Reduced rate EU VAT case law

C-409/24 J-GmbH (Selective application of the reduced rate of VAT)

Judgment · 5 March 2026 · Germany

Selective reduced rate for hotel accommodation and ancillary supplies

Article 98(1) and (2) with Annex III, point 12 does not preclude such national rules, provided the legislation confines the reduced rate to concrete and specific aspects of the accommodation category, identified by objective, clear and precise criteria, and fiscal neutrality is respected. Where a Member State has exercised that discretion, whether the elements form a single supply for the average consumer is not decisive. Stadion Amsterdam concerned the situation where no such selective choice had been made. Hoteliers, holiday parks and campsites in Member States that split out non-accommodation elements can no longer rely on single-supply reasoning to pull breakfast, parking, wifi, gym and spa access into the reduced rate.

C-375/24 Keesing Deutschland

Judgment · 1 August 2025

Sudoku books fall within tariff heading 4902 and the reduced rate

The Court holds that such goods come under tariff heading 4902. The publications appear at regular intervals under the same title and so display the characteristics of a periodical, and their content, consisting mainly of puzzle grids, does not take them outside that heading. The reduced rate that the national legislation attaches to that heading therefore applies to their supply. A reminder that where a Member State uses the Combined Nomenclature to delimit a reduced rate category, as Article 98(3) expressly allows, customs classification decides the VAT rate and the customs case law governs.

C-576/23 Elite Games

Order · 14 March 2024 · Romania

Coin-operated amusement machines in a shopping centre are not an amusement park

The Court holds that such an installation does not fall within the concept of amusement parks in point 7. The services giving access to those machines therefore cannot benefit from the reduced rate that Member States may apply to admission to amusement parks. The categories in Annex III are derogations from the standard rate and are to be interpreted strictly. A short but practically useful order for the leisure sector.

C-733/22 Valentina Heights

Judgment · 8 February 2024 · Bulgaria

Reduced rate for hotel accommodation conditional on a tourism categorisation certificate

The Court held that Article 98(2) with point 12 of Annex III precludes such a categorisation requirement in so far as the legislation does not confine the reduced rate to concrete and specific aspects of the accommodation category or, if it does, breaches fiscal neutrality. Where national law requires all accommodation facilities to be categorised, categorised accommodation cannot be a separately identifiable aspect. The referring court must verify this and, if applicable, assess neutrality from the average consumer's viewpoint. Member States may still apply the reduced accommodation rate selectively, but only to a genuinely separable subset.

C-433/22 HPA - Construções

Judgment · 11 January 2024 · Portugal

Reduced rate for renovation of private dwellings, actual residential use

The Court held that point 2 of Annex IV does not preclude such a condition. Property merely authorised for residential use, or used by its owner for commercial or investment purposes, falls outside the provision, which concerns supplies to final consumers. The qualification is that actual residential use does not require occupation while the works proceed. Seasonal use, or a dwelling standing empty for a period, does not lose its character as a private dwelling. On a renovation of residential stock what has to be established is the actual residential use at the time of the works, not merely the planning or building consent.

C-146/22 Dyrektor Krajowej Informacji Skarbowej (VAT on hot milk-based drinks)

Judgment · 5 October 2023 · Poland

Different reduced rates for hot milk-based drinks and shop-bought dairy drinks

The Court held that Article 98 does not preclude such legislation, provided the foodstuffs do not in fact have similar properties despite the shared main ingredient, or the differences between them, including the support services accompanying supply, significantly influence the average consumer's purchasing decision. Using two classification sources and distinguishing by reference to accompanying services is not in itself contrary to EU law. Whether neutrality is respected is for the national court, assessing temperature, taste, added ingredients and immediacy of consumption. Confirms Member States may split a single Annex III category across two reduced rates and may distinguish retail foodstuffs from hot prepared drinks.

