C-846/19 Administration de l'Enregistrement, des Domaines et de la TVA

JUDGMENT OF THE COURT (Third Chamber)

15 April 2021 ( *1 )

(Reference for a preliminary ruling – Value added tax (VAT) – Directive 2006/112/EC – Economic activity – Supply of services for consideration – Article 2(1)(c) and Article 9(1) – Exemptions – Article 132(1)(g) – Supply of services closely linked to welfare and social security work – Services performed by a lawyer under powers of representation for the protection of adults lacking legal capacity – Body recognised as being devoted to social wellbeing)

In Case C‑846/19,

REQUEST for a preliminary ruling under Article 267 TFEU from the tribunal d’arrondissement (District Court, Luxembourg), made by decision of 20 November 2019, received at the Court on 21 November 2019, in the proceedings

EQ

v

Administration de l’Enregistrement, des Domaines et de la TVA,

THE COURT (Third Chamber),

composed of A. Prechal (Rapporteur), President of Chamber, N. Wahl, F. Biltgen, L.S. Rossi and J. Passer, Judges,

Advocate General: G. Pitruzzella,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

the Luxembourg Government, by C. Schiltz and T. Uri, acting as Agents,

the European Commission, initially by R. Lyal and N. Gossement, and subsequently by R. Lyal, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 14 January 2021,

gives the following

Judgment

Legal context and the dispute

1This request for a preliminary ruling concerns the interpretation of Article 9(1) and 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; ‘the VAT Directive’).

2The request has been made in proceedings between EQ and the administration de l’Enregistrement, des Domaines et de la TVA (the Registration, Land and VAT Authority, Luxembourg) (‘the Luxembourg tax authority’) concerning the imposition of value added tax (VAT) on the supply of services performed by a lawyer under powers of representation for the protection of adults lacking legal capacity entrusted to him in pursuance of the law by the competent judicial authority.

Legal context

EU law

3Article 2(1)(c) of the VAT Directive provides:

‘The following transactions shall be subject to VAT:

…

the supply of services for consideration within the territory of a Member State by a taxable person acting as such’.

4Under Article 9(1) of that directive:

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

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

5According to Article 24(1) of the VAT Directive:

‘“Supply of services” shall mean any transaction which does not constitute a supply of goods.’

6Article 25 of the VAT Directive is worded as follows:

‘A supply of services may consist, inter alia, in one of the following transactions:

the assignment of intangible property, whether or not the subject of a document establishing title;

the obligation to refrain from an act, or to tolerate an act or situation;

the performance of services in pursuance of an order made by or in the name of a public authority or in pursuance of the law.’

7Under Article 73 of the directive:

‘In respect of the supply of goods or services, other than as referred to in Articles 74 to 77, the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price of the supply.’

8Article 131 of that directive, which is the only article in Chapter 1, entitled ‘General provisions’, of Title IX, itself entitled ‘Exemptions’, states:

‘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.’

9Chapter 2 of Title IX of the VAT Directive, that chapter being entitled ‘Exemptions for certain activities in the public interest’, comprises Articles 132 to 134 thereof.

10In accordance with Article 132(1)(g) of the directive, Member States are to 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’.

11Subparagraph (a) of the first paragraph of Article 133 of that directive provides:

‘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’.

12Article 134 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;

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.’

Luxembourg law

13Article 4(1) of the loi du 12 février 1979 concernant la taxe sur la valeur ajoutée (Law of 12 February 1979 on value added tax), in the version applicable to the dispute in the main proceedings (‘the Law on VAT’), provides:

‘“Taxable person” under Article 2 shall mean any person who independently and regularly carries out transactions that form part of any economic activity, whatever the purpose, results or location of that activity …’

14Under Article 5 of the Law on VAT:

‘“Economic activity” shall mean any activity aimed at generating income, and in particular activities of producers, traders and persons supplying services, including mining and agricultural activities, the activities of the professions and activities involving the exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis.’

15According to Article 15(1) of that law:

‘1. “Supply of services” shall mean any transaction which does not constitute a supply or an intra-Community acquisition or an importation of goods.

That transaction may consist in the assignment of intangible property, the obligation to refrain from an act or to tolerate an act or situation and the performance of a service in pursuance of the law or in pursuance of an order made by or in the name of a public authority.

…’

16Under Article 44(1)(o) of the Law on VAT:

‘The following shall be exempted from [VAT] within the limits and under the conditions to be laid down by Grand-Ducal Regulation:

…

the supply of services and of goods closely linked to social security, welfare or public health, carried out by bodies governed by public law, mutual investment funds, public bodies or those of public interest, care homes, old peoples’ homes, gerontological or geriatric institutions, hospital or charitable organisations and other similar private sector institutions, where those bodies are recognised by the competent public authorities as being devoted to social wellbeing;

…’

17Article 3 of the règlement grand-ducal du 23 décembre 1982 fixant les conditions de désignation d’un gérant de la tutelle (Grand Ducal Regulation of 23 December 1982 laying down the conditions for the appointment of a guardianship manager) provides:

‘The guardianship judge may award to the guardianship manager remuneration, the amount or the method of calculation of which he shall determine, by reasoned decision, taking into account the financial position of the person lacking legal capacity.

That remuneration shall consist in either a fixed amount, a percentage of the income of the person lacking legal capacity or a fee fixed according to the duties performed.

…’

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

18EQ has been a member of the Luxembourg Bar (Luxembourg) since 1994. Since 2004 he has been representing adults in his capacity as agent, curator and guardianship manager.

19By VAT adjustment notices of 19 January 2018, relating to 2014 and 2015, confirmed by decision of 4 June 2018 on an objection, the Luxembourg tax authority determined of its own motion the amounts of VAT payable by EQ for those years, starting from the premiss that those representation activities constituted a supply of services subject to VAT.

20EQ brought an action before the referring court, seeking annulment of the decision of 4 June 2018, arguing, inter alia, that the activities which he had carried out, during the period at issue, in the protection of adults did not constitute economic activities, that those activities were in any event exempt from VAT under the national provision transposing Article 132(1)(g) of the VAT Directive and that the Luxembourg tax authority had accepted, from 2004 until 2013, that those activities were not subject to VAT, with the result that making them now subject to VAT for 2014 and 2015 constitutes a breach of the principle of the protection of legitimate expectations.

21In addition, EQ submits that the position of the Luxembourg tax authority is contrary to that of the ministère de la Justice (Ministry of Justice, Luxembourg), which bears the fees of the representatives responsible for the protection of adults when the latter are indigent, and which accepts that the payments received in this respect are not subject to VAT.

22The Luxembourg tax authority disputes those arguments. In that regard, it contends, first, that the supply of services provided by EQ in the protection of adults constitutes indeed an economic activity, given that EQ performs those services in the course of his professional activity as a lawyer and obtains a significant income therefrom. Secondly, that supply is not, in the circumstances of the present case, eligible for exemption under the national provision transposing Article 132(1)(g) of the VAT Directive, since the exemption provided for in that provision cannot be relied on by a person who practises as a lawyer and does not fulfil the condition of being a body devoted to social wellbeing.

23The referring court explains that the needs of adults lacking legal capacity, that is to say those affected by an impairment of their mental faculties as a result of illness, disability or weakening due to age, are met by various protection schemes, including curatorship and guardianship, which make it possible to provide advice to, supervise and even represent those persons in civil matters and which confer powers of management and representation on third parties. The establishment of those protection schemes may give rise to the appointment of a special representative by the guardianship judge, pending a decision on the protection regime to be put in place, and of an ad hoc representative in case of a conflict of interests. In practice, curators, guardianship managers, special representatives and ad hoc representatives are selected, inter alia, from among family members as well as from among other persons, such as lawyers.

24The referring court states, first of all, as to whether the activities at issue constitute economic activities, within the meaning of Article 9(1) of the VAT Directive, for consideration, within the meaning of Article 2(1)(c) thereof, that the remuneration referred to in Article 3 of the Grand Ducal Regulation of 23 December 1982 laying down the conditions for the appointment of a guardianship manager does involve financial consideration in connection with those activities.

25However, although the services provided in the present case are in every respect similar to an economic activity, the referring court is uncertain, first, as to the scope of the finding, in the case-law of the Court (see, inter alia, judgment of 22 February 2018, Nagyszénás Településszolgáltatási Nonprofit Kft., C‑182/17, EU:C:2018:91, paragraph 32), that a supply of services is taxable only if there is a legal relationship between the person supplying services and the recipient pursuant to which there is reciprocal performance. In the protection of adults there is a triangular relationship between the person supplying services, the recipient, namely the adult protected, and the judicial authority that entrusted the person supplying services with a management role. It might also be relevant in that regard that, if the adult protected is indigent, the remuneration of the person supplying services is to be borne by the State.

26Secondly, as regards the amount of remuneration, although it follows from the case-law of the Court that it is irrelevant that an economic transaction is carried out at a price lower than the cost price, it would appear to follow also from that case-law that the remuneration must be determined in advance and cover the operating costs of the supplier (see, inter alia, judgment of 22 February 2018, Nagyszénás Településszolgáltatási Nonprofit Kft., C‑182/17, EU:C:2018:91, paragraph 38). In the present case, the remuneration of the person supplying services is determined on a case-by-case basis by the competent court, depending on the recipient’s wealth, with the result that that remuneration is not fixed in advance and does not necessarily ensure that the operating costs incurred by that supplier are covered in all circumstances.

27Next, as regards the question whether the activities in question are exempt from VAT, the referring court is required to examine, first, whether those activities fall within the concept of ‘welfare and social security’, within the meaning of Article 132(1)(g) of the VAT Directive, and, secondly, whether EQ may be covered by the concept of ‘bodies recognised by the Member State concerned as being devoted to social wellbeing’, within the meaning of that provision, and according to which procedure and by which authority such recognition should be implemented.

28Finally, the referring court raises the question of the application of the principle of the protection of legitimate expectations in the circumstances of the present case. It points out in that context, inter alia, that where the Luxembourg tax authority informs the taxable person, after carrying out the transactions in question, that it intends to depart from its previous position of not making those transactions subject to VAT, the taxable person finds itself in a situation in which it has not been able to charge VAT to the recipients of the services. The taxable person is thus required to take the amounts claimed by the State by way of VAT from its own funds.

29In those circumstances, the tribunal d’arrondissement (District Court, Luxembourg) decided to stay proceedings and to refer the following questions to the Court for a preliminary ruling:

Is the concept of “economic activity” within the meaning of the second subparagraph of Article 9(1) of [the VAT Directive] to be interpreted as including or excluding supplies of services provided in the context of a triangular relationship in which the provider of the services is appointed to provide those services by an entity which is not the same person as the recipient of the supplies of services?

Is the answer to the first question different according to whether the supplies of services are provided in the context of a role entrusted to the provider by an independent judicial authority?

Is the answer to the first question different according to whether the remuneration of the service provider is borne by the recipient of the services or by the State, an entity of which appointed the service provider to provide those services?

