1014, paragraph 31 and the case-law cited).

73In that regard, first, the wording of Article 132(1)(g) of the VAT Directive suggests that the words ‘by the Member State concerned’ must be compared with the words ‘Member States shall exempt’ in the introductory phrase of Article 132(1) of the VAT Directive. Accordingly, in referring to ‘the Member State concerned’, the EU legislature only referred to the Member State that must, in a given case, exempt from VAT the transactions referred to in Article 132(1)(g) of that directive.

74However, it is for the Member State on which the VAT Directive confers the tax jurisdiction in order to subject transactions to VAT, namely the Member State of taxation, to exempt from that tax those transactions where the requisite conditions have been satisfied.

75Secondly, the interpretation of Article 132(1) of the VAT Directive, read in the light of Article 131 of that directive, supports that the expression ‘by the Member State concerned’ refers to the Member State of taxation.

76Article 131 of the VAT Directive, which sets out the general provisions applicable to the exemptions provided for in Chapters 2 to 9 of Title IX of that directive, including those in Article 132 of that directive, provides that those exemptions apply ‘in accordance with conditions which the Member States shall lay down for the purposes of ensuring the correct and straightforward application of those exemptions and of preventing any possible evasion, avoidance or abuse’.

77It is thus apparent, from Article 131 that it is for the Member State having to apply the exemptions to fix, in complying with the VAT Directive, the conditions for their application, including those that allow the recognition of a private entity as a body devoted to social wellbeing for the purposes of the exemption provided for in Article 132(1)(g) of the VAT Directive. However, as noted in paragraph 74 of the present judgment, the Member State having to apply those exemptions is the Member State of taxation.

78Furthermore, if the EU legislature had wanted that the recognition of the social wellbeing of bodies other than those governed by public law for the purposes of the exemption provided for in Article 132(1)(g) of the VAT Directive, fall under the jurisdiction of a Member State other than the Member State that has to apply that exemption, such as in particular the Member State in which the supplies are actually carried out, it would not have merely referred to ‘the Member State concerned’.

79Thirdly, as regards the objective of the exemption provided for in Article 132(1)(g) of the VAT Directive, as recalled in paragraph 50 of the present judgment, it is intended, by treating certain supplies of public-interest services in the social sector more favourably for purposes of VAT, to reduce the cost of those services and thus to make them more accessible to the individuals who may benefit from them (judgment of 8 October 2020, Finanzamt D, C‑657/19, EU:C:2020:811, paragraph 29 and the case-law cited).

80It appears consistent with that objective that it is the Member State having to forgo collecting the VAT applicable to supplies of services referred to in Article 132(1)(g) of the VAT Directive, accordingly allowing that the price to be paid by the individuals wishing to benefit from those supplies should be further reduced, that has a decisive influence, within the limits of the margin for discretion that it has, on which are the private entities whose social supplies deserve, with regard to the social wellbeing of those entities, to benefit from the same favourable treatment, as far as concerns VAT, than that applicable to supplies provided by bodies governed by public law of that Member State.

81Therefore, it is apparent from a literal, systematic and teleological interpretation of Article 132(1)(g) of the VAT Directive that recognising the social wellbeing of bodies other than those governed by public law for the purposes of the exemption provided for under Article 132(1)(g) of the VAT Directive falls within the right of the Member State of taxation.

82Therefore, in circumstances such as those at issue in the main proceedings in which a company providing the supply of social services to natural persons residing in a Member State other than that where that company established its business, to recognise the social wellbeing of that company for the purposes of the exemption provided for in Article 132(1)(g) of the VAT Directive comes under the right not of the Member State in which those supplies are actually carried out, in the present case the Federal Republic of Germany and the Republic of Austria, but of the Member State where the company is established, here, the Republic of Bulgaria.

83That interpretation is, moreover, supported by the logic that underlies the provisions relating to the determination of the place of supply of services, reflected in recitals 3 and 5 of Directive 2008/8 and in Article 45 of the VAT Directive that taxing the supply of services provided to non-taxable persons must take place where the supplier is established, irrespective of the place where those services are actually carried out.

84In that context, it appears consistent with such an analysis that, similar to the fiscal competence to subject to VAT the supply of social services provided to a non-taxable person residing in a Member State other than that where the supplier is established, the power to recognise the social wellbeing of that supplier for the purposes of the exemption provided for in Article 132(1)(g) of the VAT Directive is to be established by the country-of-origin principle.

85Lastly, it should be recalled that the interpretation of the terms used to specify the exemptions contained in Article 132 of the VAT Directive must comply with the requirements of the principle of fiscal neutrality inherent in the common system of VAT which precludes, in particular, economic operators who effect the same transactions being treated differently in respect of the levying of VAT (judgment of 16 October 2008, Canterbury Hockey Club and Canterbury Ladies Hockey Club, C‑253/07, EU:C:2008:571, paragraph 30 and the case-law cited).

86An interpretation of Article 132(1)(g) of the VAT Directive recognising the social wellbeing of that supplier for the purposes of the exemption provided in that provision falls within the competence of the Member State where the supplies are actually carried out means that the supply of services closely linked to welfare and social security work, within the meaning of that provision, provided by a company established in a Member State and recognised by that Member State as a body devoted to social wellbeing, within the meaning of that same provision, for a non-taxable person residing in that Member State, are exempt from VAT, whereas supplies of the same services provided by that same company, or by another company also established in the Member State and recognised by that Member State as a body devoted to social wellbeing, for a non-taxable person residing in another Member State not recognising the social wellbeing of those companies is not exempt from VAT. It is necessary to add that that interpretation applies, although, in accordance with Article 45 of the VAT Directive, both categories of transaction are considered for the purposes of VAT as supplied in the Member State where the supplier is established and subject, accordingly, to VAT in that Member State, that they have a similar meaning and that they are provided by the same supplier or by two suppliers with similar characteristics.

87It is true that, as EU law now stands, the interpretation of Article 132(1)(g) of the VAT Directive, as is apparent from paragraph 81 of the present judgment, is capable of leading to a situation in which, concerning the supply of services closely linked to welfare and social security work provided to a non-taxable person residing in a Member State other than that where the supplier is established, a supplier of services, established in a Member State with less stringent requirements as to recognising the social wellbeing of private entities for the purpose of the exemption provided for in that provision, could make the supply of services exempt from VAT in a Member State imposing requirements particularly stringent in that regard, whereas a supplier established in the latter Member State could not benefit from such an exemption. Conversely, with further regard to the supply of services closely linked to welfare and social security work, a supplier established in a Member State imposing particularly stringent requirements concerning such recognition could make, in a Member State imposing less stringent requirements in that regard, the supply of services that would not be exempt from VAT, whereas a supplier established in that latter Member State could make the supply of services exempt from that tax.