C-330/21 The Escape Center

Judgment · 22 September 2022 · Belgium

Reduced rate for use of sporting facilities and fitness coaching

Permission to use fitness centre facilities together with individual or group coaching may be taxed at the reduced rate where the coaching is linked to the use of the facilities and necessary for practising sport and physical education, or is ancillary to that use. It is otherwise where the coaching is aimed essentially at teaching or training in a sports discipline. A Member State may restrict the reduced rate to concrete and specific aspects of point 14, but Belgium's decree appeared merely to reproduce it. Relevant to gyms, health clubs and studios, and to their advisers, in Member States applying a reduced rate to sporting facilities.

C-218/21 Autoridade Tributária e Aduaneira

Judgment · 5 May 2022 · Portugal

Reduced rate for renovation and repair of private dwellings, lifts in residential buildings

The concept covers repair and renovation services for lifts in residential buildings, but not maintenance services for those lifts. Renovation and repair are occasional in character. Regular, continuous maintenance is not. Shared facilities in a multi-apartment residential building, including lifts, fall within "private dwellings" because they are important or indispensable to the use of the individual apartments. For mixed-use buildings, a pro rata allocation is required. Member States may transpose selectively, but not by way of mere administrative instructions. Lift and escalator servicing businesses, facilities managers and building maintenance contractors in Member States applying the reduced rate to dwelling renovation must split contracts.

C-515/20 Finanzamt A

Judgment · 3 February 2022 · Germany

Reduced rate for wood used as firewood and the limits of selective application

Article 122 covers any wood which, by objective properties such as a predetermined degree of dryness, is intended exclusively for burning. Because Article 122 is a derogation from the standard rate under Article 96, Member States may apply it selectively and may use the Combined Nomenclature to do so, even though Article 122 does not say so, provided fiscal neutrality is respected. Excluding wood chips while relieving other firewood is therefore permissible only if wood chips are not interchangeable with other firewood for the average consumer, a matter for the national court. Relevant to biomass and wood fuel suppliers, sawmills, forestry operators and energy service providers in Member States still applying the transitional firewood reduced rate.

C-406/20 Phantasialand

Judgment · 9 September 2021

Mobile fairground entertainers and fixed theme parks, taxed differently

The Court held that Article 98, read with point 7 of Annex III, does not preclude such national law, subject to compliance with the principle of fiscal neutrality. A Member State which exercises the option of applying a reduced rate to a category in Annex III may confine it to concrete and specific aspects of that category, provided that it does not tax differently supplies which are similar from the point of view of the average consumer. Similarity is assessed by reference to that consumer, taking account of the context in which the supply is made, so that circumstances distinguishing a travelling fair, held for a limited period at changing locations, from a permanent installation may be taken into account. EU law does not preclude the referring court from seeking an expert opinion under the conditions of its national law. The judgment confirms that a Member State may split a category in Annex III and apply the reduced rate to part of it, and it puts the weight of the analysis on similarity as perceived by the average consumer rather than on the abstract description of the activity.

C-703/19 Dyrektor Izby Administracji Skarbowej w Katowicach

Judgment · 22 April 2021 · Poland

Reduced rate for fast food, restaurant services or supply of foodstuffs

"Restaurant and catering services" covers the supply of food accompanied by sufficient support services enabling immediate consumption by the end customer, assessed by the national court on the level of service offered (seating, dedicated rooms, toilets, crockery, table service). Preparation method is not decisive. The qualification is that where the customer chooses not to use the material and human resources made available, no support services accompany the supply, and it is a supply of goods. Member States may also place different Annex III categories in one national category, subject to fiscal neutrality. Relevant to fast food, food-to-go, food halls and delivery operators, and to anyone advising on national rate classifications.

C-331/19 Staatssecretaris van Financiën (Reduced rate of VAT for aphrodisiacs)

Judgment · 1 October 2020 · Netherlands

Reduced rate for foodstuffs, what counts as a foodstuff

Both concepts cover products containing nutrients that serve as building blocks, generate energy and regulate the body's functions, necessary to keep the human body alive and enable it to function and develop, and which are consumed in order to supply those nutrients. Other effects, including on libido, pleasure or health, are irrelevant. A product with no or negligible nutrients, consumed solely for other effects, is excluded. The food safety definition in Regulation No 178/2002 is wider and not relevant. Application to the products is for the national court. A nutrient based test now governs the Annex III point 1 category, displacing arguments built on oral ingestion, edible ingredients or the food law definition.