Is the concept of “economic activity” within the meaning of the second subparagraph of Article 9(1) of [the VAT Directive] to be interpreted as including or excluding supplies of services where the remuneration of the service provider is not a legal requirement and the amount of the remuneration, where it is awarded, … is based on a case-by-case assessment, … is always dependent on the financial position of the recipient of the services and … is calculated by reference to a fixed amount, a percentage of the income of the recipient of the services or the services performed?

Is the concept of “the supply of services and of goods closely linked to welfare and social security work” contained in Article 132(1)(g) of [the VAT Directive] to be interpreted as including or excluding services performed in the context of a scheme for the protection of adults established by law and subject to the control of an independent judicial authority?

Is the concept of “bodies recognised … as being devoted to social wellbeing” contained in Article 132(1)(g) of [the VAT Directive] to be interpreted, in view of the recognition of the social character of the body, as laying down certain requirements vis-à-vis the way in which the service provider operates or as regards the not-for-profit or profit-making objective of the activity of the service provider, or more generally as restricting by other criteria or conditions the scope of the exemption provided for in Article 132(1)(g), or is the performance of services “linked to welfare and social security work” alone sufficient to give the body at issue a social character?

Is the concept of “bodies recognised by the Member State concerned as being devoted to social wellbeing” contained in Article 132(1)(g) of [the VAT Directive] to be interpreted as requiring a recognition process based upon a pre-defined procedure and pre-determined criteria, or is ad hoc recognition possible on a case-by-case basis, where appropriate by a judicial authority?

Does the principle of [the protection of] legitimate expectations as interpreted by the case-law of the Court … allow the authority responsible for recovering VAT to require that a person liable to VAT pays the VAT on economic transactions relating to a period which had ended when the authority’s decision to apply VAT was made after that authority has, for an extended time prior to that period, accepted VAT returns from that taxable person which do not include economic transactions of the same kind in its taxable transactions? Is that possibility on the part of the authority responsible for recovering VAT subject to certain conditions?’

Consideration of the questions referred

The first to fourth questions

30By its first to fourth questions, which it is appropriate to examine together, the referring court asks, in essence, whether Article 9(1) of the VAT Directive must be interpreted as meaning that the supply of services for the benefit of adults lacking legal capacity and intended to protect them in civil matters, the performance of which is entrusted to the person supplying services by a judicial authority in pursuance of the law and remuneration for which is fixed by the same authority as a fixed amount or is based on a case-by-case assessment by taking into account in particular the financial situation of the person lacking legal capacity – and such remuneration may moreover be borne by the State in the event that that person is indigent – constitutes an economic activity within the meaning of that provision.

31It should be observed that although the VAT Directive gives a very wide scope to VAT, only activities of an economic nature are covered by that tax (judgment of 17 December 2020, WEG Tevesstraße, C‑449/19, EU:C:2020:1038, paragraph 24 and the case-law cited).

32In that regard, the Court has stated that an activity may be regarded as an economic activity, within the meaning of the second subparagraph of Article 9(1) of the VAT Directive, only where the activity corresponds to one of the chargeable events defined in Article 2(1) of that directive (judgment of 12 May 2016, Gemeente Borsele et Staatssecretaris van Financiën, C‑520/14, EU:C:2016:334, paragraph 21).

33According to Article 2(1)(c) of the VAT Directive, concerning taxable transactions, the supply of services for consideration within the territory of a Member State by a taxable person acting as such is subject to VAT, together with other transactions. Furthermore, under the first subparagraph of Article 9(1) of that directive, ‘taxable person’ means any person who, independently, carries out an economic activity, whatever the purpose or results of that activity (judgment of 2 June 2016, Lajvér, C‑263/15, EU:C:2016:392, point 21).

34Thus, it is necessary to determine, in the first place, whether activities such as those at issue in the main proceedings, which the referring court has classified as a supply of services within the meaning of Article 2(1)(c) of the VAT Directive, are for consideration, as required by that provision.

35While it is ultimately for the referring court to carry out that verification, it is nonetheless for the Court to provide the former with all the guidance as to the interpretation of EU law which may be of assistance in adjudicating on the case pending before it (see, to that effect, judgment of 17 December 2020, Franck, C‑801/19, EU:C:2020:1049, paragraph 27).

36In that regard, according to settled case-law, the possibility of classifying a supply of services as a transaction for consideration requires only that there be a direct link between that supply and the consideration actually received by the taxable person. Such a direct link is established if there is a legal relationship between the provider of the service and the recipient pursuant to which there is reciprocal performance, the remuneration received by the provider of the service constituting the actual consideration for the service supplied to the recipient (judgments of 29 October 2015, Saudaçor, C‑174/14, EU:C:2015:733, paragraph 32).

37In the present case, it is apparent from the explanations provided by the referring court that EQ actually received payments in the context of the exercise of the powers of management and of representation entrusted to him.

38However, that court notes, first, that the performance of those services was entrusted to EQ not by their recipients, but by the competent authority in pursuance of legislation aimed at protecting adults lacking legal capacity in civil matters.

39The Court has already held that the fact that the activity in question consists in the performance of duties conferred and regulated by law in the public interest is irrelevant for the purposes of determining whether that activity can be classified as a supply of services effected for consideration (judgment of 2 June 2016, Lajvér, C‑263/15, EU:C:2016:392, paragraph 42). Article 25(c) of the VAT Directive expressly provides that a supply of services may consist in the performance of services in pursuance of an order made by or in the name of a public authority or in pursuance of the law.

40As regards, secondly, the relevance, in that context, of the circumstance that, in the event that the recipients of the services at issue in the main proceedings are indigent, the remuneration for those services may be borne by the State, it should be recalled that it is not a requirement of the directive, as is also apparent from Article 73 thereof, that for a supply of services to deemed to be ‘for consideration’, within the meaning of the VAT Directive, the consideration for that supply must be obtained directly from the recipient thereof, since it may be obtained from a third party (see, to that effect, judgment of 27 March 2014, Le Rayon d’Or, C‑151/13, EU:C:2014:185, paragraph 34).

41Thirdly, as regards the procedures for fixing the remuneration for the supply of services such as those provided by EQ, it is apparent from the explanations provided by the referring court, and from the written answers submitted by EQ and by the Luxembourg Government following the questions put by the Court on that subject – the validity of which is a matter for that court to determine – that that remuneration is fixed, on the basis of a case-by-case assessment taking into account the financial situation of the person lacking legal capacity, by the competent judicial authority at the request of the person supplying services, which must regularly report to that authority on his or her transactions. In addition, it is apparent that the remuneration is generally made up of a monthly lump sum in respect of the day-to-day management of the business of the person lacking legal capacity and, where appropriate, a sum in respect of additional services, determined, as a rule, on an hourly basis, with the remuneration thus granted not necessarily corresponding in every case to the actual value of the service provided.

42In that context, it must be borne in mind, first, that the fact that the payment for the supply of services in question is made in the form of a lump sum is not such as to affect the direct link between the supply of services made and the consideration received (see, to that effect, judgment of 27 March 2014, Le Rayon d'Or, C‑151/13, EU:C:2014:185, paragraph 37).

43Secondly, the fact that the price paid for an economic transaction is higher or lower than the cost price, and, therefore, higher or lower than the open market value, is irrelevant for the purpose of establishing whether it was a transaction effected for consideration, since that circumstance is not such as to affect the direct link between the services supplied or to be supplied and the consideration received or to be received, the amount of which is determined in advance and according to well-established criteria (see, to that effect, judgment of 2 June 2016, Lajvér, C‑263/15, EU:C:2016:392, paragraphs 45 and 46, and the case-law cited).

44Furthermore, the fixing of the remuneration as described above, which occurs as the person supplying the services in question deploys his or her activities and submits the relevant statements of account to the competent judicial authority, does not in any way prevent the view being taken that the amount thus fixed has been determined in advance and according to well-established criteria, in accordance with the case-law cited in the preceding paragraph above, provided that the procedures for fixing that amount are foreseeable and capable of ensuring that the person supplying services will receive, in principle, payment for those services.

45In the light of the foregoing, it does not appear from the circumstances referred to by the referring court that there is reason to doubt that the supply of services at issue in the main proceedings was effected for consideration within the meaning of Article 2(1)(c) of the VAT Directive.

46That said, it is important, in the second place, that the supply of services at issue in the main proceedings is covered by the concept of ‘economic activity’ within the meaning of the second subparagraph of Article 9(1) of the VAT Directive.

47The concept of ‘economic activity’ is defined in the second subparagraph of Article 9(1) of the VAT Directive as covering any activity of producers, traders and persons supplying services, including mining and agricultural activities and activities of the professions. It is apparent from the Court’s case-law that that definition shows that the scope of the concept of ‘economic activity’ is very wide and that the term is objective in character, in the sense that the activity is considered per se and without regard to its purpose or results. Thus, an activity is generally classified as economic where it is permanent and is carried out in return for remuneration which is received by the person carrying out the activity (judgment of 17 December 2020, WEG Tevesstraße, C‑449/19, EU:C:2020:1038, paragraph 34 and the case-law cited).

48Furthermore, it follows from the Court’s case-law that, in order to determine whether a service is supplied in return for remuneration, so that the activity in question is to be classified as an economic activity, all the circumstances in which it is supplied have to be examined (judgment of 12 May 2016, Gemeente Borsele and Staatssecretaris van Financiën, C‑520/14, EU:C:2016:334, paragraph 29).

49In that regard, as noted by the referring court, the question whether the amount of the compensation was determined on the basis of criteria which ensured that it was sufficient to cover the operating costs of the provider of the service may be a relevant factor (see, to that effect, judgment of 22 February 2018, Nagyszénás Településszolgáltatási Nonprofit Kft., C‑182/17, EU:C:2018:91, paragraph 38 and the case-law cited) as well as, more generally, the amount of earnings and other factors, such as the number of customers (see, to that effect, judgment of 12 May 2016, Gemeente Borsele et Staatssecretaris van Financiën, C‑520/14, EU:C:2016:334, paragraph 31).

50In the light of the facts set out by the referring court, it appears that the activity carried out by EQ is of a continuing nature. Furthermore, as is apparent from paragraph 45 above, it also seems established that EQ’s activity is carried out in return for remuneration. The referring court explains, however, that it harbours doubts in that regard given that the services provided by that service provider are not necessarily in all circumstances remunerated in such a way as to cover the operating costs incurred by him.

51The circumstance that each supply of services, considered individually, is not remunerated at a level corresponding to the costs incurred is not sufficient to show that the activity as a whole is not remunerated on the basis of criteria ensuring that the operating costs of the provider of the service are covered.