88However, the differences in treatment with regard to VAT that could exist between two private entities making the supply of services referred to in Article 132(1)(g) of the VAT Directive to a non-taxable person, in accordance with which they are established in the same Member State where the recipient of those services resides or in another Member State, stem from the fact that, first, under Article 45 of the VAT Directive, such supplies are subject to VAT in different Member States, according to conditions set out, complying with the VAT Directive, by the legislation of the Member State of taxation, and that, secondly, as regards, in particular, the condition relating to the recognition, for the purposes of the exemption provided for in that provision, of the social wellbeing of a private entity carrying out such services, the EU legislature recognised a margin of discretion in Member States precluding uniform practices. In so far as that aspect of the EU rules in force may have adverse effects, as noted by the Advocate General in points 73 and 74 of her Opinion, it is for the EU legislature to decide on any possible amendments to that legislation (see, by analogy, judgment of 9 September 2021, Ministère public (Extraterritorial penalties), C‑906/19, EU:C:2021:715, paragraph 45).

89Having regard to the foregoing considerations, the answer to the second questions is that Article 132(1)(g) of the VAT Directive must be interpreted as meaning that, where a company provides the supply of social services to natural persons residing in a Member State other than that where that company established its business, the nature of those supplies and the characteristics of that company for the purpose of determining whether those supplies fall within the concept of ‘services … closely linked to welfare and social security work … by … [a body recognised] as being devoted to social wellbeing by the Member State concerned’, within the meaning of that provision, must be examined in accordance with the law, transposing the VAT Directive, of the Member State where that company established its business.

The third question

90By its third question, the referring court asks, in essence, whether Article 132(1)(g) of the VAT Directive must be interpreted as meaning that the fact that a company carrying out the supply of social services is registered at a public body of the Member State of taxation as a supplier of social services in accordance with the legislation of that Member State suffices for considering that that company falls within the concept of a ‘[body recognised] as being devoted to social wellbeing by the Member State concerned’, within the meaning of that provision.

91As stems from the case-law of the Court, when considering whether to recognise bodies other than those governed by public law as being devoted to social wellbeing, it is for the national authorities, in accordance with EU law and subject to review by the national courts, to take various factors into account. These may include the existence of specific provisions, be they national or regional, legislative or administrative, or tax or social security provisions; the public interest nature of the activities of the taxable person concerned; the fact that other taxable persons carrying on the same activities already enjoy similar recognition; and the fact that the costs of the supplies in question may be largely met by health insurance schemes or other social security bodies, in particular when the private operators maintain contractual relations with those bodies (judgment of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA, C‑846/19, EU:C:2021:277, paragraph 70 and the case-law cited).

92Furthermore, as stated in paragraph 67 of the present judgment, the exemption provided for in Article 132(1)(g) of the VAT Directive may be relied upon by a taxable person before a national court in order to oppose national rules incompatible with that provision. In such cases, it is for the national court to establish, in the light of all relevant factors, whether the taxable person is a body recognised as being devoted to social wellbeing for the purposes of that provision (judgment of 15 November 2012, Zimmermann, C‑174/11, EU:C:2012:716, paragraph 32 and the case-law cited).

93Accordingly, where a taxable person challenges the recognition, or the absence of recognition, of a body as being devoted to social wellbeing for the purposes of Article 132(1)(g) of the VAT Directive, it is for the national courts to examine whether the competent authorities have observed the limits of the discretion granted by that provision whilst applying the principles of EU law, including, in particular, the principle of equal treatment, which, in the field of VAT, takes the form of the principle of fiscal neutrality (judgment of 15 November 2012, Zimmermann, C‑174/11, EU:C:2012:716, paragraph 33 and the case-law cited).

94In that final regard, it should be recalled that, as stems from the case-law of the Court, for applying the exemption provided for in Article 132(1)(g) of the VAT Directive, compliance with the principle of fiscal neutrality requires, in principle, that all the organisations other than those governed by public law be placed on an equal footing for the purposes of their recognition for the supply of similar services (judgment of 15 November 2012, Zimmermann, C‑174/11, EU:C:2012:716, paragraph 43 and the case-law cited).

95It follows that, when applying that exemption, which is for the Member State of taxation to do, the Member State may not – in respect of two taxable persons performing the same activities and where its manner of carrying out and conditions for the supply of social services are similar – grant the recognition of the social wellbeing to one of the taxable persons, and not grant, by contrast, such recognition to the other taxable person, failing which the principle of fiscal neutrality will be infringed.

96In the light of that case-law, it must be found that the registration of a company, at a public body governed by the law of the Member State of taxation, as a supplier of social services in accordance with the legislation of that Member State, may be a criteria to take into account for the purpose of ascertaining whether that company falls within the concept of a ‘[body recognised] as being devoted to social wellbeing by the Member State concerned’, within the meaning of Article 132(1)(g) of the VAT Directive, in particular where companies thus registered are systematically or habitually considered by the tax authorities of that Member State as such bodies. Such a registration can, however, only allow for the company concerned to fall within that concept where it requires the prior inspection by the competent national authorities, considering the factors raised in paragraphs 91 to 94 of the present judgment, of the social wellbeing of that company for the purposes of that provision.

97Having regard to the foregoing considerations, the answer to the third question is that Article 132(1)(g) of the VAT Directive must be interpreted as meaning that the fact that a company making the supply of social services is registered at a public body of the Member State of taxation as a supplier of social services in accordance with the legislation of that Member State suffices for considering that that company falls within the concept of a ‘[body recognised] as being devoted to social wellbeing by the Member State concerned’, within the meaning of that provision, only where such a registration is subject to the prior determination by the competent national authorities of the social wellbeing of that company for the purposes of that provision.

Costs

98Since 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 (Seventh Chamber) hereby rules:

Article 132(1)(g) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2008/8/EC of 12 February 2008,

must be interpreted as meaning that, first, the supplies of social services provided to natural persons residing in a Member State other than that where the supplier has established its business are capable of being exempted under that provision and, secondly, it is irrelevant in that regard whether that supplier has had recourse to a company established in that other Member State to contact its clients.