C-715/18 Segler-Vereinigung Cuxhaven

Judgment · 19 December 2019 · Germany

Reduced rate and the letting of boat moorings

The reduced rate does not apply to the letting of boat moorings. Point 12 of Annex III is an exception and must be read strictly. Mooring is not mentioned in its wording and is not intrinsically linked to "accommodation", its primary purpose being to keep boats immobile and secure. The social objective of facilitating access to accommodation is absent, since sailing and motor boats do not principally serve as accommodation. Neutrality is not infringed because moorings and camping pitches perform different functions and do not compete. In Member States that applied a reduced rate to overnight mooring charges, marinas, yacht clubs and harbour operators are standard rated, whether or not the fee is tied to overnight stays.

C-145/18 Regards Photographiques

Judgment · 5 September 2019 · France

Reduced rate for photographs as works of art

Photographs qualify as works of art if they meet the point 7 criteria (taken by their creator, printed by him or under his supervision, signed, numbered, limited to 30 copies), to the exclusion of all other criteria, in particular any assessment of artistic character by the tax authority. A Member State may restrict the reduced rate to a concrete and specific sub-category, but not where artistic character is assessed without objective, clear and precise statutory criteria and consistently with fiscal neutrality. National rules that make the reduced rate depend on a case-by-case judgement of artistic merit are unsustainable.

C-597/17 Belgisch Syndicaat van Chiropraxie and Others

Judgment · 27 June 2019 · Belgium

Medical exemption for unregulated professions and reduced rates for aesthetic treatments

The exemption is not restricted to professions regulated by national law. Member States define the qualifying professions but must ensure adequate quality of care and respect fiscal neutrality, and other means of verifying qualifications may exist. Member States may apply the reduced rate selectively within Annex III, and therapeutic and purely aesthetic uses are not similar supplies, so the differentiation is permissible. The national court may not maintain the effects of the annulled provisions, whether for legal certainty or to avoid reverting to an earlier non-compliant regime. Providers of therapeutic care outside regulated professions, chiropractors, osteopaths and comparable practitioners, can rely on Article 132(1)(c) where their qualifications and quality of care are verifiable and their services compete with exempt care.

C-552/17 Alpenchalets Resorts

Judgment · 19 December 2018 · Germany

Accommodation-only supplies under the travel agents' margin scheme

Accommodation-only supplies bought in from other taxable persons are covered by the margin scheme, and so are such supplies combined with additional ancillary services, whatever the importance of those extras. Each is a single service under Article 307. The single supply analysis from ordinary VAT rules does not apply here. The reduced rate cannot apply, because the single travel agent service is not listed in Annex III. The Court assumed, subject to national verification, that the property owners were taxable persons. Relevant to holiday letting intermediaries, villa and chalet agencies, online accommodation resellers and tour operators buying rooms in and reselling in their own name.

C-463/16 Stadion Amsterdam

Judgment · 18 January 2018 · Netherlands

Single VAT rate for a composite supply

A single supply cannot be split between two rates in that way. A single supply comprised of a principal and an ancillary element must be taxed solely at the rate applicable to that single supply, determined by the principal element, even where the price of each element within the total charge can be identified. The ability to identify or agree those prices does not justify any exception. Splitting would be artificial and would risk breaching fiscal neutrality. Talacre Beach and Commission v France (C-94/09) concerned different questions and are not authority to the contrary. Confirms that once a bundle is characterised as a single supply, rate-splitting is not available, whatever the internal pricing or cost breakdown.

C-499/16 AZ

Judgment · 9 November 2017 · Poland

Shelf life as a criterion for the reduced rate on pastry goods

Article 98 does not preclude such legislation. Member States may apply a reduced rate selectively to a concrete and specific aspect of an Annex III category, and the CN is only one permissible means of delimitation. The qualification is that this holds only if fiscal neutrality is respected, which the national court must verify. If the average Polish consumer regards longer-life and shorter-life pastries as similar and interchangeable, the differential rate is precluded. If the shelf life criterion does not favour one over the other, they are not competing goods. Confirms that reduced-rate boundaries within a food category may rest on national criteria unrelated to the CN, so producers challenging such lines cannot simply point to a common tariff classification.