52In the present case, and subject to verification by the referring court, it appears that the main proceedings differ from those giving rise to the judgments of 29 October 2009, Commission v Finland (C‑246/08, EU:C:2009:671, paragraph 50), and of 12 May 2016, Gemeente Borsele and Staatssecretaris van Financiën (C‑520/14, EU:C:2016:334, paragraph 33), in which it was found that there was no economic activity on the ground, inter alia, that the contributions paid by the recipients of the services concerned were intended to cover only a small part of the total operating costs incurred by the provider of the service.

53In the case in the main proceedings, there is nothing to suggest that the level of income which EQ obtained from his activity is insufficient in respect of his operating costs. Moreover, the results of the activity concerned cannot, in themselves, be decisive for the purposes of the analysis, referred to in paragraph 48 above, of whether the proposed activity is of an economic nature, since that analysis must be made by taking into account all the circumstances in which that activity is carried out (see, by analogy, judgment of 26 September 1996, Enkler, C‑230/94, EU:C:1996:352, paragraph 29).

54Consequently, it does not appear, subject to verification by the referring court, that the activity carried out by EQ is not of an economic nature.

55In the light of the foregoing, the answer to the first to fourth questions is that Article 9(1) of the VAT Directive must be interpreted as meaning that the supply of services for the benefit of adults lacking legal capacity and intended to protect them in civil matters, the performance of which is entrusted to the person supplying services by a judicial authority in pursuance of the law and remuneration for which is fixed by the same authority as a fixed amount or is based on a case-by-case assessment by taking into account in particular the financial situation of the person lacking legal capacity – and such remuneration may moreover be borne by the State in the event that that person is indigent – where that supply is for consideration, the person supplying services obtains income therefrom on a continuing basis and the overall amount of the compensation for that activity is determined on the basis of criteria intended to ensure that the operating costs incurred by the person supplying services are covered, constitutes an economic activity within the meaning of that provision.

On the fifth to seventh questions

56By its fifth to seventh questions, which it is appropriate to examine together, the referring court asks, in essence, whether Article 132(1)(g) of the VAT Directive must be interpreted as meaning, first, that the supply of services for the benefit of adults lacking legal capacity and intended to protect them in civil matters constitutes a ‘supply of services closely linked to welfare and social security work’, and, secondly, that a lawyer providing such services may benefit, for the purposes of the business he or she operates, within the meaning of the VAT Directive, from recognition as a body devoted to social wellbeing.

57It must be borne in mind at the outset that the terms used to specify the exemptions laid down 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. However, 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 those exemptions. Accordingly, 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 effect (judgment of 12 March 2015, ‘go fair’ Zeitarbeit, C‑594/13, EU:C:2015:164, paragraph 17).

58As is clear from the wording of Article 132(1)(g) of the VAT Directive, the exemption provided for in that provision applies to the supply of services and of goods which is, first, ‘closely linked to welfare and social security work’ and, secondly, made ‘by bodies governed by public law or by other bodies recognised by the Member State concerned as being devoted to social wellbeing’.

59As regards, in the first place, the requirement that the supply of services must be closely linked to welfare and social security work, 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 8 October 2020, Finanzamt D, C‑657/19, EU:C:2020:811, paragraph 31).

60In the present case, it is apparent from the documents before the Court that the services at issue in the main proceedings are supplied under various schemes provided for under Luxembourg law intended to support adults lacking legal capacity in civil matters, and the legal incapacity of those persons may be established in the event of impairment of their mental faculties as a result of illness, disability or weakening due to age. Under those schemes, a third party is entrusted by the competent court with powers of management and, where appropriate, of representation in respect of the person lacking legal capacity with regard to that person’s civil matters and to the management of his or her assets. Members of the family of the person lacking legal capacity, social assistants, not-for-profit associations or lawyers, among others, may be appointed for that purpose.

61More specifically, it is apparent from the written answers submitted by EQ and by the Luxembourg Government to the questions put by the Court in that regard that, where a lawyer is so instructed, such a lawyer is generally required to provide multiple services, for the benefit of the person lacking legal capacity, as summarised in points 52 to 57 of the Advocate General’s Opinion, which include services relating to civil matters and covering the management of everyday life and of the assets of the person lacking legal capacity as well as those of a legal nature.

62Although the VAT Directive contains no definition of the concept of ‘welfare and social security work’ used, in particular, in Article 132(1)(g) thereof, the Court has already held that the provision of 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 (see, to that effect, judgment of 10 September 2002, Kügler, C‑141/00, EU:C:2002:473, paragraph 44).

63Similarly, 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.

64As the Advocate General has, in essence, also observed in points 63 and 64 of his Opinion, in so far as such services serve to alleviate such a risk by allowing the specific activities of those persons’ everyday life, including those of a financial nature, to be managed with the necessary prudence, they are essential to protect them from acts which may be prejudicial to them or even jeopardise their being able to live with dignity.

65Consequently, the supply of services for the benefit of adults lacking legal capacity and intended to protect them in civil matters falls within the concept of ‘the supply of services closely linked to welfare and social security work’ within the meaning of Article 132(1)(g) of the VAT Directive.

66By contrast, where such services are provided by a service provider who also engages, in the context of the powers referred to in paragraph 60 above, in more general activities providing assistance or legal, financial or other advice, such as those which may be linked to the specific skills of a lawyer, a financial adviser or an estate agent, it should be noted that the services provided in the context of those latter activities do not, as a rule, fall within the scope of the exemption provided for in Article 132(1)(g) of the VAT Directive, even if they are performed in the context of assistance to a person lacking legal capacity. Given the strict interpretation to which that exemption must be subject, such transactions cannot be regarded as essential and closely linked to welfare.

67That finding must also be made, moreover, in order to comply with the principle of fiscal neutrality, which is expressly laid down in Article 134(b) of the VAT Directive and which precludes treating similar supplies of services, which are thus in competition with each other, differently for VAT purposes (see, to that effect, judgment of 4 May 2017, Brockenhurst College, C‑699/15, EU:C:2017:344, paragraph 35). That principle would be infringed if, when suppliers entrusted with powers of representation for protection, such as those at issue in the main proceedings, carry out not only transactions inherent in the protection of persons lacking legal capacity but also transactions similar to those carried out outside such powers, the latter transactions being exempt from VAT solely because they are carried out in the context of those powers.

68In the second place, as regards the requirement that, in order to be exempt, the services 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 is common ground that EQ, a member of the Bar of Luxembourg, is not covered by the concept of ‘body governed by public law’, with the result that he could benefit from the exemption in question only if he could be regarded as covered by that of ‘other bodies recognised by the Member State concerned as being devoted to social wellbeing’ within the meaning of Article 132(1)(g) of the VAT Directive.

69Article 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. 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 (see, to that effect, judgment of 21 January 2016, Les Jardins de Jouvence, C‑335/14, EU:C:2016:36, paragraphs 32 and 34).

70In that regard, 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. 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 8 October 2020, Finanzamt D, C‑657/19, EU:C:2020:811, paragraph 44 and the case-law cited).

71It is only where the Member State has failed to observe the limits of its discretion that the taxable person may rely on the exemption provided for in Article 132(1)(g) of the VAT Directive in order to oppose national legislation incompatible with that provision. In such a case, it is for the national court to determine, in the light of all relevant factors, whether the taxable person must be recognised as being devoted to social wellbeing within the meaning of that provision (see, to that effect, judgment of 15 November 2012, Zimmermann, C‑174/11, EU:C:2012:716, paragraphs 28 and 32), as also explained by the Advocate General in points 114 to 119 of his Opinion.

72In the present case, with regard to the referring court’s questions, it should be noted, first, that the application of the exemption provided for in Article 132(1)(g) of the VAT Directive is not only subject to a condition relating to the social nature of the supply of services concerned, but is, moreover, limited to the supply of services by bodies recognised as being devoted to social wellbeing, as recalled in paragraph 58 above. It would be inconsistent with that dual requirement to allow a Member State to classify private profit-making entities as bodies devoted to social wellbeing merely because those entities provide, inter alia, services related to social wellbeing (see, to that effect, judgment of 28 July 2016, Ordre des barreaux francophones et germanophone and Others, C‑543/14, EU:C:2016:605, paragraphs 61 and 63).

73Secondly, the fact that the service provider in question is a natural person and operates, by virtue of his activity, for profit does not preclude his being recognised as being devoted to social wellbeing under Article 132(1)(g) of the VAT Directive. Indeed, the Court has already held that the concept of ‘bodies recognised as being devoted to social wellbeing’ is in principle sufficiently broad to include also private profit-making entities, including natural persons operating a business, in so far as the latter also constitute individualised entities performing a particular function (see, to that effect, judgments of 7 September 1999, Gregg, C‑216/97, EU:C:1999:390, paragraphs 17 and 18; of 17 June 2010, Commission v France, C‑492/08, EU:C:2010:348, paragraphs 36 and 37; and of 15 November 2012, Zimmermann, C‑174/11, EU:C:2012:716, paragraph 57).

74Moreover, it does not follow from the information provided to the Court that the Grand Duchy of Luxembourg availed itself of the option, provided for in subparagraph (a) of the first paragraph of Article 133 of the VAT Directive, to refuse, inter alia, to grant the exemption provided for in Article 132(1)(g) of that directive to bodies which systematically aim to make a profit, with the result that that Member State cannot object to the taxable person wishing to be granted that exemption if that person pursues such an objective.

75That limitation on the rule excluding liability to tax is purely contingent in nature and a Member State which has omitted to adopt the measures necessary for that purpose cannot rely on its own omission in order to refuse a taxpayer entitlement to an exemption which he or she may legitimately claim under the VAT Directive (see, to that effect, judgment of 10 September 2002, Kügler, C‑141/00, EU:C:2002:473, paragraph 60). The application of that limitation in that situation would, moreover, be liable to infringe the principle of fiscal neutrality, resulting in different treatment for VAT purposes of supplies referred to in Article 132(1)(g) depending on whether the entities which provide them are profit-making or not (see, to that effect, judgment of 26 May 2005, Kingscrest Associates and Montecello, C‑498/03, EU:C:2005:322, paragraph 42).

76Thirdly, although, for the purposes of recognising a person supplying services as being a body devoted to social wellbeing, the form of exploitation chosen by the person supplying services is not irrelevant, since it must not prove incompatible with the classification of ‘body devoted to social wellbeing’, the fact remains that Member States cannot refuse such recognition without a precise examination of the specific circumstances of the case, in order to ascertain whether they are capable of establishing that the business operated by such a person is devoted to social wellbeing, with the result that, if it is established that it is devoted to social wellbeing and in so far as that person supplies services closely linked to welfare and social assistance work, those supplies fall within the exemption provided for in Article 132(1)(g) of the VAT Directive.

77As regards, specifically, the fact that, in the present case, the services concerned were supplied by a member of the Bar, it must be noted that the Court has indeed held that, in the light of its overall objectives and the fact that any engagement in welfare work is not permanent, the professional category of lawyers as a whole cannot be regarded as devoted to social wellbeing (judgment of 28 July 2016, Ordre des barreaux francophones et germanophone and Others, C‑543/14, EU:C:2016:605, paragraph 62).

