JUDGMENT OF THE COURT (Ninth Chamber)
10 January 2019 ( *1 )
(Reference for a preliminary ruling — Value added tax (VAT) — Directive 2006/112/EC — Article 2(1)(a) and (c) — Article 14(1) — Article 24(1) — Transactions for consideration — Transactions for consideration constituted partly by services or goods — Demolition contract — Purchase contract for dismantling)
In Case C‑410/17,
REQUEST for a preliminary ruling under Article 267 TFEU from the Korkein hallinto-oikeus (Supreme Administrative Court, Finland), made by decision of 30 June 2017, received at the Court on 7 July 2017, in the proceedings
A Oy,
intervening party:
Veronsaajien oikeudenvalvontayksikkö,
THE COURT (Ninth Chamber),
composed of K. Jürimäe, President of the Chamber E. Juhász and C. Vajda (Rapporteur), Judges,
Advocate General: N. Wahl,
Registrar: C. Strömholm, Administrator,
having regard to the written procedure and further to the hearing on 11 July 2018,
after considering the observations submitted on behalf of:
–
A Oy, by M. Kallio and H. Huhtala,
–
the Finnish Government, by J. Heliskoski, acting as Agent,
–
the European Commission, by J. Jokubauskaitė and I. Koskinen, acting as Agents,
having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,
gives the following
Judgment
1
This request for a preliminary ruling concerns the interpretation of Article 2(1)(a) and (c), Article 14(1) and Article 24(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1) (the ‘VAT Directive’).
2
The request has been made in proceedings brought by A Oy concerning the treatment, for the purposes of value added tax (VAT), of transactions made, first, under a demolition contract requiring the service provider to dispose of demolition waste which, as it contains iron, may, pursuant to that contract, be resold by the latter and, second, under a contract for the purchase of goods for dismantling, which includes the obligation for the purchaser to demolish or dismantle (hereinafter referred to collectively as ‘dismantling’) and to dispose of those goods, together with the disposal of the resulting waste.
Legal context
European Union law
3
Article 2(1)(a) and (c) of Directive 2006/112 provides:
‘The following transactions shall be subject to VAT:
(a)
the supply of goods for consideration within the territory of a Member State by a taxable person acting as such;
…
(c)
the supply of services for consideration within the territory of a Member State by a taxable person acting as such’.
4
Article 14(1) of that directive is worded as follows:
“Supply of goods” shall mean the transfer of the right to dispose of tangible property as owner.’
5
Article 24(1) of the directive provides:
‘“Supply of services” shall mean any transaction which does not constitute a supply of goods.’
6
Article 73 of that directive states:
‘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.’
7
Article 199(1)(a) and (d) of Directive 2006/112 provides:
‘Member States may provide that the person liable for payment of VAT is the taxable person to whom any of the following supplies are made:
(a)
the supply of construction work, including repair, cleaning, maintenance, alteration and demolition services in relation to immovable property, as well as the handing over of construction works regarded as a supply of goods pursuant to Article 14(3);
…
(d)
the supply of used material, used material which cannot be re-used in the same state, scrap, industrial and non-industrial waste, recyclable waste, part processed waste and certain goods and services, as listed in Annex VI’.
8
Points 1 and 4 of Annex VI to the VAT Directive, entitled ‘List of Supplies of Goods and Services as referred to in Point (d) of Article 199(1)’ is worded as follows:
‘(1)
Supply of ferrous and non-ferrous waste, scrap, and used materials including that of semi-finished products resulting from the processing, manufacturing or melting down of ferrous and non-ferrous metals and their alloys;
…
(4)
supply of, and certain processing services relating to, ferrous and non-ferrous waste as well as parings, scrap, waste and used and recyclable material consisting of cullet, glass, paper, paperboard and board, rags, bone, leather, imitation leather, parchment, raw hides and skins, tendons and sinews, twine, cordage, rope, cables, rubber and plastic’.
Finnish law
9
The arvonlisäverolaki (1501/1993) (Law on value added tax (1501/1993)) of 30 December 1993, in the version applicable to the facts in the main proceedings (‘the AVL’), which transposed Directive 2006/112 into Finnish law, provides in Paragraph 1(1):
‘VAT shall be charged, in accordance with the provisions of this law:
on the sale of goods and services in Finland in the course of business’.
10
The first subparagraph of Paragraph 2 of the AVL states that the person liable to pay VAT, that is the taxable person, is the seller of the goods or services in the case of sales referred to in Paragraph 1, unless otherwise provided for. Among those provisions is Paragraph 8d of the AVL.
11
Paragraph 8d provides that the reverse charge mechanism is applicable to purchasers of scrap metal and waste where that person is a trader entered on the register of persons subject to VAT.
12
Under Paragraph 17 of the AVL, ‘goods’ means tangible property as well as electricity, gas, thermal energy, cooling energy and other comparable energy resources. ‘Services’ means everything else which may be sold in the course of business.
13
According to Paragraph 18 of the AVL, ‘sale of goods’ means the transfer of the right of ownership to goods for consideration. ‘Sale of services’ means the performance or other supply of services for consideration.