Article 132(1)(g) of Directive 2006/112, as amended by Directive 2008/8,

must be interpreted as meaning that where a company provides the supply of social services to natural persons residing in a Member State other than that where that company established its business, the nature of those supplies and the characteristics of that company for the purpose of determining whether those supplies fall within the concept of ‘services … closely linked to welfare and social security work … by … [a body recognised] as being devoted to social wellbeing by the Member State concerned’, within the meaning of that provision, must be examined in accordance with the law, transposing Directive 2006/112, as amended, of the Member State where that company established its business.

Article 132(1)(g) of Directive 2006/112, as amended by Directive 2008/8,

must be interpreted as meaning that the fact that a company making the supply of social services is registered at a public body of the Member State of taxation as a supplier of social services in accordance with the legislation of that Member State suffices for considering that that company falls within the concept of a ‘[body recognised] as being devoted to social wellbeing by the Member State concerned’, within the meaning of that provision, only where such a registration is subject to the prior determination by the competent national authorities of the social wellbeing of that company for the purposes of that provision.

Signatures

[Signatures]

( *1 ) Language of the case: Bulgarian.

OPINION OF ADVOCATE GENERAL

KOKOTT

delivered on 1 December 2022 ¹

(Reference for a preliminary ruling – VAT Directive – Article 132(1)(g) – Exemption for the supply of services closely linked to welfare and social security work – Body recognised as being devoted to social wellbeing – Member State concerned which recognises the body as being devoted to social wellbeing)

I. Introduction

1Demographic change and globalisation do not stop even for EU VAT law. This can be seen from the present case. An undertaking established in Bulgaria posts its employees throughout the European Union, including to private individuals established in Germany and Austria who, for reasons of age or health, need home help as well as care. In principle, the place of supply of these services to private individuals is the place where the supplier is established, in this case Bulgaria. Accordingly, Bulgarian law is applicable in respect of the correct levying of VAT and thus also the exemption for those services which are carried out in Germany or Austria.

2The exemption at issue covers services closely linked to welfare and social security work supplied by a body ‘recognised by the Member State concerned as being devoted to social wellbeing’. The crucial question is which State is the ‘Member State concerned’. Is it the State in whose territory the services subject to relief are supplied (country of destination) because its social welfare systems generally pay for the supply? Or is it the State which would actually be entitled to the tax revenue if the supply were not exempt? In the case of supplies to non-taxable persons like those at issue, this would be the country of origin, while in the case of supplies to taxable persons (such as a hospital in another country), this would be the country of destination.

3Both solutions create practical problems. If the Member State which is the country of destination takes the decision on recognition, it may be difficult for the Member State which is the country of origin to review that decision, even though its tax revenue could be indirectly affected. If the Member State which is the country of origin is competent for such recognition, that Member State could establish an ideal location for cross-border welfare services by adopting a very liberal recognition practice. This could lead to distortions of competition with undertakings established in the country of destination, which a harmonised system of VAT is in fact intended to prevent.

4Because there can be only one solution, however, the Court must decide in this case whether the exemption of transactions of certain bodies to be recognised by the ‘Member State concerned’ always applies to the State which is the place of supply for VAT purposes (in this case Bulgaria) or to the country of destination (in this case Germany or Austria).

II. Legal framework

A. European Union law

5The legal framework is formed by Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (‘the VAT Directive’). ²

6Article 45 of the VAT Directive concerns the place of supply of services to a non-taxable person and states:

‘The place of supply of services to a non-taxable person shall be the place where the supplier has established his business. However, if those services are provided from a fixed establishment of the supplier located in a place other than the place where he has established his business, the place of supply of those services shall be the place where that fixed establishment is located. In the absence of such place of establishment or fixed establishment, the place of supply of services shall be the place where the supplier has his permanent address or usually resides.’

7Article 132(1)(g) of the VAT Directive governs exemption:

‘1. Member States shall exempt the following transactions:

the supply of services and of goods closely linked to welfare and social security work, including those supplied by old people’s homes, by bodies governed by public law or by other bodies recognised by the Member State concerned as being devoted to social wellbeing;’

8Point (c) of the first paragraph of Article 133 of the VAT Directive permits Member States to make the granting of the abovementioned exemption subject to a condition:

‘Member States may make the granting to bodies other than those governed by public law of each exemption provided for in points (b), (g), (h), (i), (l), (m) and (n) of Article 132(1) subject in each individual case to one or more of the following conditions:

those bodies must charge prices which are approved by the public authorities or which do not exceed such approved prices or, in respect of those services not subject to approval, prices lower than those charged for similar services by commercial enterprises subject to VAT.’

9Article 134(a) of the VAT Directive provides:

‘The supply of goods or services shall not be granted exemption, as provided for in points (b), (g), (h), (i), (l), (m) and (n) of Article 132(1), in the following cases:

where the supply is not essential to the transactions exempted’.

B. Bulgarian law

10The VAT Directive was transposed by the Zakon za danaka varhu dobavenata stoynost (Law on value added tax; ‘the ZDDS’).

11Under Article 21 of the ZDDS, the place of supply of services provided to a non-taxable person is deemed to be the place where the supplier has established his independent business.

12Article 40 of the ZDDS provides that the supply of social services in accordance with the Zakon za sotsialnoto podpomagane (Law on social assistance; ‘the ZSP’) is exempt.

13Article 16 of the ZSP stipulates that social services are based on targeted social work to help people with their day-to-day activities or social integration and are provided at the person’s choice and request based on a personal needs assessment.

14Under Article 18 of the ZSP, social services, including those supplied by Bulgarian legal entities, may be provided only following registration with the Agentsia za sozialno podpomagane (Social Assistance Agency, Bulgaria).

15According to the legal definition in Article 1, point 6, of the Supplementary provisions of the ZSP, ‘social services’ means activities to support people and increase their opportunities to lead an independent life; point 7 states that ‘social services in the community’ are provided within a family or family related environment.

16Article 40 of the Pravilnik za prilagane na ZSP (ZSP Implementing Regulations; ‘the PPZSP’) states that persons wishing to avail themselves of social services must submit a written request to the managing body in the place where they are currently residing if the provider of the social services is a legal entity. As references, they must enclose a copy of an identity document, a copy of their personal medical file, if available, and a medical report, if available. The managing body conducts an assessment of the person’s need for social services and records the results in a standard-format report.

17According to Article 40d of the PPZSP, the social services provider must prepare a personal plan based on the needs assessment in which it formulates objectives and sets out the activities required to meet those needs, including day-to-day needs and healthcare, education, rehabilitation and other needs.

18Article 40e of the PPZSP requires social services providers to keep a client register containing data on the recipient and the service provided.