78However, it does not follow from that case-law that a taxable person carrying out activities closely linked to welfare and social security work may, in all circumstances and a priori, be excluded from the possibility of being recognised as being a body devoted to social wellbeing solely on the ground that that person belongs to the professional category defined in the preceding paragraph, without examining whether that person operates his or her business in conditions justifying recognition as being a body devoted to social wellbeing within the meaning of Article 132(1)(g) of the VAT Directive. Such an approach would, moreover, be liable to conflict with the principle of fiscal neutrality, as also noted, in essence, by the Advocate General in points 90 and 95 of his Opinion.

79Even if the professional category of lawyers cannot be characterised, as a whole, as being devoted to social wellbeing, it is conceivable that, in a specific case, a lawyer providing services closely linked to welfare and social security work may show a stable social engagement and, in the light of the factors to be taken into account for the purposes of establishing the social nature of his or her business, cannot be distinguished from other natural or legal persons providing such services except by the fact that that person is a member of the Bar.

80In such a situation, the mere fact that the person supplying services is a lawyer is a purely formal element which cannot call into question the social nature of his or her business.

81It will therefore be for the referring court to examine, in the light of all the other relevant circumstances prevailing in the dispute before it, whether the Grand Duchy of Luxembourg exceeded the limits of its discretion by not providing that a person supplying services which is in a situation such as that of the applicant in the main proceedings may benefit, for the purposes of his or her business, from recognition as a body devoted to social wellbeing. It is only if that Member State has exceeded those limits that it will be for the referring court itself to grant such a recognition in respect of the period at issue in the main proceedings, if necessary by disapplying the substantive or procedural provisions of domestic law precluding that recognition.

82That being said, in order to give an answer which will be of use to the referring court, it must be observed that, subject to verification by that court, some of the information contained in the documents before the Court appears to be of some relevance for the purposes of the examination seeking to establish whether the applicant in the main proceedings, despite being a lawyer, has shown a stable social engagement in operating his business during the period at issue in the main proceedings.

83The circumstance that the person concerned has carried on his transactions, some of which, in any event, appear to be devoted to social wellbeing, in the context of the powers of representation for protection that have been granted to him, under the various protection schemes provided for in Luxembourg law, by a judicial authority which supervises also the exercise thereof, may be taken into consideration in that regard. Such a circumstance tends to indicate not only that the person supplying the services concerned is required to carry out those transactions in accordance with the specific legislative provisions laid down in Luxembourg law in that regard, but also that that person may act only after an express decision has been taken by the judicial authority with jurisdiction to appoint the persons entrusted with the performance of those services falling within the field of welfare and social security work.

84Moreover, the circumstance that the remuneration for the transactions concerned is always determined under the supervision of that judicial authority (see, to that effect, judgment of 21 January 2016, Les Jardins de Jouvence, C‑335/14, EU:C:2016:36, paragraph 38) and that that remuneration is liable to be borne by the State in the event that the recipient is indigent may also be relevant.

85It should also be borne in mind that the Court has already held, in the case of a nurse running her own business as a sole trader and relying on the exemption provided for in Article 132(1)(g) of the VAT Directive, that a Member State may, in principle, require, without exceeding the discretion granted to it in that context, that the medical and pharmaceutical costs of such a taxable person be borne wholly or in part by the statutory social security and welfare bodies in at least two thirds of cases, in order to ensure that that service provider may be recognised as being devoted to social wellbeing (see, by analogy, judgment of 15 November 2012, Zimmermann, C‑174/11, EU:C:2012:716, paragraphs 10 and 35 to 37).

86Similarly, there is nothing to prevent the Member State concerned from making such recognition subject to the requirement that the person supplying services must take certain procedural steps to that end, since such steps are likely to enable the authorities concerned to ascertain whether the person supplying services is devoted to social wellbeing. It seems, however, that, as regards the exemption provided for by the national provision transposing Article 132(1)(g) of the VAT Directive, Luxembourg law does not require such steps to be taken, which is, however, a matter for the referring court to verify.

87The application of such criteria must, however, comply with the principle of fiscal neutrality. Thus, in the main proceedings, it is necessary to determine whether other taxable persons, including not-for-profit associations, already enjoy similar recognition in circumstances similar to those prevailing in the situation of the applicant in the main proceedings, an aspect on which he and the Luxembourg Government, in their written replies to the questions put by the Court, have adopted diverging views.

88In the light of all of the foregoing considerations, the answer to the fifth to seventh questions is that Article 132(1)(g) of the VAT Directive must be interpreted as meaning, first, that the supply of services for the benefit of adults lacking legal capacity and intended to protect them in civil matters constitutes a ‘supply of services closely linked to welfare and social security work’, and, secondly, that it is not excluded that a lawyer supplying such services of a social nature may benefit, for the purposes of the business he or she operates and within the limits of those supplies, from recognition as a body devoted to social wellbeing, and such recognition must however necessarily be granted by a judicial authority only if the Member State concerned, by refusing that recognition, exceeded the limits of the discretion which it enjoys in that regard.

The eighth question

89By its eighth question, the referring court asks, in essence, whether the principle of the protection of legitimate expectations precludes the tax authority from imposing VAT on certain transactions relating to a previous period, in a situation where that authority has, over a number of years, accepted the taxable person’s VAT returns which do not include transactions of the same kind in its taxable transactions and where the taxable person is unable to recover the VAT due from those who have remunerated those transactions.

90It should be recalled that the principle of the protection of legitimate expectations extends to any person in a situation in which an administrative authority has caused that person to entertain expectations which are justified by precise assurances provided to him or her (judgment of 5 March 2020, Idealmed III, C‑211/18, EU:C:2020:168, paragraph 44).

91It is apparent from the documents before the Court that the Luxembourg tax authority, after accepting the non-taxation of the transactions carried out by EQ since 2004, changed that practice, in respect of EQ, by its tax adjustment decision of 19 January 2018, with regard to the transactions carried out from 2014 onwards, by demanding payment of VAT for transactions of the same nature.

92The mere acceptance, even for several years, by the Luxembourg tax authority of the VAT returns submitted by EQ, which did not include the amounts relating to the transactions at issue in the main proceedings, does not amount to a precise assurance provided by that authority that VAT is not to be applied to those transactions and cannot, therefore, give rise to a legitimate expectation on the part of that taxable person that the transactions concerned are not taxable.

93As regards, moreover, the situation, referred to by the referring court, in which the person supplying services supplied services without collecting the VAT for which that person is liable, and in which that person would not be in a position to recover from those who have paid those supplies the VAT subsequently required by the tax authority, it is necessary, if that is the case, to take the view that the remuneration received in that regard by the person supplying services already includes the VAT due, so that the collection of VAT is compatible with the basic principle of the VAT Directive that the VAT system is aimed at taxing only the end consumer (see, to that effect, judgment of 7 November 2013, Tulică and Plavoşin, C‑249/12 and C‑250/12, EU:C:2013:722, paragraphs 34, 42 and 43).

94In the light of those considerations, the answer to the eighth question is that the principle of the protection of legitimate expectations does not preclude the tax authority from imposing VAT on certain transactions relating to a previous period, in a situation where that authority has, over a number of years, accepted the taxable person’s VAT returns which do not include transactions of the same kind in its taxable transactions and where the taxable person is unable to recover the VAT due from those who have remunerated those transactions, with the remuneration already paid then deemed to include this VAT already.

Costs

95Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

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

Article 9(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that the supply of services for the benefit of adults lacking legal capacity and intended to protect them in civil matters, the performance of which is entrusted to the person supplying services by a judicial authority in pursuance of the law and remuneration for which is fixed by the same authority as a fixed amount or is based on a case-by-case assessment by taking into account in particular the financial situation of the person lacking legal capacity – and such remuneration may moreover be borne by the State in the event that that person is indigent – where that supply is for consideration, the person supplying services obtains income therefrom on a continuing basis and the overall amount of the compensation for that activity is determined on the basis of criteria intended to ensure that the operating costs incurred by the person supplying services are covered, constitutes an economic activity within the meaning of that provision.

Article 132(1)(g) of Directive 2006/112 must be interpreted as meaning, first, that the supply of services for the benefit of adults lacking legal capacity and intended to protect them in civil matters constitutes a ‘supply of services closely linked to welfare and social security work’, and, secondly, that it is not excluded that a lawyer supplying such services of a social nature may benefit, for the purposes of the business he or she operates and within the limits of those supplies, from recognition as a body devoted to social wellbeing, and such recognition must however necessarily be granted by a judicial authority only if the Member State concerned, by refusing that recognition, exceeded the limits of the discretion which it enjoys in that regard.

The principle of the protection of legitimate expectations does not preclude the tax authority from imposing value added tax (VAT) on certain transactions relating to a previous period, in a situation where that authority has, over a number of years, accepted the taxable person’s VAT returns which do not include transactions of the same kind in its taxable transactions and where the taxable person is unable to recover the VAT due from those who have remunerated those transactions, with the remuneration already paid then deemed to include this VAT already.

Signatures

[Signatures]

( *1 ) Language of the case: French.

OPINION OF ADVOCATE GENERAL

PITRUZZELLA

delivered on 14 January 2021 ¹

(Reference for a preliminary ruling – Harmonisation of fiscal legislation – Value added tax (VAT) – Concepts of economic activity and of services closely linked to welfare and social security work – Concept of bodies recognised as being devoted to social wellbeing – Powers of representation of adults – Liability to VAT)

1Are the services provided by a lawyer under a scheme for the protection of adults lacking legal capacity subject to value added tax (VAT)?

2Can those services be likened to ‘services closely linked to welfare work’?

3Can a professional registered with a professional association be deemed to be a ‘body recognised as being devoted to social wellbeing’, and to what extent?

4Those are the principal questions central to the case being brought today in a dispute between EQ and the Administration de l’Enregistrement, des Domaines et de la TVA (the Luxembourg Registration, Land and VAT Authority) (‘the tax authority’).

5Essentially, the Court of Justice is being asked to rule on the scope of the concepts cited above, laid down in Article 132(1)(g) of Directive 2006/112/EC ² (‘the VAT Directive’), and on the limits on the discretion of Member States in terms of introducing additional conditions to those laid down in the directive.

I. Legal framework

A. EU law

6Article 2(1)(c) of the VAT Directive provides:

‘The following transactions shall be subject to VAT:

…

the supply of services for consideration within the territory of a Member State by a taxable person acting as such; …’

7Under Article 9(1) of the VAT Directive:

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

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

8Article 131 of the VAT Directive provides:

‘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.’

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

9In accordance with Article 132(1)(g) of the directive, Member States are to 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’.