C-573/15 Oxycure Belgium

Judgment · 9 March 2017 · Belgium

Reduced rate for oxygen concentrators and the limits of fiscal neutrality

Those provisions do not preclude such legislation. Reduced rates are an option, to be construed strictly, and Member States may apply them selectively within Annex III or not at all. Concentrators are not pharmaceutical products within point 3, and fall outside point 4 unless shown to be for the exclusive personal use of the disabled, a matter for the national court. Fiscal neutrality is an interpretative principle only and cannot extend a reduced rate to goods outside Annex III, even if consumers see them as similar. Confirms that neutrality arguments fail where the competing product sits outside Annex III altogether. Relevant to suppliers of medical devices, home healthcare equipment and rental businesses, and to advisers challenging rate distinctions between clinically equivalent products.

C-390/15 RPO

Judgment · 7 March 2017 · Poland

Reduced rate for e-books supplied electronically

Nothing affects the validity of either provision. The final wording was a simplification of the proposal preserving its substance, so no fresh consultation was required. Supplies of digital books on a physical support and electronically are comparable in the light of the objective of promoting reading, and the classification as goods or services is not decisive, but the difference in treatment is justified by the legitimate aim of clear, uniform and certain rules for electronically supplied services, within the legislature's broad discretion. Confirms that, on the law as it then stood, Member States could not apply a reduced rate to electronically supplied books, whatever the equivalence with physical formats.

C-432/15 Baštová

Judgment · 10 November 2016 · Czechia

Race prize money, deduction and the reduced rate for sporting facilities

No supply for consideration where only placed horses receive a prize, even a prize fixed in advance, because the payment is uncertain. There is a supply for consideration where the organiser pays remuneration for participation regardless of placing. Input VAT on racing one's own horses is deductible as general costs only where the horses are actually intended for sale or racing objectively promotes the business. Prize money then stays outside the taxable amount. The reduced rate cannot apply where training is a main or equal-status component. Relevant to racing stables, breeders and equestrian centres, and by analogy to other prize-based sporting participation.

C-678/13 Commission v Poland

Judgment · 4 June 2015 · Poland

Failure of a Member State to fulfil obligations · VAT · Directive 2006/112/EC · Annex III · Reduced rate of VAT applicable to medical equipment, aids and other appliances and pharmaceutical products

C-161/14 Commission v United Kingdom

Judgment · 4 June 2015 · United Kingdom

Reduced rate on energy-saving materials outside the social policy categories

The Court upheld the action on all three limbs. The regime went beyond Category 10 because it was not confined to supplies forming part of a social policy. It went beyond Category 10a in so far as the supplies fell outside renovation and repairing of private dwellings, and even where they did fall within that category, the reduced rate was applied to supplies in which the materials accounted for a significant part of the value of the service. The United Kingdom had therefore failed to fulfil its obligations under Article 98 read with Annex III. A firm reading of Annex III as an exhaustive and narrowly construed list.

C-479/13 Commission v France

Judgment · 5 March 2015

A digital book is an electronically supplied service, and the reduced rate does not reach it

The Court declared that France had failed to fulfil its obligations. The supply of digital or electronic books is an electronically supplied service within the meaning of the second subparagraph of Article 98(2) of the VAT Directive, read with Annex II and the Implementing Regulation, and is therefore excluded from the application of a reduced rate. Point 6 of Annex III covers the supply of books on all physical means of support, and the physical support on which a book is supplied is a constituent element of that supply. A book transmitted by download or streaming is not supplied on such a support. France was ordered to bear its own costs and to pay those of the Commission, and Belgium to bear its own costs. The judgment reads point 6 of Annex III as a rule about the medium, so that the exclusion of electronically supplied services in Article 98(2) prevails over the argument from fiscal neutrality between a printed and a digital book.