III. Facts and reference for a preliminary ruling

19Momtrade Ruse OOD (‘Momtrade’) is a limited liability company which mainly provides outpatient social services. Since 24 June 2014, it has been registered voluntarily as a taxable person under the ZDDS. In addition, it is registered with the Social Assistance Agency of the Bulgarian Ministry of Labour and Social Policy ³ as a provider of social services in the form of personal carers, social assistants and home help for elderly people.

20A tax audit was conducted for Momtrade for the period from 24 June 2014 to 31 December 2015. The audit covered the provision of services to various private individuals of German and/or Austrian nationality who were probably resident in Germany or Austria.

21Based on contracts concluded with those private individuals, Momtrade posted care and home help workers to the clients’ homes. The various duties are detailed in a questionnaire attached to the contract. These questionnaires were prepared by a placement agency registered in Germany or Austria, which referred clients to Momtrade under a placement agreement.

22Aside from home help, the listed duties include caring for elderly people with health problems who are unable to take care of themselves. Each contract states both the client’s name and the name of the placement agency. The payments made to Momtrade by the private individuals are not disputed.

23The German tax authorities initiated an exchange of information. It was established further to that exchange that the place of supply of those services was in Bulgaria. Consequently, these transactions were not taxable in Germany, but were subject to tax in Bulgaria under the Bulgarian ZDDS.

24Based on the documents produced by Momtrade, the revenue authorities in Bulgaria found that there was no agreement on the provision of ‘social services’, as clients’ personal needs were not indicated. They held that German and Austrian law were relevant, in addition to the ZSP, because the service was in fact provided in another Member State, and that, in order for Momtrade to be exempt under Article 40, point 1, of the ZDDS, proof must be provided confirming that under the law of the other Member State the services provided in its territory were services devoted to social wellbeing.

25By tax audit notice of 4 October 2018, Momtrade was in any case denied exemption for the services. It brought proceedings against that notice. The court of first instance in the case, the Administrativen sad Ruse (Administrative Court, Ruse, Bulgaria), held that Article 40, point 1, of the ZDDS corresponds to Article 132(1)(g) of the VAT Directive. In order for the exemption provided for in Article 40, point 1, of the ZDDS to apply, the person audited must prove that the service is devoted to social wellbeing both under Bulgarian law and under the law of the Member State in whose territory the services are provided. The court held that this had not been proven in accordance with the Bulgarian rules, which required a social assessment of the person’s needs, which had not been carried out or documented in this case.

26Momtrade had simply produced the contracts and associated questionnaires and had failed to produce the social service requests, social assessments, proposals, personal plans and list of clients required under Bulgarian law.

27Furthermore, the services provided in connection with the care of elderly persons are not social services within the meaning of Article 40(1) of the ZDDS as they simply provide help in connection with household management. The workers are not required to perform duties relating to the state of health of those persons. Nor had they received any training that might suggest that they were able to provide medical care.

28The court of first instance therefore largely upheld the tax debts assessed in the tax audit notice. Momtrade appealed against that decision. The question arising for the Cassation Chamber, which has jurisdiction to hear the case, is the criteria by which it must assess whether the activities are devoted to social wellbeing.

29The Varhoven administrativen sad (Supreme Administrative Court, Bulgaria) has therefore decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

Can Article 132(1)(g) of the VAT Directive be interpreted as meaning that it allows a commercial company registered as a social service provider in one Member State (in this case, Bulgaria) to rely on that provision in order to obtain a tax exemption for the social services which it provides in the territory of other Member States to private individuals who are nationals of those States? Is the answer to that question affected by the fact that the recipients of the services were referred to the provider by commercial companies registered in the Member States in which the services are provided?

If Question 1 is answered in the affirmative, by what criteria and law (Bulgarian and/or Austrian and German law) is it necessary to assess, for the purposes of the interpretation and application of the aforesaid provision of EU law, whether the company audited is an “organisation recognised as being devoted to social wellbeing” and whether it has been proven that the services are “closely linked to welfare and social security work”?

Based on that interpretation, does the fact that a commercial company is registered as a provider of social services, as defined by national law, suffice in order for that company to be classed as an organisation “recognised by the Member State concerned as being devoted to social wellbeing”?’

30In the proceedings before the Court, the tax authorities of the Republic of Bulgaria and the European Commission submitted written observations. In accordance with Article 76(2) of the Rules of Procedure, the Court did not consider it necessary to hold a hearing.

IV. Legal assessment

31As the answers to questions 1 and 3 are relatively straightforward in the light of the VAT Directive and the Court’s case-law, I will examine those questions first (see section A. and B.). I will then turn to question 2, which has two parts that are to be considered separately. First, the referring court asks how to interpret the concept of ‘services … closely linked to welfare and social security work’ and how such services are to be proven. The key factor is the existence of an intrinsically exempt supply of services (see section C.) by old people’s homes, by bodies governed by public law or by other recognised bodies. Second, it must be clarified how to interpret the concept of ‘Member State concerned’, which recognises such ‘other bodies’ as being devoted to social wellbeing such that they fall within the scope ratione personae of the exemption (see section D.).

A. Direct applicability of Article 132(1)(g) of the VAT Directive (question 1)

32The first question seeks clarification as to whether Momtrade may rely directly upon Article 132(1)(g) of the VAT Directive. According to the Court’s case-law, ⁴ wherever the provisions of a directive appear, so far as their subject matter is concerned, to be unconditional and sufficiently precise, those provisions may, in the absence of implementing measures adopted within the prescribed period, be relied upon as against any national provision which is incompatible with the directive. This requires that those provisions define rights which individuals are able to assert against the State.

33In this connection, the Court has already ruled with regard to Article 132(1)(g) of the VAT Directive that it (or its predecessor provision, Article 13(A)(1)(g) of the Sixth Directive, the content of which is identical) indicates in a sufficiently precise and unconditional manner the activities to which the exemption applies. ⁵

34The concept of ‘bodies recognised by the Member State concerned as being devoted to social wellbeing’ does, however, grant the Member States a discretion to recognise certain organisations as being devoted to social wellbeing. ⁶ To the extent that the Member States observe the limits of the discretion that is accorded to them by Article 132(1)(g) of the VAT Directive, individuals cannot rely on that provision in order to acquire the status of body devoted to social wellbeing in respect of the Member State concerned. ⁷

35Where, however, a person seeks the status of body devoted to social wellbeing, it is for the national courts to examine whether the competent authorities have observed the limits of discretion while applying EU law principles, in particular the principle of equal treatment. ⁸ Thus, despite the discretion which is accorded, Article 132(1)(g) of the VAT Directive may be relied upon by an individual. ⁹

36With regard to the first question asked by the referring court, it must be made clear that this is true irrespective of whether the place of supply is determined on the basis of the destination principle or the origin principle and irrespective of whether a placement agency arranged that service.