B. Luxembourg law

10Article 4(1) of the Luxembourg Law on VAT of 12 February 1979 (‘the Law on VAT’), in the version applicable to the facts in the main proceedings, lays down as follows:

‘“Taxable person” under Article 2 shall mean any person who independently and regularly carries out transactions that form part of any economic activity, whatever the purpose, results or location of that activity …’

11Article 5 of the Law on VAT lays down as follows:

‘“Economic activity” shall mean any activity aimed at generating income, and in particular activities of producers, traders and persons supplying services, including mining and agricultural activities, the activities of the professions and activities involving the use of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis.’

12In accordance with Article 44(1)(o) of the Law on VAT:

‘1. The following shall be exempted from value added tax within the limits and under the conditions to be laid down by Grand-Ducal Regulation:

…

the supply of services and of goods closely linked to social security, welfare or public health, carried out by bodies governed by public law, mutual investment funds, public bodies or those of public interest, care homes, old peoples’ homes, gerontological or geriatric institutions, hospital or charitable organisations and other similar private sector institutions, where those bodies are recognised by the competent public authorities as being devoted to social wellbeing;

…’

13The implementing conditions for Article 44(1) of the Law on VAT (as amended) are laid down in the Grand-Ducal Regulation of 23 December 1981 (‘the Grand-Ducal Regulation’). Article 3 of that regulation lays down as follows:

‘The guardianship judge may award to the guardianship manager remuneration, the amount or the method of calculation of which he shall determine, by reasoned decision, taking into account the financial position of the person lacking legal capacity.

That remuneration shall consist in either a fixed amount, a percentage of the income of the person lacking legal capacity or a fee fixed according to the duties performed.’

II. The facts, the main proceedings and the questions referred for a preliminary ruling

14EQ has been a lawyer of the Luxembourg bar since 1994 and has, since 2004, exercised powers of representation under schemes for the protection of adults lacking legal capacity (primarily as a curator and as a guardian).

15Until 2013, the tax authority took the view that that activity was not subject to VAT.

16By two VAT notices of 19 January 2018, relating to the years 2014 and 2015, the tax authority has requested a VAT payment from EQ for his activities representing adults lacking legal capacity carried out in those years. In so doing, the tax authority has decided to make those representation activities subject to VAT for the first time.

17By a decision of 4 June 2018, the tax authority dismissed the action brought by EQ against the two VAT notices.

18EQ then brought an action before the referring court, the tribunal d’arrondissement of Luxembourg (District Court, Luxembourg), requesting that the decision of 4 June 2018 be set aside.

19EQ asserts that the services in question are not economic activities subject to VAT because they perform a social function.

20In his view, those activities are exempt from VAT under the national provision transposing Article 132(1)(g) of the VAT Directive, namely Article 44(1)(o) of the Luxembourg Law on VAT, which recognises an exemption from VAT for the supply of services closely linked to social security and welfare work carried out by bodies that have been recognised by the competent public authorities as being devoted to social wellbeing.

21EQ submits that those activities were not subject to VAT from 2004 to 2013, so that making them subject to VAT for the years 2014 and 2015 would therefore constitute an infringement of the principle of the protection of legitimate expectations.

22The referring court has stated that Luxembourg law covers various schemes for the protection of adults lacking legal capacity. The application of those protection schemes may result in the appointment of a special representative by the guardianship judge, pending a decision on the protection scheme to be applied, and of an ad hoc representative in the case of a conflict of interest.

23The referring court asks, first of all, whether the activities relating to the protection of adults, undertaken for financial consideration, constitutes an economic activity under Article 9(1) of the VAT Directive.

24With regard to the amount of the financial remuneration, although it follows from the case-law of the Court of Justice that the fact that the price paid for an economic transaction is lower than the cost price is irrelevant, the remuneration must, however, be determined in advance and must cover the operating costs of the service provider. ³ In this case, the remuneration is determined on a case-by-case basis by the competent court, in all cases on the basis of the financial position of the recipient; the remuneration is therefore not determined in advance and does not necessarily guarantee in all circumstances that the costs incurred by the supplier of the services are covered.

25Furthermore, the referring court asks whether activities associated with the protection of adults lacking legal capacity can be exempted from VAT, and therefore whether the abovementioned activities constitute ‘the supply of services and of goods closely linked to welfare and social security work’ under Article 132(1)(g) of the VAT Directive, and whether the lawyer carrying out those activities can fall within the concept of ‘bodies recognised by the Member State concerned as being devoted to social wellbeing’ under that same provision. On this point, EQ assumes a position that takes into account the nature of the activity carried out regardless of the legal status of the service provider, whereas the tax authority argues that the legal status of the person concerned must be taken into account and, without expressly saying so, that service providers operating for profit must be excluded.

26The referring court also asks for clarification as to the concept of ‘recognition’ of the body concerned as being devoted to social wellbeing. Although the VAT Directive simply refers to recognition ‘by the Member State concerned’, it does not explain the recognition process or specify the body authorised for the purposes of recognition. The facts of the present case raise, inter alia, questions as to whether the authority concerned can be a judicial authority and whether recognition can be carried out on a case-by-case basis.

27Lastly, the referring court asks about the applicability of the principle of the protection of legitimate expectation in the present case. The court notes that VAT is not a tax payable by the taxable person but by the end consumer. Where, as in the present case, the authority responsible for collecting VAT informs the taxable person after the transactions in question have been carried out that it intends to depart from its earlier position of not subjecting those transactions to VAT, the taxable person is in a position where he or she could not charge VAT to the recipient of those supplies, while having to remit it to the State. The taxable person would therefore be required to pay the amounts claimed by the State in respect of VAT from his or her own funds, which would infringe the principle of fiscal neutrality of VAT.

28In these circumstances, the tribunal d’arrondissement (District Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

Is the concept of “economic activity” within the meaning of the second subparagraph of Article 9(1) of Directive [2006/112] to be interpreted as including or excluding supplies of services provided in the context of a triangular relationship in which the provider of the services is appointed to provide those services by an entity which is not the same person as the recipient of the supplies of services?

Is the answer to the first question different according to whether the supplies of services are provided in the context of a role entrusted to the provider by an independent judicial authority?

Is the answer to the first question different according to whether the remuneration of the service provider is borne by the recipient of the services or by the State, an entity of which appointed the service provider to provide those services?

Is the concept of “economic activity” within the meaning of the second subparagraph of Article 9(1) of Directive [2006/112] to be interpreted as including or excluding supplies of services where the remuneration of the service provider is not a legal requirement and the amount of the remuneration, where it is awarded, (a) is based on a case-by-case assessment, (b) is always dependent on the financial position of the recipient of the services, and (c) is calculated by reference to a fixed amount, a percentage of the income of the recipient of the services or the services performed?

Is the concept of “the supply of services and of goods closely linked to welfare and social security work” contained in Article 132(1)(g) of [Directive 2006/112] to be interpreted as including or excluding services performed in the context of a scheme for the protection of adults [lacking legal capacity] established by law and subject to the control of an independent judicial authority?

Is the concept of “bodies recognised as being devoted to social wellbeing” contained in Article 132(1)(g) of [Directive 2006/112] to be interpreted, in view of the recognition of the social character of the body, as laying down certain requirements vis-à-vis the way in which the service provider operates or as regards the not-for-profit or profit-making objective of the activity of the service provider, or more generally as restricting by other criteria or conditions the scope of the exemption provided for in Article 132(1)(g), or is the performance of services “linked to welfare and social security work” alone sufficient to give the body at issue a social character?

Is the concept of “bodies recognised as being devoted to social wellbeing” contained in Article 132(1)(g) of [Directive 2006/112] to be interpreted as requiring a recognition process based upon a pre-defined procedure and pre-determined criteria, or is ad hoc recognition possible on a case-by-case basis, where appropriate by a judicial authority?

Does the principle of legitimate expectations as interpreted by the case-law of the Court of Justice of the European Union allow the authority responsible for recovering VAT to require that a person liable to VAT pays the VAT on economic transactions relating to a period which had ended when the authority’s decision to apply VAT was made after that authority has, for an extended time prior to that period, accepted VAT returns from that taxable person which do not include economic transactions of the same kind in its taxable transactions? Is that possibility on the part of the authority responsible for recovering VAT subject to certain conditions?’

III. Legal analysis

29The questions referred are essentially intended to determine whether the activities carried out by a lawyer, as an agent, curator and guardian of adults lacking legal capacity, are subject to VAT or whether an exemption applies.

30As suggested by the Commission, the eight questions referred can be subdivided into three groups:

the first four relate to the concept of economic activity, and in particular whether the abovementioned activities fall within the concept of economic activity under Article 9(1), taken together with Article 2(1)(c) of the VAT Directive;

the fifth, sixth and seventh questions relate to the scope of the exemption provided for under Article 132(1)(g) of the VAT Directive, and in particular whether those activities are exempt as ‘services closely linked to welfare and social security work’ and whether the lawyer carrying out those services can be considered ‘a body recognised by the Member State concerned as being devoted to social wellbeing’ under that same provision;

the final question referred aims to clarify whether the principle of the protection of legitimate expectations precludes a situation where those activities could be liable to VAT where the tax authorities have agreed, in the past and for a lengthy period, that they were not liable to that tax.

31As requested by the Court, this Opinion will focus on the fifth, sixth and seventh questions referred – grouped under (B) above – which relate to the scope of the exemption for services closely linked to welfare and social security work. The economic nature of the services on the basis of the criteria indicated by Article 9(1) of the VAT Directive – covered by the group of questions under (A) above – will therefore be taken as read.

32I should note first that the interest in the questions being examined extends beyond the present case, since the Court currently has another similar action before it, referred by the Verwaltungsgerichtshof (Supreme Administrative Court, Austria) on this same issue, relating to a single question referred that broadly overlaps the questions included in group (B). ⁴

33In case C‑1/20 too, the applicant is a lawyer whom the court frequently appoints as representative of adults lacking legal capacity. The tax office has determined that the revenues from the activities carried out by the lawyer in the capacity of representative are liable to the payment of VAT. The applicant brought an action before the Bundesfinanzgericht (Federal Finance Court, Austria), which dismissed the case on the basis that the professional category of lawyers cannot be regarded as bodies devoted to social wellbeing.

34Nonetheless, a reading of the request for a preliminary ruling from the Austrian court reveals a series of elements that may also be useful in responding to the questions in the present case.