C-502/13 Commission v Luxembourg

Judgment · 5 March 2015

The same reduced rate question, with a super-reduced rate on top

The Court declared that Luxembourg had failed to fulfil its obligations. The supply of digital or electronic books is an electronically supplied service excluded from reduced rates by the second subparagraph of Article 98(2), and it cannot benefit from the derogations in Articles 110 and 114, which do not permit a super-reduced rate to be applied to a supply that is excluded from reduced rates in the first place. Luxembourg was ordered to bear its own costs and to pay those incurred by the Commission, and Belgium and the Council to bear their own costs. The judgment adds to the French ruling the point that the transitional derogations allowing rates below the 5% minimum operate within the category of supplies eligible for a reduced rate and cannot extend it.

C-639/13 Commission v Poland

Judgment · 18 December 2014 · Poland

Reduced rate on fire protection goods breaches the VAT Directive

The Court finds an infringement of Articles 96 to 98 of the VAT Directive read with Annex III. The standard rate is the rule and reduced rates are a derogation confined to the categories listed in Annex III. Since fire protection goods are not in that list, no reduced rate is available. Socio political arguments cannot justify a departure from Article 98(2), and Poland was ordered to pay the costs. Part of the steady line of infringement judgments treating Annex III as exhaustive.

C-219/13 K

Judgment · 11 September 2014 · Finland

Reduced rate for books limited to paper format

Selective application is permitted. The 2009 amendment did not oblige Member States to extend the reduced rate to all supports. They may determine which supports qualify, subject to fiscal neutrality. The national court must decide whether the average consumer in that Member State regards printed and other-support books as similar, having similar characteristics, meeting the same needs and comparable in use. Support type, content and technical properties are factors in that assessment, not separate answers. Publishers, audiobook producers and library suppliers cannot assume a single rate across formats.

C-454/12 Pro Med Logistik and Pongratz

Judgment · 27 February 2014 · Germany

Selective reduced rate for taxi but not minicab transport

Selective application is permissible where, because of the different statutory obligations, taxi transport is a concrete and specific aspect of the passenger transport category and those differences decisively influence the average user's choice between the two. The opposite applies to services supplied under a special agreement binding taxi and minicab operators indiscriminately on the same fares and without additional taxi obligations. There taxi transport is not a distinct aspect and is similar in the average user's eyes, so differentiated rates are precluded. Verification is for the national court.

C-108/11 Commission v Ireland

Judgment · 14 March 2013 · Ireland

Standstill reduced rates for horses and greyhounds

The Court declared an infringement of Articles 96, 98 read with Annex III, and 110. Article 110 is a derogation to be strictly interpreted. Member States choose their social reasons but must define them and not distort the concept. Here the measures were principally economic, aimed at supporting the equine and greyhound sectors. Nor were they for the benefit of final consumers, since many buyers and users of insemination services are taxable persons who pass the VAT on. Confirms that a standstill super-reduced rate must be positively justified by the Member State.

C-360/11 Commission v Spain

Judgment · 17 January 2013 · Spain

Scope of reduced rates for pharmaceutical products and medical devices

Spain infringed Article 98 with Annex III on all four counts. Annex III terms are autonomous and construed strictly. Point 3 is broader than "medicinal product" under Directive 2001/83 but covers only finished goods usable directly by final consumers, so a medicinal substance marketed as a finished product may still qualify. Products requiring further processing may not. Point 3 does not extend to medical devices, apparatus or equipment generally. Point 4 is confined to human disability and to goods for the exclusive personal use of the disabled, excluding general hospital and professional use. Where a Member State applies reduced rates across broadly drafted pharmaceutical and medical categories, each item is measured against two limits: finished goods reaching final consumers (point 3) and exclusive personal use by disabled persons (point 4).

C-557/11 Kozak

Judgment · 25 October 2012 · Poland

In-house transport supplied within a travel package

The margin scheme covers only services bought in from third parties. In-house transport does not form part of the single service in Articles 307 and 308, even where it is an essential element of the overall tourist service, and the normal regime single supply case law does not alter that. It is therefore taxed under the normal rules, including as to rate, and benefits from any reduced rate the Member State has adopted for passenger transport. Confirms the split treatment of mixed packages for tour operators and travel agents who supply any element with their own resources, typically coach transport but the reasoning is not limited to transport.