B. The requirements for effective recognition (question 3)

37The third question asks whether the fact that a commercial company is registered as a provider of social services suffices for there to be an effectively recognised body for the purposes of Article 132(1)(g) of the VAT Directive.

38It will be for the national authorities to determine which bodies should be recognised as being devoted to social wellbeing within the meaning of Article 132(1)(g) of the VAT Directive. ¹⁰ Article 132(1)(g) of the VAT Directive does not specify the conditions or the procedures for recognising bodies other than those governed by public law as being devoted to social wellbeing. Consequently, it is in principle for the national law of each Member State to lay down the rules in accordance with which that recognition may be granted to such bodies. ¹¹

39In that regard, however, it is clear from the case-law of the Court that, when considering whether to recognise bodies other than those governed by public law as being devoted to social wellbeing, it is for the national authorities, in accordance with EU law and subject to review by the national courts, to take various factors into account.

40These may include the existence of specific provisions, be they national or regional, legislative or administrative, or tax or social security provisions; the public interest nature of the activities of the taxable person concerned; the fact that other taxable persons carrying on the same activities already enjoy similar recognition; and the fact that the costs of the supplies in question may be largely met by health insurance schemes or other social security bodies. ¹² Account may also be taken of the objectives pursued by a body viewed as a whole and whether it is engaged in welfare work on a permanent basis. ¹³

41It also follows that the Member States do not have latitude to classify private profit-making bodies (like Momtrade in this case) as being devoted to social wellbeing merely because they provide, inter alia, services related to social wellbeing. ¹⁴ Consequently, the mere fact that a commercial company is registered as a provider of social services with a State agency does not suffice in itself in order to be able to infer that a correct discretionary decision was made in recognition as a body devoted to social wellbeing. The situation may be different if a substantive examination of the abovementioned factors were connected with that registration, which is a matter to be reviewed by the referring court.

C. Assessment of services closely linked to welfare and social security work (question 2 – second part)

42The second part of the second question concerns the assessment of an exempt supply of services, both as regards criteria and as regards applicable law and necessary proof. It is clear from the wording of Article 132(1)(g) of the VAT Directive that the exemption laid down in that provision applies only to the supply of services and of goods ‘closely linked to welfare and social security work’. The existence of an exempt supply of services thus follows solely from EU law.

43According to the Court’s case-law, the terms used to specify the exemptions in Article 132 of the VAT Directive are to be interpreted strictly, as they are a departure from the general principle that VAT is to be paid on each supply of services made for consideration by a taxable person. ¹⁵ However, they also should not be interpreted too narrowly, ¹⁶ as the interpretation of those terms must comply with the requirements of the principle of fiscal neutrality inherent in the common system of VAT and be consistent with the objectives underlying the exemptions. Accordingly, in the view of the Court, the requirement of strict interpretation does not mean that the terms used to specify the exemptions referred to in Article 132 must be construed in such a way as to deprive the exemptions of their intended effects. ¹⁷

44The Court thus requires a teleological interpretation of the rules on exemption which takes account of the objectives of the exemption and the principle of neutrality. The interpretation of Article 132(1)(g) of the VAT Directive must also encompass Article 134(a), which requires that the supply of services concerned be essential to the transactions relating to welfare and social security work. ¹⁸

45In this regard, the Court has ruled that the provision of general care and domestic help by an out-patient care service to persons in a state of physical or economic dependence is in principle closely linked to welfare and social security work within the meaning of that provision. ¹⁹ Similarly, the supply of services provided to persons in a state of mental dependence and intended to protect them in civil matters must also be regarded as such where those persons risk damaging their own financial or other interests. ²⁰ The concept does not, however, cover the supply of workers because it is not, in itself, a supply of services of general interest carried out in the social sector. It is irrelevant in that regard that the staff members concerned are care workers or that they are supplied to recognised care establishments. ²¹

46The Member State on which the directive confers the power of taxation must clarify whether the supply in question is exempt. In VAT law, this is done through the place of supply of services. In the case of supplies to taxable persons, under Article 44 of the VAT Directive this is in principle the place where the recipient of the supply has established his business (destination principle). In the case of services to a non-taxable person, under Article 45 of the VAT Directive this is the place where the supplier has established his business (origin principle). Under certain specific place-of-supply rules (such as Article 54 of the VAT Directive), the right of taxation is based on the place where the activities are actually carried out (place-of-activity principle).

47The present case concerns the supply of services to non-taxable persons, which means that the State having the right of taxation under Article 45 of the VAT Directive is Bulgaria. Therefore, the Bulgarian law on VAT, if it correctly transposed the VAT Directive, determines whether an exempt service was supplied. It is irrelevant in this regard whether the German or the Austrian law on VAT would also classify the supply of services in question as an exempt welfare supply. In a harmonised field of law such as VAT law, the assessment should nevertheless ideally be the same.

48It is for the referring court to assess whether the relevant rules of the ZDDS correctly transpose the VAT Directive. If this is not the case, taxable persons may – as stated above (point 32 et seq.) – rely directly upon the VAT Directive. In both cases, the taxable person has a duty to assist in the assessment of whether the supply of services concerned is also an exempt supply of services. This may include providing proof. The VAT Directive does not, on the other hand, specify what proof this is or how it is to be provided.

49In the absence of such EU legislation, it falls within the competence of the Member States to arrange the requirements for proof (principle of procedural autonomy). As the Court has already ruled, they have freedom in this regard ²² and may lay down the rules themselves. However, the procedures must not be less favourable than those governing similar domestic actions (principle of equivalence) nor may they be framed in such a way as to make it in practice impossible or excessively difficult to exercise the rights conferred by EU law (principle of effectiveness). ²³

50A breach of the principle of equivalence is not apparent here. Nor is a breach of the principle of effectiveness evident. It is clear that certain proof is suitable, necessary and generally also appropriate in reviewing whether there exists an exempt supply of services, a fortiori where the services are provided outside the area under the supervision of the Bulgarian tax authorities (in this case in Germany or Austria). This does not appear, in principle, to make it in practice impossible to invoke the exemption. Ultimately, however, this assessment must be made by the referring court.