35In particular, for the purposes of this Opinion, it is important to note the circumstance that ‘the Bundesfinanzhof [(the German Federal Finance Court)], ruling on the question of the activities governed by § 1896 of the Bürgerliches Gesetzbuch (BGB) [(the German Civil Code)], comparable in German law to those of a professional curator, reached the conclusion that those individuals could rely on the tax exemption laid down by Article 132(1)(g) of [the VAT Directive], except in the case of remunerated services carried out by a lawyer appointed as a curator who performs legal activities in the context of the curatorship [(judgment of the Bundesfinanzhof (Federal Finance Court) of 25 April 2013, V R 7/11)]. The case-law cited prompted the German legislature to include an exemption for those services in [§ 4(16)(k) of the Umsatzsteuergesetz (German Law on Turnover Tax)]’. ⁵

36To respond to the questions referred to the Court grouped under (B) above, we should note that, according to the Court’s settled case-law, Article 132(1)(g) of the VAT Directive states that the exemption from payment of VAT provided for under that provision will apply only if two conditions are met: the services in question must be ‘closely linked to welfare and social security work’ and they must be carried out by ‘bodies governed by public law or by other bodies recognised by the Member State concerned as being devoted to social wellbeing’. ⁶

37We must therefore determine whether the activities carried out by a lawyer in the capacity of agent, curator or guardian of an adult lacking legal capacity fall within the scope of the VAT exemption laid down in Article 132(1)(g) of the VAT Directive, and therefore whether those activities are ‘closely linked to welfare and social security work’ and whether the lawyer responsible for carrying them out can be considered as a ‘body recognised by the Member State concerned as being devoted to social wellbeing’.

38Specifically, we must determine whether the interpretation proposed by the Luxembourg Government – whereby a lawyer carrying out those activities should be excluded from the VAT exemption – is in line with a textual, systematic and purposive interpretation of Article 132(1)(g) of the VAT Directive ⁷ and, moreover, whether Member States have a degree of discretion to introduce such an exclusion for interpretative purposes.

39According to the settled case-law of the Court, ‘the wording used to describe the exemptions provided for in Article 132 of the VAT Directive should be interpreted restrictively’, ⁸ since they constitute exceptions to the general principle that VAT is to be levied on all services supplied for consideration by a taxable person.

40However, that strict interpretation on the part of the Member State when transposing the directive must not go so far as to render the implementation of the scheme of exemptions so excessively difficult as to rob them of their effect as autonomous concepts.

41It is therefore necessary to consider the underlying purpose of the provision concerned.

42The purpose of the VAT Directive is to harmonise national laws so as to establish a common system of value added tax and, thus, a uniform basis of assessment.

43The interpretation of the terms contained in the VAT Directive must therefore be consistent with the objectives underlying the exemptions and must comply with the requirements of the principle of fiscal neutrality inherent in the common system of VAT. The terms used to describe the exemptions laid down in Article 132 must therefore not be construed in such a way as to deprive them of their intended effects. ⁹

44By treating certain supplies of services in the public interest in the social sector more favourably for the purposes of VAT, that exemption is indeed intended to reduce the cost of those services and to make them more accessible to the individuals who may benefit from them. ¹⁰

45The case file would seem to indicate, at least in the applicant’s arguments in the main proceedings, that even the Luxembourg Ministry of Justice is of the view that welfare and social services should be exempt from VAT, even if carried out by lawyers, so as not to increase the cost charged to society. ¹¹

(a) The condition whereby the supply of services must be ‘closely linked to welfare and social security work’

46The concept of a ‘close link’, therefore, according to the social care rationale that characterises it on the basis of its purpose, does not require a particularly strict interpretation, in particular given the fact that the exemption provided for in Article 132(1)(g) of the VAT Directive is subject to the further condition that the services concerned must be ‘essential’ to the welfare and social security work in accordance with Article 134(a) of that directive. ¹²

47Although the concepts of ‘welfare and social security work’ are not defined in the VAT Directive, the case-law of the Court has on several occasions recognised the social nature of certain activities associated with the care, assistance and protection of adults who are not self-sufficient.

48In the judgment in Kügler, ¹³ the Court held 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 amounts to the supply of services closely linked to welfare and social security work within the meaning of Article 13A(1)(g) of the Sixth Directive. ¹⁴

49Similarly, in the judgment in Zimmerman, ¹⁵ it was not disputed by the parties that the out-patient services, provided by a professional nurse, could be regarded as ‘closely linked to welfare and social security work’ in accordance with Article 13A(1)(g) of the Sixth Directive.

50It must also be acknowledged that the wording of Article 132(1)(g) of the VAT Directive expressly mentions the supply of services by old people’s homes among the supply of services and of goods closely linked to welfare and social security work, which thus come under the exemption provided for by that provision. This circumstance has been noted by the Court in the judgment in Les Jardins de Jouvence. ¹⁶

51According to the case file, the appointment of a legal representative assumes that the adult is not able to take care of his or her own interests independently because that person is suffering from a psychiatric illness or mental disability, disabling ageing or another form of incapacity.

52To assess the social nature of the activities carried out by the legal representative, and therefore to determine whether those activities are closely linked to welfare work, consideration should first be given to the specific nature of those activities. For this purpose, the written answers provided by the parties to the Court’s question on this issue are particularly valuable.

53In the view of the applicant in the main proceedings, the majority of the services carried out by lawyers appointed as agents, curators or guardians for adults lacking legal capacity involve the following: (1) visiting the persons concerned in their homes to ascertain their wellbeing and determine their needs; (2) contacting family members, social workers and individuals providing care; (3) deciding where they should live; (4) applying for pensions and social benefits; (5) organising home help; (6) paying invoices, obtaining reimbursements of medical expenses, preparing declarations of income and providing money for everyday expenses.

54The representative may also be required to provide legal services, although those activities are not the exclusive province of lawyers: negotiating, signing or terminating lease agreements, selling real estate or personal property, or supporting or representing the adult in matters of inheritance. It is true that, according to Luxembourg national law, the close relatives of the recipient or institutions responsible for protecting individuals suffering from mental or physical problems can also be appointed as agents, curators and guardians.

55Lastly, those activities can include services that fall within the exclusive remit of lawyers, such as representing an adult lacking legal capacity in a legal dispute, but services of this type are much less common.

56The response provided by the Luxembourg Government on this point is that, according to the information collected by the Luxembourg Bar Association, the activities of a lawyer in this sector are numerous and varied and do not involve merely everyday representation but, rather, ‘some of the activities of the lawyer could be classified as “social” activities: contact with social workers, doctors, banks and families. For example, lawyers are often required to manage care home admissions, to request financial support and to manage a move’. ¹⁷

57The responses provided by the parties to the Court’s question as to the specific nature of the activities carried out by legal representatives do not therefore seem to diverge in substance: lawyers carry out a range of different activities for the adults lacking legal capacity and some of those activities can be classified as ‘social’ activities, including in the aforementioned sense of ‘closely linked to welfare work’.

58What does diverge in the factual information provided by the parties is the extent and proportion of the activities undertaken: the applicant in the main proceedings contends that ‘social’ activities outweigh other activities, while the Luxembourg Government takes the view that such activities represent ‘some’ of the many types of activities carried out.

59To determine the social nature of those representation activities, we must also consider certain elements laid down in the detailed provisions (in the present case, the Grand-Ducal Regulation): (a) the cost of those agents is borne by the State, if the adult lacking legal capacity does not have sufficient financial means; (b) the remuneration for the services, which must be set by the court, is determined in particular on the basis of the income and financial position of the adults lacking legal capacity; (c) the representative is subject to review by the court; and (d) the allowance paid is most often a flat-rate allowance and only rarely corresponds to services provided.

60On the basis of the case file, those elements seem to be present in the present case.

61We can therefore state, on the basis of the unanimous interpretation of the statements made by the parties, including the public sector party represented by the Luxembourg Government, that some of the activities carried out by the lawyer as agent, curator or guardian of adults lacking legal capacity can be considered to be ‘closely linked to welfare work’ because they are linked to the care of individuals who are lacking legal capacity and to their personal life choices, and are also ‘essential’ to the performance by the agent, guardian or curator of welfare actions, as they are necessary to guarantee the recipients decent living conditions in view of their mental or physical problems. ¹⁸ Those activities therefore represent activities that are an expression of the requirement for care, assistance and protection of individuals suffering from mental or physical problems, who would not otherwise be able to manage on their own. In particular, this covers the decision as to whether to place the person concerned in a care home appropriate for that person’s needs or whether to organise care in the home.

62As has also been recognised by the Luxembourg Government, in fact, the concept of ‘welfare work’ can also be described as assistance that enables a natural person to live with dignity in times of need. ¹⁹

63Asset management can be (at least in some cases) an activity that contributes to ensuring that the recipient can live with dignity and to protecting that individual from prejudicial acts of disposal.

64Furthermore, living with dignity is definitely jeopardised if the specific activities of everyday life, including those of a financial nature, are not managed with the necessary prudence.

65With reference to the second category of activities carried out by lawyers acting as agents, curators or guardians for adults lacking legal capacity, relating exclusively to the profession of lawyer, those activities represent a portion of the activities carried out by lawyers acting as agents, curators or guardians.

66I do not believe that those activities carried out by lawyers acting as agents, curators or guardians in their capacity as professionals can be considered to be activities that are closely linked to welfare work and are essential to the services exempted. They are, in fact, professional activities that are the exclusive province of lawyers, which are undertaken in the exercise of an independent profession rather than to fulfil the social function of agent, curator or guardian.

67To assess whether the exemption applies for a lawyer carrying out activities that have a definite welfare and social security purpose such as those described above, we must determine whether the second condition required by the VAT Directive is met (recognition by the Member State as a body devoted to social wellbeing). It is my view that the two conditions are closely linked, in the sense that a significant prevalence of welfare activities can serve to determine the nature of the person performing the services, characterising that person as engaged in social work on a continuing basis and therefore deserving of recognition in that regard.

68As we will see, in my view, if a lawyer undertakes predominantly social functions (closely linked to welfare work) different from those activities that are strictly law-related, that individual may enjoy the exemption in relation to the welfare and social security services provided. That exemption cannot be excluded solely by the fact that those activities are performed by a lawyer.

(b) The condition relating to recognition by the Member State as a body devoted to social wellbeing

69Article 132(l)(g) of the VAT Directive does not specify either the conditions or the procedures for recognising bodies other than those governed by public law as being devoted to social wellbeing.

70Consequently, 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. ²⁰

71Specifically, under Article 132 of the VAT Directive Member States may grant the exemption provided for in subparagraph (g) of Article 132(1) to bodies other than those governed by public law, making this exemption subject to compliance with one or more conditions indicated in that article. Member States are free to impose those optional conditions on a supplementary basis for the granting of the exemption in question. ²¹

72It follows that Article 132(1)(g) of the VAT Directive grants the Member States discretion to recognise certain bodies not governed by public law as being devoted to social wellbeing. ²²

73However, it should be noted that the first paragraph of Article 131 circumscribes the extent of the discretionary power available to the Member States, stating that they may introduce additional conditions to those stated in the directive for the purposes of ‘ensuring the correct and straightforward application of those exemptions and of preventing any possible evasion, avoidance or abuse’.

74The discretion that the Member States have in laying down the conditions for entitlement to the exemption cannot extend, therefore, to altering the substantive definition of the exemptions listed in the directive.

75The words ‘for the purposes of ensuring the correct and straightforward application of exemptions’ are, in my view, intended to allow Member States to introduce national regulations that will not make it excessively difficult for economic operators to apply exemptions and that will possibly also streamline inspection procedures.