C-596/10 Commission v France

Judgment · 8 March 2012 · France

France's reduced rate on horses and other equidae

The Court upheld the action. By applying reduced rates to transactions relating to equidae, and in particular to horses, when those animals are not as a matter of course intended for use in the preparation of foodstuffs or in agricultural production, France failed to fulfil its obligations under Articles 96 to 99 read with Annex III. France was ordered to pay the costs and Ireland to bear its own. One of a series of infringement actions on the equine sector decided around the same time against several Member States.

C-119/11 Commission v France

Judgment · 28 February 2012 · France

France breached the standstill by reducing the rate on certain concert admissions

The Court finds the infringement established and orders France to pay the costs. Article 110 allows a Member State to keep rates below the minimum of 5 per cent only where they were in force on 01-01-1991 and were adopted for clearly defined social reasons and for the benefit of the final consumer. A rate introduced or extended after that date falls outside the derogation. A short judgment that illustrates how tightly the standstill in Article 110 is read.

C-441/09 Commission v Austria

Judgment · 12 May 2011 · Austria

Austria could not apply a reduced rate to all supplies of horses

The Court finds the infringement established. By applying a reduced rate to all supplies, imports and intra Community acquisitions of horses, Austria breached Articles 96 and 98 read with Annex III. The category covers live animals normally intended for the preparation of foodstuffs, and horses are as a rule kept for other purposes, so a general reduced rate for the species goes beyond it. Austria was ordered to pay the costs. Decided the same day as the parallel action against Germany, and preceded by Commission v Netherlands and Commission v France on the same point.

C-453/09 Commission v Germany

Judgment · 12 May 2011 · Germany

Germany could not apply a reduced rate to all supplies of horses

The Court finds the infringement established. By applying a reduced rate to all supplies, imports and intra Community acquisitions of horses, Germany breached Articles 96 and 98 read with Annex III. Reduced rates are a derogation from the standard rate and the listed categories are to be interpreted strictly, by reference to the use for which the animals are normally intended. Germany was ordered to pay the costs. The twin of the Austrian judgment delivered the same day.

C-497/09 Bog and Others

Judgment · 10 March 2011 · Germany

Hot food to go, supply of goods or supply of services

Sales from snack stalls, mobile snack bars and cinema foyers are supplies of goods where a qualitative assessment shows the service elements are not predominant: standardised cooking not done to individual order, plus rudimentary eating facilities requiring negligible human intervention, does not tip the balance, and it is immaterial whether customers use them. Party catering is a supply of services, unless the caterer merely delivers standard meals without additional service elements or other circumstances make the food predominant. "Foodstuffs" in Annex H covers food prepared for immediate consumption. The dividing line is qualitative, judged from the typical consumer's viewpoint, and turns on whether preparation is standardised and whether the facilities require real human intervention.

C-41/09 Commission v Netherlands

Judgment · 3 March 2011 · Netherlands

Reduced rate on supplies of live horses

The Court declared the infringement established. Given divergence between language versions, the scheme and purpose of point 1 mean the qualifier "normally intended for use in the preparation of foodstuffs" applies to live animals too. Horses are not usually and in general so intended. Only the supply of a horse for slaughter for use in preparing foodstuffs may benefit. Point 11 likewise covers only horses intended for use in agricultural production. Slaughter horses and racehorses or pet horses are not similar, so different rates do not breach neutrality. Member States cannot apply a blanket reduced rate to equine supplies.

C-49/09 Commission v Poland

Judgment · 28 October 2010 · Poland

Reduced rate on babies' clothing and children's footwear, availability of the standstill derogation to a later accession State

The Court declared the infringement. Article 115 is a transitional derogation to be construed strictly and depends on two cumulative conditions: VAT, or a system with the essential characteristics of VAT, in force at 01-01-1991, and a reduced rate on those goods then. The Polish turnover tax was assessed on periodic gross turnover with no proper input deduction, so it lacked two essential characteristics of VAT. Socio-political aims cannot justify departing from Article 98(2). Only a Council amendment could. Confirms that Member States acceding in 2004 can apply reduced rates only where Annex III or their Act of Accession says so. Relevant to advisers in clothing, footwear and childrenswear retail and to any reliance on standstill arguments by later accession States.