D. The ‘Member State concerned’ which recognises the bodies (question 2 – first part)

1. Explanation of the problem

51It is therefore Bulgaria that decides on the existence of a supply of services closely linked to welfare. Nevertheless, Article 132(1)(g) of the VAT Directive further requires that this service is supplied by a specific taxable person. Exempt services of this nature may be supplied only ‘by old people’s homes, by bodies governed by public law or by other bodies recognised by the Member State concerned as being devoted to social wellbeing’.

52Because only the last alternative is a possibility in the present case, the key factor is whether Momtrade is such a recognised body. Momtrade has possibly been recognised as such a body by Bulgaria, although the mere fact that a commercial company is registered as a provider of social services with a State agency does not suffice in itself (see above point 40 et seq.). It is evident that at the place of activity and in the countries of destination, Germany and Austria, Momtrade has not been recognised as such a body. If it is assumed that Bulgaria has effectively recognised Momtrade as such a body, it must be clarified, in order to answer the first part of the second question, which ‘Member State concerned’ is to make this decision on recognition.

53The VAT Directive refers only to the ‘Member State concerned’. At first glance, the ‘Member State concerned’ is also the Member State which is place of supply for VAT purposes. Ultimately, as the Commission, for example, asserts in its observations, that State must levy tax.

54The place-of-supply rules were, however, amended for the supply of services with effect from 1 January 2010. ²⁴ The purpose of that amendment was to take account of the character of VAT as a tax on consumption ²⁵ with regard to the right of taxation of the respective Member State. Accordingly, the State where consumption takes place is intended, in principle, to have the right of taxation (destination principle). If this leads to enforcement problems – for example in the supply of services to non-taxable persons, see Article 45 of the VAT Directive – the origin principle applies. However, I do not think that this purpose of the origin principle – avoiding deficiencies in enforcement – is readily transferrable to the purpose of recognition of other bodies in accordance with Article 132(1)(g) of the VAT Directive.

55The simplest solution might be to have regard to the country of origin in this regard too. This is supported by the fact that the place of supply to non-taxable persons is normally the country of origin, which also has the right of taxation. It would then be Bulgaria that is competent for recognition in the present case. On the other hand, in this solution a Member State which imposes very strict requirements (qualitatively for example) on recognition would make the cross-border supply of services closely linked to welfare more difficult for undertakings established in its territory. Conversely, it would be a locational advantage for such undertakings to become established in the State which imposes the least stringent requirements on recognition. In both cases distortions of competition in the country of destination – where the service is received and consumed – would be inevitable.

56VAT law has been harmonised specifically because it has a particular, intrinsic internal market dimension and such distortions of competition are to be avoided. The VAT Directive is therefore founded on the legal basis for competence under Article 113 TFEU and, unlike with other taxes (in particular, taxes on income), does not have to meet the special conditions laid down in Article 115 TFEU.

57It thus appears doubtful whether the ‘Member State concerned’ really means the State which is the place of supply for VAT purposes, a fortiori since the place of supply depends on the status of the recipient of the supply. If the same service were supplied in the same (foreign) Member State to a non-taxable person (for example care services to a private individual) and to a taxable person (for example care services as a secondary provider to an old people’s home), this would require two recognitions, as the place of supply is in the country of destination in one case (foreign) and in the country of origin (domestic) in the other.

2. Wording

58The concept of body ‘recognised by the Member State concerned’ is used in just a few provisions governing exemption, while other rules on exemption mention only ‘recognised establishments’ (see, for example, Article 132(1)(b) of the VAT Directive).

59This comparison of wording in itself suggests that ‘Member State concerned’ would appear to mean something other than the State which has the right of taxation. The interpretation that the Member State concerned always means the State which is also permitted to tax the transaction makes the overall wording superfluous, as without that wording it is in any case always the Member State in which the place of supply for VAT purposes is located and which therefore has the right of taxation that examines the conditions for the chargeable event and may exercise discretion to that effect.

60The wording therefore indicates that ‘Member State concerned’ does not always mean the Member State which is permitted to tax the transaction.

3. Analysis of drafting history

61It is also supported by the drafting history of the provision. In the predecessor legislation to the VAT Directive, the exemption under Article 132(1)(g) of the VAT Directive was governed by Article 13 of the Sixth Directive. According to the heading at the time, that article covered only ‘exemptions within the territory of the country’.

62According to recital 3 of the VAT Directive, with the adoption of the VAT Directive only the structure and the wording were recast, which would not make material changes in the existing legislation. Material changes which were nevertheless made are listed exhaustively in the provisions governing transposition and entry into force. There is nothing in this respect for Article 132(1)(g) of the VAT Directive.

63Having regard to the Sixth Directive, it can therefore be assumed that an exemption within the territory of the country meant principally supplies ‘by old people’s homes, by bodies governed by public law or by other bodies recognised by the Member State concerned as being devoted to social wellbeing’ normally established within the territory of the country, which carry out their supplies within the territory of that country. The Member State concerned which is required to effect recognition would then be the State in which the supply was carried out. This would be consistent with the country of destination principle.

4. Teleological interpretation

64A teleological interpretation also militates against using the place-of-supply rules to determine the ‘Member State concerned’ which decides on recognition. As was stated above, the place-of-supply rules are intended to assign the tax base for cross-border supplies of goods and services to one of the Member States under consideration. To that end, different principles can be applied which take greater or lesser account of the nature of VAT as a tax on consumption (destination principle, place-of-activity principle) and the principle of effective tax administration (origin principle).

65The objective of the VAT exemption in Article 132(1)(g) of the VAT Directive and the link with State recognition by the ‘Member State concerned’ are different, in my view, as it is not a matter of implementing the nature of VAT as a tax on consumption or effective tax administration but, specifically, of financing the Member States’ social welfare systems.

66The objective of that exemption is to reduce the cost of those services and thus to make them more accessible to the individuals who may benefit from them. ²⁶ Since those costs are largely borne by the Member States’ social welfare systems, the exemption thus also serves to finance the Member States’ social welfare systems.

67For this reason, the Court has repeatedly ruled that the Member State does not go beyond the limits of its discretion in the recognition of other bodies by requiring that the costs relating to the out-patient services concerned must have been borne wholly or partly by the statutory social security or social welfare authorities. ²⁷

68If, on the one hand, the recognition of another body lies within the discretion of the Member State and, on the other, the exemption is intended to reduce the costs of medical care which are borne largely by the respective social welfare systems, the place of supply for VAT purposes cannot be crucial as it would be hard to imagine, in the case of cross-border supplies of services, that it should lie within the discretion of the country of origin (in this case Bulgaria) whether or not the social welfare systems in the countries of destination (in this case the German or Austrian systems) are to bear the VAT burden.

