Judicial Training on EU Taxation Law

1. VAT in Practice – European Court of Justice Judicial Training on EU Taxation Law Prof. Dr. David Hummel

2. VAT in Practice – European Court of Justice Agenda • The court in general • The special characteristics of the ECJ • Understanding of VAT-decisions of the ECJ (using the example of Art. 132 and the cases Taksatorringen and Aviva) Barcelona Prof. Dr. David Hummel

3. VAT in Practice – European Court of Justice I. The European Court • It consists of the tribunal and the court. • The tribunal is the first instance for special affairs (like state aid cases/trademark cases). • The court is responsible for all preliminary rulings and (at the moment) for all infringement proceedings and appeals. Barcelona Prof. Dr. David Hummel

4. VAT in Practice – European Court of Justice I. The European Court of Justice (ECJ) • Is composed of 28 judges and 11 advocates general. • Each one of the six largest countries has one permanent advocate general and the other five positions rotate between the other member states. • Each member of the court (judges and advocates general) is appointed for six years. • More or less: 4 referendairs and 3 assistants Barcelona Prof. Dr. David Hummel

5. VAT in Practice – European Court of Justice I. The judges • Differences between the decisions... • The court may sit in a Grand Chamber of 15 judges or in chambers of five or three judges. • The judgements are usually made after an oral hearing and sometimes (nearly 50%) after hearing the opinion of an advocate general. Barcelona Prof. Dr. David Hummel

6. VAT in Practice – European Court of Justice I. The advocate general • To most of the member states the existence of an advocate general is unknown. • In France, the advocate general is known as the “rapporteur public” (public reporting person). • His function is to inform the court and the public about the problems of the case and to propose an independent legal solution. Barcelona Prof. Dr. David Hummel

7. VAT in Practice – European Court of Justice I. Grande salle d'audience Barcelona Prof. Dr. David Hummel

8. VAT in Practice – European Court of Justice II. The three characteristics of the ECJ (1) The distribution of the cases • The president of the court and the first advocate general (both elected through the members of the court) nominate the reporting judge and the advocate general which are responsible for the case. • In Germany we have some problems with this system of nomination of the “legal judge”. Barcelona Prof. Dr. David Hummel

9. VAT in Practice – European Court of Justice II. The three characteristics of the ECJ • (2) The system of collegiality • Each member of the court knows each case (each legal secretary of a cabinet too...). • Each week the “réuniongénérale” (general assembly) of the court decides how to deal with each case - especially the size of the chamber, if there should be an oral hearing or not and if opinions of the advocates general will be necessary. Barcelona Prof. Dr. David Hummel

10. VAT in Practice – European Court of Justice II. The three characteristics of the ECJ • (3) The function of the court • It isn’t a normal court......... • The Court doesn’t interpret the national law – it interprets only the European Law. • In case of a preliminary ruling (about 66% of the cases) the court has the function of a « supporting court » - he doesn’t decide the single case. Barcelona Prof. Dr. David Hummel

11. VAT in Practice – European Court of Justice III. How to read the ECJ Art. 132 (1) lit f. of the VAT-Directive “Member States shall exempt the following transactions: the supply of services by independent groups of persons, who are carrying on an activity which is exempt from VAT or in relation to which they are not taxable persons, for the purpose of rendering their members the services directly necessary for the exercise of that activity, where those groups merely claim from their members exact reimbursement of their share of the joint expenses, provided that such exemption is not likely to cause distortion of competition;” Barcelona Prof. Dr. David Hummel

12. VAT in Practice – European Court of Justice III. How to read the ECJ Sens and effect of Art. 132 (1) lit. f FA FA VAT charge: 285 190 285 190 1000 + 190 1500 + 285 = 1785 V U K 1190 + 500 = 1690 1000 + 190 0 (Art. 168) 0 (Art. 132) 190 VAT charge: 190 FA FA Barcelona Prof. Dr. David Hummel

13. VAT in Practice – European Court of Justice III. How to read the ECJ (1) Taksatorringen (C-8/01) 1. Must Art. 132 (1) lit. f of the Directive be interpreted as meaning that exemption from VAT must be granted for services of the type which an undertaking –which otherwise meets the conditions set out in that provision for VAT exemption– provides for its members, in the case where it cannot be demonstrated that the exemption produces distortion of competition? Barcelona Prof. Dr. David Hummel

14. VAT in Practice – European Court of Justice III. How to read the ECJ (1) Taksatorringen (C-8/01) Art. 132 (1) lit. f of the Directive must be construed as meaning that the grant of exemption from VAT under that provision to an association such as that issue in the main proceeding and which satisfies all of the other condition of that provision must be refused if there is a genuine risk, that the exemption may by itself give rise to distortions of competition. Barcelona Prof. Dr. David Hummel

15. VAT in Practice – European Court of Justice III. How to read the ECJ (2) Aviva (C-605/15): Is a provision of national law concerning the exemption from VAT of an independent group of persons (IGP) which does not lay down any criteria or procedures governing the fulfilment of the condition on distortion of competition compatible with Article 132(1)(f) of the Directive and also with the principles of effectiveness, of legal certainty and of the protection of legitimate expectations? Barcelona Prof. Dr. David Hummel

16. VAT in Practice – European Court of Justice III. How to read the ECJ (2) Aviva (C-605/15): Article 132(1)(f) of the Directive must be interpreted to the effect that the exemption provided for in that provision relates only to independent groups of persons whose members carry on an activity in the public interest referred to in Article 132 and that, therefore, the services supplied by independent groups of persons whose members carry on an economic activity in the area of insurance, which does not constitute such an activity in the public interest, are not entitled to that exemption. Barcelona Prof. Dr. David Hummel

17. VAT in Practice – European Court of Justice III. How to read the ECJ (3) Explanations • Decisions of the court are for the referring court • Answer depends on the facts of the preliminary ruling (and their quality....) • The reasoning is just a reasoning and not the result • Two ways to deal with preliminary rulings... • „The ECJ has only said what it has really said!“ Barcelona Prof. Dr. David Hummel

18. VAT in Practice – European Court of Justice Thanks for your attention david.hummel@curia.europa.eu Prof. Dr. David Hummel