C-492/08 Commission v France

Judgment · 17 June 2010 · France

Reduced rate for lawyers' legal aid services

The Court declared that France had failed to fulfil its obligations under Articles 96 and 98(2). Private profit-making entities, including natural persons, are not automatically excluded from point 15, but the dual requirement must be met. The supplier must itself be devoted to social wellbeing and engaged in welfare work. Viewed by reference to its overall objectives and the absence of any permanent welfare engagement, the legal profession as a whole cannot be so regarded, whatever the nature of the individual services. Member States operating reduced rates for state-funded professional services must look at the supplier's overall objectives and the permanence of its social engagement, not merely at the character of the particular supply or the recipient's means.

C-94/09 Commission v France

Judgment · 6 May 2010 · France

Selective application of a reduced rate to part of a category in Annex III

The Court dismissed the action. A Member State may apply a reduced rate selectively to concrete and specific aspects of an Annex III category, provided fiscal neutrality is respected. The single or composite supply criteria, including typical consumer expectations, are not decisive when a Member State exercises that rate discretion. General and objective criteria apply instead. Vehicle transport of a body is separately identifiable and, taxed at the same reduced rate whether supplied alone or with other funeral services, does not breach neutrality. Confirms that reduced rates need not cover an entire Annex III category, and separates rate design from the composite supply analysis. Relevant to funeral operators and any sector where national law reduces the rate on one element only (utilities, water, transport).

C-3/09 Erotic Center

Judgment · 18 March 2010 · Belgium

Reduced rate and the meaning of admission to a cinema

Such a booth is not a cinema for the purposes of category 7. Reduced rates are a derogation and category 7 must be read strictly and according to the ordinary meaning of its terms. The events and establishments listed there share the feature of being open to the public against prior payment of an admission charge entitling all those paying to enjoy the cultural or entertainment supply collectively. Payment for individualised viewing of films or film extracts in a private space is therefore not a right of admission to a cinema.

C-442/05 Zweckverband zur Trinkwasserversorgung und Abwasserbeseitigung Torgau-Westelbien

Judgment · 3 April 2008 · Germany

Mains connections as part of the supply of water

The connection is essential to making water available and therefore forms part of the supply of water for both Annex D and Annex H. A body governed by public law acting as a public authority is consequently a taxable person on that transaction. Member States may apply the reduced rate selectively, to concrete and specific aspects of water supplies such as mains connections, provided fiscal neutrality is respected so that similar competing supplies are not treated differently. Water undertakings and municipal bodies charging separate connection fees must account for VAT on them even where they act under public law powers, and the connection is rateable as water supply rather than as construction work. Relevant to advisers on utilities, local authority trading activities and to any reduced rate scoping argument built on category-wide application.

C-109/02 Commission v Germany

Judgment · 23 October 2003 · Germany

Reduced rate for performing artists, soloists and ensembles

Germany was in breach. The option to apply a reduced rate to Annex H items belongs to the Member States, but in exercising it they must respect fiscal neutrality, which forbids taxing similar competing supplies differently. "Performing artists" in category 8 covers soloists and ensembles alike. The number of performers, and the resulting content of the music, is irrelevant for tax purposes. Category 7 concerns admissions, not the artists' own services. Confirms that once a Member State opts into an Annex H (now Annex III) category, it cannot carve up that category on grounds unrelated to objective differences between the supplies. Relevant to artists, orchestras, agents and concert and festival promoters, and more generally to anyone challenging selective reduced-rate rules.

C-384/01 Commission v France

Judgment · 8 May 2003 · France

Selective reduced rate on the standing charge for gas and electricity

The action was dismissed. The Commission had merely voiced doubts and had adduced no evidence that the standing charge was not a supply of energy, or that a reduced rate on part only of the supply breached fiscal neutrality. Nothing in Article 12(3)(b) requires the reduced rate to cover all supplies of gas and electricity, provided there is no risk of distortion of competition. As the Commission made no finding of such a risk within three months, that risk was deemed absent and France could implement. Confirms that Member States may apply a reduced rate selectively to concrete and specific aspects of gas and electricity supplies, here the standing charge giving entitlement to a minimum quantity, subject to the no distortion condition. Relevant to energy suppliers and their advisers dealing with two part tariffs, and to anyone relying on the notification procedure.