76Furthermore, the purpose of ‘preventing any possible evasion, avoidance or abuse’ clearly cannot refer to mere subjective exclusions not related to the specific nature of the activities carried out.

77In any case, in the light of the general principles, it should be noted that the discretion available to the Member States must be exercised in line with EU law. ²³

78When a taxpayer contests the recognition – or non-recognition – of a body as being devoted to social wellbeing under Article 132(1)(g) of the VAT Directive, it is for the national courts to examine whether the competent authorities have observed the limits on discretionary power granted by the abovementioned article while applying the principles of EU law, in particular the principle of equal treatment, which is represented in terms of VAT by the principle of fiscal neutrality. ²⁴

79In the present case, the Luxembourg Government has not recognised EQ as a body devoted to social wellbeing in relation to the activities that he carries out as agent, curator and guardian. As I understand it, the Luxembourg Government believes this is precluded by his position as a lawyer.

80The Court has already rejected in previous rulings the position that the professional category of lawyers may be considered, in principle, as a body devoted to social wellbeing. According to the Court, a Member State cannot apply a reduced rate of VAT to supplies of services provided by private profit-making entities merely on the basis of an assessment of the nature of those services without taking into account, inter alia, the objectives pursued by those entities viewed as a whole and whether they are engaged in social work on a continuing basis. In the light of its overall objectives and the fact that any engagement in social work is not permanent, the Court has determined that the professional category of lawyers and legal practitioners as a whole cannot be regarded as devoted to social wellbeing. ²⁵

81On the basis of the same argument, the Court has ruled that the services rendered by lawyers under the national legal aid scheme are not exempt from VAT under Article 132(1)(g) of the VAT Directive. ²⁶

82A case such as that at issue here does, however, seem to have some specific characteristics that could suggest that the applicability of the VAT exemption should not be excluded a priori.

83As can be seen from the information provided above in relation to the types of services rendered by a lawyer in the role of agent, curator or guardian for an adult lacking legal capacity, at least some of those services have a definite social aspect and could therefore be considered closely linked to the concept of ‘welfare work’ as described above.

84They are not, in fact, the exclusive province of lawyers, and indeed do not require that the individual performing them be a lawyer.

85I think at this point it is important to verify certain additional conditions that must be met for the VAT exemption to be compatible with a situation similar to the one in the present case: the importance of classification as a lawyer for a person carrying out the functions of agent, curator or guardian for an adult lacking legal capacity, and the extent and continuing nature of the engagement in social work by the person requesting the exemption, also for the purposes of establishing compliance with the limits on discretion by Member States in introducing additional conditions to those laid down in the directive for the recognition of the exemption.

86All of those conditions must be specifically established by the national courts, but the Court is required to provide those courts with parameters to ensure that the determination is made in accordance with EU law.

87If it is established that the condition whereby the services carried out must be closely linked to welfare work has been met, this would not be sufficient to hold that the second condition relating to recognition has also been met. That condition expressly requires that the person offering those services be recognised as a ‘body devoted to social wellbeing’. ²⁷

88In my view, the case-law of the Court should be interpreted as meaning that ‘the intention of the [EU] legislature to make the option of applying a reduced rate refer only to supplies of services provided by organisations meeting that dual requirement would be frustrated if a Member State were free to classify private profit-making entities as organisations within the meaning of point 15 merely because those entities provide inter alia services related to social wellbeing’. ²⁸

89However, I believe that the opposite is also true: the intention of the EU legislature would also be frustrated if a Member State were to refuse to classify as ‘bodies devoted to social wellbeing’ private bodies that, despite being profit-making (to a limited extent), provide social services in such a way as to demonstrate the continuing nature of their social engagement.

90I do not believe, in fact, that the case-law of the Court cited above can be interpreted as precluding a priori the possibility of a VAT exemption under Article 132(1)(g) of the VAT Directive for persons who provide predominantly services that are closely linked to welfare work, demonstrating the continuing nature of their social engagement, solely because of the fact that they are professionally registered as lawyers.

91This conclusion is based, in the first place, on the principle of proportionality, which is one of the general principles of EU law. The Court has on several occasions pointed out that the means employed for the implementation of the Sixth Directive must be appropriate to achieve the objectives stated in that measure and must not go beyond what is necessary in order to attain them. ²⁹

92A failure to grant the exemption to a person simply because that person is professionally registered as a lawyer, however, could upset the balance of the provision of EU law with an ‘exclusionary’ intention that is alien to the spirit of the directive.

93It would appear to be more correct to focus, in the implementation of the exemption, on the activity that the person is engaged in, rather than on the nature of the person himself or herself.

94In the second place, we must consider the application of the principle of fiscal neutrality. The circumstance that the taxpayer is classified as a lawyer should not result in different tax treatment compared to a taxpayer that, despite essentially providing the same services, is covered by the exemption, in the case that they are individuals or associations that provide similar services and have been recognised. ³⁰

95Indeed, such an approach would be tantamount to focusing on the name of the taxable person concerned and could therefore conflict with the fact that consideration of the economic and commercial realities is a fundamental criterion for the application of VAT. This could also be problematic in terms of the principle of fiscal neutrality, which does not permit situations where similar economic transactions, which are thus in competition with each other, are treated differently for VAT purposes.

96In the third place, it should be noted that the activities in question are carried out by the lawyer not by virtue of the lawyer’s professional status, but following appointment by the court as an agent, curator or guardian for adults lacking legal capacity. The judicial authority grants the person appointed a specific function provided for by law for adults who are lacking legal capacity, conferring the power and duty to represent and protect the adults in question and to carry out the activities required to achieve that purpose. I would therefore ask whether the figure of agent, curator and guardian provided for under Luxembourg law could be viewed as a ‘body recognised as being devoted to social wellbeing’ because of the peculiar social dimension of that figure identified by law. In such a case, the recognition of the social nature of the function of agent, curator and guardian would derive directly from national law, while the judicial appointment decision would merely identify the person to whom the function is assigned.

97Lastly, I am not entirely convinced by the assertions made by the Luxembourg Government and the Commission, that the fact that profit making is typical of the profession of lawyer is a fact precluding recognition.

98The term ‘body’ is, in principle, sufficiently broad to include private bodies that operate for profit (on a limited basis). The fact that EQ performs some of his activities on a profit-making basis does not at all exclude the possibility that he might be classified as ‘other bodies recognised by the Member State concerned as being devoted to social wellbeing’, in accordance with Article 132(1)(g) of the VAT Directive. ³¹

99In my view, the above is subject to the proviso that the profit-making activities are limited, for the following reasons.

100First of all, we should note that the remuneration for the services rendered by the lawyer may be paid by the State, if the adult lacking legal capacity does not have sufficient financial means.

101This allowance, set on the basis of a Grand-Ducal regulation, as noted above, is never determined in advance, is not automatic – because it is subject to assessment by the court – and makes no distinction between the costs and services of the lawyer, and thus may in some cases not fully cover the costs. ³²

102According to case-law referred to previously, ³³ this circumstance can be included among the elements to be taken into consideration in establishing whether the body in question is devoted to social wellbeing and demonstrates that its social activities are carried out on a non-market basis, despite being in exchange for a fee.

103The Court has already held that, when considering whether to recognise as bodies devoted to social wellbeing bodies other than those governed by public law, 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. They include the existence of specific provisions; the public interest nature of the activities of the taxable person concerned; the fact that other taxable persons carrying out the same activities already enjoy similar recognition; and the fact that the costs of the services in question may be largely met by the State. ³⁴

104In the present case, it seems to me that some of the indicative elements identified by the Court to recognise that a given body is devoted to social wellbeing can also be found in the following, albeit in part: the public interest nature of at least some of the activities carried out by the taxable person; the fact that other taxable persons carrying out the same activities already enjoy the exemption; ³⁵ and the fact that at least some of the costs of those welfare and social services are borne by the State or, in any event, as in the present case, are always set by order and following assessment by the judicial authorities. It will naturally be a matter for the national court to determine whether those requirements are actually met in the main proceedings, but we should note that they are indicative elements and we should not consider that they all need to be present for the purposes of recognition.

105Specifically because the situation in the present case cannot be considered as a matter of course to be one of those typical cases that entitles the recipient to the exemption, in my opinion and as can be seen indirectly from the case-law cited above, the real element that characterises the position of the person, for the purposes of whether that person can be considered a ‘body devoted to social wellbeing’, is the continuing nature of that person’s engagement in social work.

106This circumstance can be easy to identify when the corporate object or sole purpose of the person’s activities is providing social and welfare services, but it is more difficult to determine (but cannot be excluded) when the person carries out a more structured activity such as that of a professional, inter alia, that of a lawyer.

107I believe that in this case, because, as already stated, it is not possible to exclude a priori the possibility of recognition solely because of membership of a specific professional association, the criterion that could guide the national authorities in terms of recognition should be related to the preponderance of activities of a social nature over other activities that are also legitimately carried out.

108Just like any other professional, a lawyer who primarily undertakes activities that can be described as ‘services closely linked to welfare and social security work’ can in my view be recognised as a ‘body devoted to social wellbeing’ including where that person also carries out activities of a strictly legal nature, even where those activities are not linked to social services.

109In such a case, the professional must ensure that he or she keeps separate accounts that make it possible to differentiate, for VAT purposes, the (main) activities closely linked to welfare work from the different (residual) activities subject to VAT. ³⁶

110In the light of the above, it will be a matter for the referring court to establish, taking into consideration all of the relevant elements, and in particular those mentioned, whether the national authorities, by not recognising EQ as a body devoted to social wellbeing, have observed the limits of the discretionary power afforded to them by Article 132 of the VAT Directive.

(c) The possibility for the national court to grant recognition

111Certain final considerations in relation to the recognition procedure: the Luxembourg Government and, as I understand it, also the Commission assert that, in the Luxembourg system, the recognition of a taxable person as a body devoted to social wellbeing cannot be granted by a court, even where it is established that the Luxembourg State, by not making provision in its national law for the possibility of recognition for a specific taxable person, has exceeded the bounds of its discretion in that regard.

112While it is true that Article 131 of the VAT Directive being examined leaves the Member States broad discretion in terms of recognising the bodies in question, the Court has explicitly held, specifically in relation to the interpretation of that directive, that ‘the general nature of the directive in question or the discretion which … it leaves to the Member States may not be relied upon in order to deny any effect to those provisions which in view of their subject matter may be relied upon to good purpose before a court even though the directive as a whole has not been implemented’. ³⁷

113It is first and foremost for the State to define that condition, but the Court has clarified that a Member State that has failed to adopt the implementing measures provided for in the directive ‘may not plead its own omission in order to refuse to grant to a taxpayer an exemption which the taxpayer may legitimately claim under the Sixth Directive’. ³⁸ Hence, if it is possible to reconstruct by other means the conditions for the recognition in question, the principles of EU law, and that of the effectiveness of the directives above all, require that the persons concerned not be prevented from exercising a right sanctioned by the directive in question.