The dispute in the main proceedings and the questions referred for a preliminary ruling
14
A is a company specialising in environmental services in the industrial
15
and construction sector. It operates in various industrial sectors in real estate and construction and provides environmental services in Finland and Sweden. Its business activities include industrial and real estate services, demolition services and recycling and waste processing services.
16
In the course of its activities, A performs demolition services for its clients, pursuant to a demolition contract (‘the demolition contract’). The terms of the contract are based on standard contractual terms applied by all undertakings in the construction sector for construction services. Pursuant to this type of contract, the company undertakes to demolish the buildings of its client’s old factory and to be the main contractor with responsibility for site services and works management. According to the standard contractual terms for construction services, the company’s responsibilities also include the proper disposal and processing of materials and waste.
17
Part of the materials and waste are composed of scrap metal and waste materials such as those referred to in Paragraph 8d of the AVL, on the sale of which liability for VAT lies with the buyer. That waste consists partly of goods that A may resell to companies who purchase recyclable scrap metal. A tries to estimate in advance the quantity of such goods and the price likely to be obtained on their resale, and that price is factored in to the calculation of the price when preparing the quote for the demolition services, so that the price of the demolition services contract proposed to the client is as competitive as possible. However, the estimated price of those goods is not discussed or fixed with the client under the demolition contract, as the client is quoted a price which covers all the demolition services.
18
In addition, in the course of its business, A purchases from its clients old machines and equipment that, pursuant to a purchase contract for dismantling (‘the purchase contract for dismantling’), it is responsible for dismantling and removing (hereinafter referred to collectively as ‘dismantle’) from the premises or the site of the establishment of the client concerned and disposition of the resulting waste, in accordance with conditions set out in the contract. A typical example of such a contract concerns the purchase of certain specified buildings on a factory site. That contract provides that A is to purchase the buildings and constructions to ground level situated on the site and the machines, equipment and other movable goods, and that A is to dismantle and remove the goods that it has purchased.
19
Taking account of the nature of the goods purchased, the dismantling, the proper disposal and processing of those goods, and the disposal of the resulting waste, generates costs for A that it tries to estimate in advance and to factor in to the price it quotes, as a means of reducing the purchase price. However, the parties to the contract do not discuss those costs in their negotiations and do not specify the amount of those costs in the contract, the aim being not to communicate that amount to the seller at any time.
20
A requested a preliminary decision from the tax authority concerning the calculation of the amount of VAT due under the demolition contract for the supply of demolition services and, under the purchase contract for dismantling, for the purchase of scrap metal and metal waste.
21
By preliminary decision of 11 June 2015, covering the period from 11 June 2015 to 31 December 2016, the tax authority, first, declared that under the demolition contract A must be regarded as selling demolition services to its client and as purchasing scrap metal from it. That authority concluded from that that A must pay VAT on the services it supplies to its client and, under the reverse charge mechanism, on the scrap metal that it purchases from its client.
22
Second, in the same preliminary decision, the tax authority declared that, as regards the purchase contract for dismantling, A must be regarded as supplying demolition services to its client and as purchasing scrap metal from it. That authority concluded that A must pay VAT on the supply of the services to its client and, under the reverse charge mechanism, on the scrap A purchases from its client.
23
In neither of the two situations which are the subject of the preliminary decision, did the tax authority take a position on the price formation of the consideration.
24
A brought proceedings against the preliminary decision of 11 June 2015 in the Helsingin hallinto-oikeus (Administrative Court, Helsinki, Finland).
25
By judgment of 16 December 2015, that court dismissed the action. It held that, in both the demolition contract and the purchase contract for dismantling, A must be regarded as having concluded a barter agreement with its client, pursuant to which it provides demolition services and purchases scrap metal and, therefore, it is liable to pay VAT both on the services it provides to the client and on the scrap metal that it purchases from the client.
26
A brought an appeal against the judgment of the Helsingin hallinto-oikeus (Administrative Court, Helsinki) before the Korkein hallinto-oikeus (Supreme Administrative Court, Finland).
27
The referring court takes the view that, under the demolition contract, A supplies services for consideration and that, under the purchase contract for dismantling, it acquires goods for consideration. The dispute in the main proceedings concerns whether, with regard to the demolition contract, A also acquires goods for consideration and whether, with regard to the purchase contract for dismantling, it also supplies services for consideration. The referring court points out that A challenges the classification of those contracts as barter agreements, on the ground that, according to that company, under the demolition contract the scrap metal does not constitute consideration for the demolition services and, with regard to the purchase contract for dismantling, the demolition services do not constitute consideration for the purchase of scrap metal, in the absence of a direct link between the supply of the services or goods concerned and the consideration received.
28
It is in those circumstances that the Korkein hallinto-oikeus (Supreme Administrative Court) decided to stay its proceedings and to refer the following questions to the Court for a preliminary ruling:
‘(1)
Is Article 2(1)(c), in conjunction with Article 24(1) of [Directive 2006/112], to be interpreted as meaning that demolition services carried out by a company whose business includes the performance of demolition works, is one single transaction where, under the terms