69This would also explain why the EU legislature explicitly had in view recognition by the Member State concerned. The Member State concerned is, from a teleological point of view, the State whose social welfare systems are affected by the service and which is therefore intended to be able to decide whether to recognise the supplier as being devoted to social wellbeing.

70This interpretation is supported, lastly, by the wording of point (c) of the first paragraph of Article 133 of the VAT Directive. Under that provision, the Member State may make the granting to ‘other bodies’ of the exemption subject to the condition that those bodies must charge prices which are approved by the public authorities. This can only mean the authorities in the country of destination. If the competent authorities of the country of destination are responsible for approving prices in their territory, it becomes apparent that the ‘Member State concerned’ which decides on recognition must be the Member State which is the country of destination.

5. Consideration of the principle of neutrality

71Furthermore, the interpretation under which the Member State competent for recognition in Article 132(1)(g) of the VAT Directive is the State whose social welfare systems generally pay for the services and not the State where the place of supply of the service is located under the VAT Directive is consistent with the principle of neutrality.

72The principle of neutrality precludes economic operators who effect the same transactions being treated differently in respect of the levying of VAT. ²⁸ Competing undertakings must in principle be treated equally for VAT purposes.

73Competition between old people’s homes, bodies governed by public law and other bodies recognised by the Member State concerned normally takes place where the services are supplied and paid for. Momtrade competes primarily with bodies which supply similar services in Germany or Austria. That competition could be significantly distorted if Member States were able, through their own recognition practice in the country of origin, to influence the costs of the activity in the country of destination.

74This distortion of competition would occur wherever the recognition practice in the Member States is different. The discretion accorded to Member States in this regard (see above point 38 et seq.) virtually precludes a uniform practice. The Member State which imposes the strictest recognition requirements would prejudice undertakings which have established their business in its territory in respect of the supply of services under Article 45 of the VAT Directive. The Member State which imposes the least stringent recognition requirements would favour undertakings which have established their business in its territory in respect of the supply of services under Article 45 of the VAT Directive.

75Accordingly, as the Bulgarian tax authorities have asserted, Bulgaria issues a decision on recognition which is valid only for the supply of services within the territory of Bulgaria. In the present case, Germany and Austria would therefore have to decide whether Momtrade should be recognised as being devoted to social wellbeing.

76Momtrade would have to submit that decision to the Bulgarian tax authorities. It would have to be recognised in Bulgaria in accordance with the principle of mutual trust. ²⁹ The Bulgarian tax authorities would then merely review whether there also exists an exempt supply of services closely linked to welfare and social security work within the meaning of Article 132(1)(g) of the VAT Directive. If that is not the case, the supply of services is subject to tax; if it is the case, the supply of services is exempt. Any disputes as to whether an error of assessment was made in the decision on recognition would have to be resolved in the State whose social welfare systems would generally have to bear the costs, that is to say, in the country of destination.

77However, this interpretation means that the amount of VAT revenue in Bulgaria is influenced indirectly by the decision on recognition taken by another Member State (in this case Germany and Austria). This is nevertheless justified, in my view, by the particular objective of Article 132(1)(g) of the VAT Directive (reduction of costs of the respective social welfare systems – see point 65 et seq.) and the principle of competitive neutrality.

V. Conclusion

Conclusion

78I therefore propose that the Court answer the questions referred for a preliminary ruling by the Varhoven administrativen sad (Supreme Administrative Court, Bulgaria) as follows:

Article 132(1)(g) of Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (‘the VAT Directive’) may, despite the discretion accorded to Member States therein, be relied upon directly by an individual vis-à-vis the Member State of taxation. This is true irrespective of whether the place of supply is determined on the basis of the destination principle or the origin principle and irrespective of whether a placement agency arranged that service.

Article 132(1)(g) of the VAT Directive is to be interpreted as meaning that the Member State concerned which takes the decision on recognition of other bodies is the State in which the services are actually carried out and whose social welfare systems generally pay for those services. In the case of cross-border supplies of services, this can also be a Member State on which the directive by means of the place of supply rules does not confer the corresponding power of taxation.

On the other hand, the Member State on which the directive on the place of supply confers the power of taxation must assess, solely on the basis of its own law (if it correctly transposes Article 132(1)(g) of the VAT Directive), whether the supply concerned is a supply of services closely linked to welfare and social security work and is adequately proven.

The mere fact that a commercial company is registered as a provider of social services with a State agency does not suffice in itself in order to be able to infer that a correct discretionary decision was made in recognition of it as a body devoted to social wellbeing.

¹ Original language: German.

² Council Directive of 28 November 2006 (OJ 2006 L 347, p. 1) in the version applicable in the years at issue (2014 to 2015), as last amended in that respect by Council Directive 2013/61/EU of 17 December 2013 (OJ 2013 L 353, p. 5).

³ Ministerstvo na truda i sotsialnata politika

⁴ Judgments of 19 January 1982, Becker (8/81, EU:C:1982:7, paragraph 25); of 26 September 2000, IGI (C‑134/99, EU:C:2000:503, paragraph 36); and of 10 September 2002, Kügler (C‑141/00, EU:C:2002:473, paragraph 51).

⁵ Judgment of 10 September 2002, Kügler (C‑141/00, EU:C:2002:473, paragraph 53). The judgment of 21 January 2016, Les Jardins de Jouvence (C‑335/14, EU:C:2016:36, paragraph 47), refers to autonomous concepts of EU law which must be given an EU definition.

⁶ Judgment of 17 June 2010, Commission v France (C‑492/08, EU:C:2010:348, paragraph 41 on point 15 of Annex III.

⁷ Judgment of 10 September 2002, Kügler (C‑141/00, EU:C:2002:473, paragraph 55).

⁸ Judgments of 10 September 2002, Kügler (C‑141/00, EU:C:2002:473, paragraph 56), and of 8 October 2020, Finanzamt D (C‑657/19, EU:C:2020:811, paragraph 45).

⁹ Judgments of 10 September 2002, Kügler (C‑141/00, EU:C:2002:473, paragraph 61), and of 15 November 2012, Zimmermann (C‑174/11, EU:C:2012:716, paragraph 32).

¹⁰ Judgment of 10 September 2002, Kügler (C‑141/00, EU:C:2002:473, paragraph 57).