114We should note that, according to settled case-law, ³⁹ wherever the provisions of a directive appear, so far as their subject matter is concerned, to be unconditional and sufficiently precise, they may, in the absence of implementing measures adopted within the prescribed period, be relied on against any national provision which is incompatible with the directive or in so far as they define rights which individuals are able to assert against the State.

115In the judgment in Kügler, the Court clarified that Article 132(1)(g) of the VAT Directive indicates in a sufficiently precise and unconditional manner the activities to which the exemption applies and is therefore a directly applicable provision. ⁴⁰

116The lack of appropriate legislative recognition of the bodies in question cannot be considered in itself such as to prejudice the direct applicability of the provision, but it must be ascertained whether the law of the Member State involved does not also make it possible to reconstruct, by other means, some form of recognition, albeit only de facto, of the body as being devoted to social wellbeing.

117To 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.

118However, the direct effect recognised by the Court for the exemption in question ⁴¹ leads me to believe that, if the State of Luxembourg has exceeded the bounds of its discretion by not making provision for the possibility of recognition in this specific case, the referring court could, if necessary, award that recognition itself.

119In that spirit, when an individual requests classification as a body devoted to social wellbeing, it is a matter for the national courts to establish whether the competent authorities have observed those limits by applying the principles laid down by EU law and 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’. ⁴²

120The solution proposed here does not extend the scope of the exemption beyond that laid down in the directive but merely makes it possible to grant the exemption to individuals who would be entitled to it within the meaning of the directive.

IV. Conclusion

Conclusion

121In the light of the above considerations, I propose that the Court of Justice respond to the questions referred for a preliminary ruling by the tribunal d’arrondissement, Luxembourg (District Court, Luxembourg), numbered 5, 6 and 7 and comprising group (B), as follows:

Article 132(1)(g) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that services closely linked to welfare work may include those services rendered in the context of a scheme for the protection of adults lacking legal capacity established by law and subject to the control of an independent judicial authority; classification as a body recognised as being devoted to social wellbeing may be awarded to a lawyer in the context of a scheme for the protection of adults lacking legal capacity on condition that the individual concerned is engaged in social work on a continuing basis, in the sense that the activities of a social nature take precedence to a significant degree over other activities; for the purposes of that recognition, there is no need for a recognition process based upon a pre-defined procedure and pre-determined criteria, but such recognition may be awarded on a case-by-case basis, where necessary by a judicial authority where non-recognition by the national legislature or the administrative authorities exceeds the bounds of the discretion left to the Member States by the directive.

For that purpose, it will be a matter for the national court to establish whether the activities of agent, curator and guardian carried out by EQ are closely linked to welfare work and, in the light of the nature of the services offered, whether EQ can be recognised as a body devoted to social wellbeing in the exercise of the services rendered as agent, curator and guardian for adults, and whether non-recognition by the national legislature and the administrative authorities exceeds the bounds of the discretion left to the Member States by the directive.

¹ Original language: Italian.

² Council Directive of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1).

³ See judgment of 22 February 2018, Nagyszénás Településszolgáltatási Nonprofit Kft. (C‑182/17, EU:C:2018:91, paragraph 38).

⁴ Request for a preliminary ruling from the Verwaltungsgerichtshof (Supreme Administrative Court) lodged on 3 January 2020, B v Finanzamt Wien (C‑1/20).

⁵ Case C‑1/20, request for a preliminary ruling, paragraph 41. In the written answers to the Court’s questions, and in particular in the response to question 3, EQ states that in Belgium lawyers appointed as temporary guardians for adults lacking legal capacity are not liable to VAT on their remuneration for those activities but they are liable to VAT for other services that they provide as lawyers.

⁶ See judgments of 8 October 2020, Finanzamt D (C‑657/19, EU:C:2020:811, paragraph 30); of 15 November 2012, Zimmermann (C‑174/11, EU:C:2012:716, paragraph 21); and of 26 May 2005, Kingscrest Associates and Montecello (C‑498/03, EU:C:2005:322, paragraph 34).

⁷ See judgment of 21 September 2017, DNB Banka (C‑326/15, EU:C:2017:719, paragraph 29 and the case-law cited).

⁸ See, most recently, judgment of 8 October 2020, Finanzamt D (C‑657/19, EU:C:2020:811, paragraph 28).

⁹ See judgments of 8 October 2020, Finanzamt D (C‑657/19, EU:C:2020:811, paragraph 28), and of 15 November 2012, Zimmermann (C‑174/11, EU:C:2012:716, paragraph 22). To that effect, still with reference to the interpretation of that provision, see judgment of 11 December 2008, Stichting Centraal Begeleidingsorgaan voor de Intercollegiale Toetsing (C‑407/07, EU:C:2008:713, paragraph 30 and the case-law cited). The Court asserts that, although a strict interpretation is necessary, this does not mean that the terms used to specify the exemptions should be construed in such a way as to deprive them of their intended effects or such as to make them more or less inapplicable in practice.

¹⁰ See judgments of 8 October 2020, Finanzamt D (C‑657/19, EU:C:2020:811, paragraph 29); of 21 January 2016, Les Jardins de Jouvence (C‑335/14, EU:C:2016:36, paragraph 41); and of 26 May 2005, Kingscrest Associates and Montecello (C‑498/03, EU:C:2005:322, paragraph 30).

¹¹ See request for a preliminary ruling, p. 3, in the description of the arguments of the applicant in the main proceedings.

¹² See judgment of 8 October 2020, Finanzamt D (C‑657/19, EU:C:2020:811, paragraph 31).

¹³ See judgment of 10 September 2002 (C‑141/00, EU:C:2002:473, paragraph 61).

¹⁴ Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1; ‘the Sixth Directive’). The Sixth Directive was repealed and replaced, from 1 January 2007, by the VAT Directive.

¹⁵ See judgment of 15 November 2012 (C‑174/11, EU:C:2012:716, paragraph 24).

¹⁶ See judgment of 21 January 2016 (C‑335/14, EU:C:2016:36, paragraph 42).

¹⁷ Written answers from the Luxembourg Government, paragraph 16.

¹⁸ See judgment of 21 January 2016, Les Jardins de Jouvence (C‑335/14, EU:C:2016:36, paragraph 54).

¹⁹ Written answers from the Luxembourg Government, paragraph 14.

²⁰ See judgments of 8 October 2020, Finanzamt D (C‑657/19, EU:C:2020:811, paragraph 43); of 21 January 2016, Les Jardins de Jouvence (C‑335/14, EU:C:2016:36, paragraph 32); and of 15 November 2012, Zimmermann (C‑174/11, EU:C:2012:716, paragraph 26 and the case-law cited).

²¹ See judgments of 21 January 2016, Les Jardins de Jouvence (C‑335/14, EU:C:2016:36, paragraph 33), and of 15 November 2012, Zimmermann (C‑174/11, EU:C:2012:716, paragraph 27 and the case-law cited).

²² See judgment of 26 May 2005, Kingscrest Associates and Montecello (C‑498/03, EU:C:2005:322, paragraph 51 and the case-law cited).

²³ See judgments of 10 September 2002, Kügler (C‑141/00, EU:C:2002:473, paragraphs 54 and 57), and of 26 May 2005, Kingscrest Associates and Montecello (C‑498/03, EU:C:2005:322, paragraphs 51 and 52).

²⁴ See judgments of 10 September 2002, Kügler (C‑141/00, EU:C:2002:473, paragraph 56), and of 26 May 2005, Kingscrest Associates and Montecello (C‑498/03, EU:C:2005:322, paragraphs 52 and 54).

²⁵ See judgment of 17 June 2010, Commission v France (C‑492/08, EU:C:2010:348, paragraphs 45 and 46).

²⁶ See judgment of 28 July 2016, Conseil des ministres (C‑543/14, EU:C:2016:605, paragraph 65).

²⁷ See judgments of 8 October 2020, Finanzamt D (C‑657/19, EU:C:2020:811, paragraph 30); of 15 November 2012, Zimmermann (C‑174/11, EU:C:2012:716, paragraph 21); and of 26 May 2005, Kingscrest Associates and Montecello (C‑498/03, EU:C:2005:322, paragraph 34).

²⁸ See judgment of 17 June 2010, Commission v France (C‑492/08, EU:C:2010:348, paragraph 44).

²⁹ See judgments of 23 November 2017, Di Maura (C‑246/16, EU:C:2017:887, paragraph 25), and of 26 April 2012, Commission v Netherlands (C‑508/10, EU:C:2012:243, paragraph 75).

³⁰ See judgment of 21 January 2016, Les Jardins de Jouvence (C‑335/14, EU:C:2016:36, paragraph 49).

³¹ See judgments of 21 January 2016, Les Jardins de Jouvence (C‑335/14, EU:C:2016:36, paragraph 39), and of 12 March 2015, go fair Zeitarbeit (C‑594/13, EU:C:2015:164, paragraph 27 and the case-law cited).

³² See the responses from EQ to the questions from the Court, and in particular the response to question 1.

³³ See judgment of 15 November 2012, Zimmermann (C‑174/11, EU:C:2012:716, paragraph 31 and the case-law cited).

³⁴ See judgments of 8 October 2020, Finanzamt D (C‑657/19, EU:C:2020:811, paragraph 44); of 21 January 2016, Les Jardins de Jouvence (C‑335/14, EU:C:2016:36, paragraph 35); and of 15 November 2012, Zimmermann (C‑174/11, EU:C:2012:716, paragraph 31 and the case-law cited).

³⁵ This requirement is the subject of divergent assertions from the applicant in the main proceedings and from the Luxembourg Government in the responses to the Court’s written questions. It will therefore be a matter for the referring court to determine whether or not they exist.

³⁶ For the partial exemption only of certain activities and not others, see most recently (to the effect that the existence of services of a different kind does not alter the nature of the exemption) judgments of 20 November 2019, Infohos (C‑400/18, EU:C:2019:992, paragraphs 42 and 43), and of 21 January 2016, Les Jardins de Jouvence (C‑335/14, EU:C:2016:36, paragraph 54).

³⁷ See judgment of 19 January 1982, Becker (8/81, EU:C:1982:7, paragraph 30).

³⁸ See judgments of 10 September 2002, Kügler (C‑141/00, EU:C:2002:473, paragraph 60), and of 15 November 2012, Zimmermann (C‑174/11, EU:C:2012:716, paragraph 32).

³⁹ See judgment of 10 September 2002, Kügler (C‑141/00, EU:C:2002:473, paragraph 51 and the case-law cited).

⁴⁰ See judgment of 10 September 2002 (C‑141/00, EU:C:2002:473, paragraph 53).

⁴¹ See judgment of 10 September 2002, Kügler (C‑141/00, EU:C:2002:473, paragraphs 52 to 61).

⁴² See judgment of 8 October 2020, Finanzamt D (C‑657/19, EU:C:2020:811, paragraph 45 and the case-law cited).