C-267/99 Adam

Judgment · 11 October 2001 · Luxembourg

Meaning of the liberal professions for reduced rate purposes

The Court accepted jurisdiction because the national rate rules transpose and borrow the Community concept. It held that it is for each Member State to determine and define the transactions eligible for a reduced rate under Article 12(4) and later Article 28(2)(e), subject to fiscal neutrality, which precludes different rates for similar, competing supplies. Liberal professions in Annex F(2) are activities of marked intellectual character, requiring a high-level qualification, usually subject to strict professional regulation, personal and largely independent. Classifying the managing agent is for the national court. The judgment supplies the working test for "liberal profession" still relied on where national rate or exemption rules use that label.

C-481/98 Commission v France

Judgment · 3 May 2001 · France

Different reduced VAT rates for reimbursable and non-reimbursable medicines

The action was dismissed. Reimbursable and non-reimbursable medicines are not similar products in competition with each other. Inclusion on the reimbursement list rests on objective criteria consistent with Directive 89/105 and gives the product a decisive advantage for the consumer, so the VAT rate does not drive the purchasing decision. Distortion could arise only if a not insignificant quantity of reimbursable medicines were bought without prescription, which was not alleged. Relieving the social security system and reducing household health expenditure is a social reason benefiting the final consumer. Confirms that a Member State relying on a pre-1991 super-reduced rate may confine it to reimbursable medicines without breaching fiscal neutrality. Relevant to pharmaceutical suppliers, pharmacies and advisers in Member States operating reimbursement lists and split rates for medicines.

C-276/98 Commission v Portugal

Judgment · 8 March 2001 · Portugal

Reduced rates outside Annex H and tolls charged by a public body

Portugal infringed Articles 12 and 28(2) by maintaining 5% on wine, alternative energy equipment and agricultural tools. Transitional reduced rates for non-Annex H supplies may not fall below 12%, and internal political circumstances or later corrective legislation are irrelevant. The toll complaint failed is that the bridge was made available by a public body acting as a public authority, so under Article 4(5) the supply was not taxable at all, and Member States cannot tax it via Article 2(1). No distortion of competition had been alleged. Confirms the 12% floor as a hard limit on grandfathered reduced rates for supplies outside the reduced rate annex, of interest to advisers tracking legacy national rate schedules. Relevant to infrastructure and toll operators and to public sector VAT work, subject to the distortion of competition test being properly pleaded.

C-83/99 Commission v Spain

Judgment · 18 January 2001 · Spain

Reduced rate for motorway tolls

Spain infringed Article 12(3)(a). Reduced rates are an exception to the standard rate and Annex H must be construed strictly and according to the ordinary meaning of its wording. Providing road infrastructure for a toll is not the provision of a means of transport. It merely allows users with their own vehicle to travel in better conditions, so it is outside category 5. Divergent treatment in other Member States is irrelevant, and a Member State cannot rely on legitimate expectations against an objective finding of infringement. Confirms that tolls for road, tunnel and bridge infrastructure operated by private concessionaires are standard rated, and that infrastructure access is not passenger transport for reduced rate purposes. Relevant to concession operators, and more widely to any argument that an Annex III (formerly Annex H) category can be read functionally or by analogy.

C-384/95 Landboden-Agrardienste

Judgment · 18 December 1997 · Germany

Compensation for reducing production, no supply of services

No supply of services and no taxable turnover. Following Mohr, only the nature of the undertaking matters. It must imply consumption. The farmer supplies nothing to an identifiable consumer and confers no benefit capable of being a cost component of another person's activity in the commercial chain. The Court stressed that payments by public authorities in the common interest are not automatically outside VAT, and that the use made of a service by the payer is irrelevant. The third question fell away. Confirms Mohr and extends it to nationally funded, as opposed to EU funded, production restriction schemes.