¹¹ Judgments of 15 November 2012, Zimmermann (C‑174/11, EU:C:2012:716, paragraph 26); of 21 January 2016, Les Jardins de Jouvence (C‑335/14, EU:C:2016:36, paragraphs 32 and 34); of 8 October 2020, Finanzamt D (C‑657/19, EU:C:2020:811, paragraph 43); and of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA (C‑846/19, EU:C:2021:277, paragraph 69).

¹² Judgments of 15 November 2012, Zimmermann (C‑174/11, EU:C:2012:716, paragraph 31 and the case-law cited); of 12 March 2015, go fair Zeitarbeit (C‑594/13, EU:C:2015:164, paragraph 20); of 21 January 2016, Les Jardins de Jouvence (C‑335/14, EU:C:2016:36, paragraph 35); of 8 October 2020, Finanzamt D (C‑657/19, EU:C:2020:811, paragraph 44); and of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA (C‑846/19, EU:C:2021:277, paragraph 70).

¹³ Judgment of 17 June 2010, Commission v France (C‑492/08, EU:C:2010:348, paragraph 45).

¹⁴ Judgments of 17 June 2010, Commission v France (C‑492/08, EU:C:2010:348, paragraphs 42 and 44); of 28 July 2016, Conseil des ministres (C‑543/14, EU:C:2016:605, paragraphs 61 and 63) and of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA (C‑846/19, EU:C:2021:277, paragraph 72).

¹⁵ Judgments of 7 September 1999, Gregg (C‑216/97, EU:C:1999:390, paragraph 12); of 15 November 2012, Zimmermann (C‑174/11, EU:C:2012:716, paragraph 22); of 12 March 2015, go fair Zeitarbeit (C‑594/13, EU:C:2015:164, paragraph 17); of 8 October 2020, Finanzamt D (C‑657/19, EU:C:2020:811, paragraph 28); and of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA (C‑846/19, EU:C:2021:277, paragraph 57).

¹⁶ Judgment of 26 May 2005, Kingscrest Associates and Montecello (C‑498/03, EU:C:2005:322, paragraph 32, mentions ‘not … particularly narrow’).

¹⁷ Judgments of 15 November 2012, Zimmermann (C‑174/11, EU:C:2012:716, paragraph 22); of 12 March 2015, go fair Zeitarbeit (C‑594/13, EU:C:2015:164, paragraph 17); of 8 October 2020, Finanzamt D (C‑657/19, EU:C:2020:811, paragraph 28); and of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA (C‑846/19, EU:C:2021:277, paragraph 57).

¹⁸ Judgments of 8 October 2020, Finanzamt D (C‑657/19, EU:C:2020:811, paragraph 31), and of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA (C‑846/19, EU:C:2021:277, paragraph 59). See also, apparently to that effect, judgment of 9 February 2006, Stichting Kinderopvang Enschede (C‑415/04, EU:C:2006:95, paragraph 25).

¹⁹ Judgments of 15 November 2012, Zimmermann (C‑174/11, EU:C:2012:716, paragraph 23), and of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA (C‑846/19, EU:C:2021:277, paragraph 62). See, to that effect, judgment of 10 September 2002, Kügler (C‑141/00, EU:C:2002:473, paragraph 44).

²⁰ Judgment of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA (C‑846/19, EU:C:2021:277, paragraph 63).

²¹ Judgment of 12 March 2015, go fair Zeitarbeit (C‑594/13, EU:C:2015:164, paragraph 28).

²² See, with regard to the absence of rules on interest in VAT law, judgments of 12 May 2011, Enel Maritsa Iztok 3 (C‑107/10, EU:C:2011:298, paragraph 29); of 28 July 2011, Commission v Hungary (C‑274/10, EU:C:2011:530, paragraph 39); of 24 October 2013, Rafinăria Steaua Română (C‑431/12, EU:C:2013:686, paragraph 20 – autonomy); and of 23 April 2020, Sole-Mizo and Dalmandi Mezőgazdasági (C‑13/18 and C‑126/18, EU:C:2020:292, paragraph 37).

²³ Judgments of 3 September 2009, Fallimento Olimpiclub (C‑2/08, EU:C:2009:506, paragraph 24); of 21 January 2010, Alstom Power Hydro (C‑472/08, EU:C:2010:32, paragraph 17); of 24 October 2013, Rafinăria Steaua Română (C‑431/12, EU:C:2013:686, paragraph 20); of 4 March 2020, Telecom Italia (C‑34/19, EU:C:2020:148, paragraph 58); of 10 July 2014, Impresa Pizzarotti (C‑213/13, EU:C:2014:2067, paragraph 54); and of 16 July 2020, UR (VAT liability of lawyers) (C‑424/19, EU:C:2020:581, paragraph 25).

²⁴ Council Directive 2008/8/EC of 12 February 2008 amending Directive 2006/112/EC as regards the place of supply of services (OJ 2008 L 44, p. 11).

²⁵ See recital 3 of Directive 2008/8/EC.

²⁶ Judgments of 26 May 2005, Kingscrest Associates and Montecello (C‑498/03, EU:C:2005:322, paragraph 30); of 21 January 2016, Les Jardins de Jouvence (C‑335/14, EU:C:2016:36, paragraph 41); and of 8 October 2020, Finanzamt D (C‑657/19, EU:C:2020:811, paragraph 29).

²⁷ Judgment of 15 November 2012, Zimmermann (C‑174/11, EU:C:2012:716, paragraph 37); see also, to that effect, judgment of 26 May 2005, Kingscrest Associates and Montecello (C‑498/03, EU:C:2005:322, paragraph 53), and of 21 January 2016, Les Jardins de Jouvence (C‑335/14, EU:C:2016:36, paragraph 39). Similarly, in connection with exempt medical care, judgment of 5 March 2020, Idealmed III (C‑211/18, EU:C:2020:168, paragraphs 30 and 31), and of 7 April 2022, I (VAT exemption for hospital services) (C‑228/20, EU:C:2022:275, paragraph 61).

²⁸ See judgments of 11 June 1998, Fischer (C‑283/95, EU:C:1998:276, paragraph 22); of 7 September 1999, Gregg (C‑216/97, EU:C:1999:390, paragraph 20); and of 16 October 2008, Canterbury Hockey Club and Canterbury Ladies Hockey Club (C‑253/07, EU:C:2008:571, paragraph 30).

²⁹ See, with regard to this principle in the context of cooperation in criminal justice: judgment of 12 May 2021, Federal Republic of Germany (Red Notice, Interpol) (C‑505/19, EU:C:2021:376, paragraph 80 and the case-law cited). See also judgment of 28 September 2006, van Straaten (C‑150/05, EU:C:2006:614, paragraph 43).