On March 14, 2019, the ECJ issued his decision in the case C-449/17 (A & G Fahrschul-Akademie GmbH). The case dealt with the VAT exemption of Motor vehicle driving tuition provided by a driving school.
Article in the EU VAT Directive
Article 132 (1) (i) and (j) of the EU VAT Directive 2006/112/EC
Article 132
1. Member States shall exempt the following transactions:
(i) the provision of children’s or young people’s education, school or university education, vocational training or retraining, including the supply of services and of goods closely related thereto, by bodies governed by public law having such as their aim or by other organisations recognised by the Member State concerned as having similar objects;
(j) tuition given privately by teachers and covering school or university education;
Facts
- A & G Fahrschul-Akademie GmbH operates a driving school in the legal form of a limited liability company. It did not show the amount of VAT separately on the invoices which it issued to students, although it did initially declare taxable transactions in its VAT Return.
- A & G asked for a VAT refund afterwards, claiming that its activities were exempt from VAT. The German tax authorities denied this refund request.
- The Finanzgericht (Finance Court, Germany) held, inter alia, that A & G could not rely on the tax exemption referred to in Article 132(1)(j) of Directive 2006/112. The services provided by A & G, consisting in the provision of theoretical tuition and practical driving instruction, were not, that court found, covered by the concept of ‘school or university education’ within the meaning of that provision, since, by virtue of a recommendation for road safety education at school in force during the period at issue, practical driving instruction was neither a necessary nor a desirable component of such education.
- A & G did not agree with that, arguing, inter alia, that the national legislature’s objective concerning driving tuition in a driving school is to educate road users to act responsibly. Furthermore, practical driving instruction provided by a driving school and road safety training courses organised by, for example, the Allgemeiner Deutscher Automobil-Club (German Automobile Club) serve the same objectives, ad those were exempt from VAT as well. Therefore, A & G argues that it would be contrary to the principle of neutrality to tax those comparable activities differently
Questions
1. Does the concept of school or university education in Article 132(1)(i) and (j) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax cover driving school tuition to acquire category B and category C1 driving licences?
2. If the answer to question 1 is in the affirmative:
Can the applicant be recognised as an organisation with similar objects for the purposes of Article 132(1)(i) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax on the basis of the provisions on the driving instructor examination and the issue of a driving instruction and driving school licence in the Law on driving instructors (Gesetz über das Fahrlehrerwesen) of 25 August 1969 (Bundesgesetzblatt I 1969, 1336), last amended by the Law of 28 November 2016 (Bundesgesetzblatt I 2016, 2722, Fahrlehrergesetz, Law on driving instructors), and of the public interest in the training of learner drivers to be safe, responsible and environmentally aware road users?
3. If the answer to question 2 is in the negative:
Does the term ‘tuition given privately by teachers’ contained in Article 132(1)(j) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax require that the taxable person be an individual trader?
4. If the answers to questions 2 and 3 are in the negative:
Is an instructor always providing tuition privately within the meaning of Article 132(1)(j) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax if he acts on his own account and at his own risk, or must further requirements be met to qualify as a private teacher?
AG Opinion
Article 132(1)(i) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that driving school tuition for the purpose of acquiring category B and category C1 driving licences is not covered by the concept of school or university education within the meaning of that provision.
Decision
The concept of ‘school or university education’, within the meaning of Article 132(1)(i) and (j) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, must be interpreted as not covering motor vehicle driving tuition provided by a driving school, such as that at issue in the main proceedings, for the purpose of acquiring driving licences for vehicles in categories B and C1 referred to in Article 4(4) of Directive 2006/126/EC of the European Parliament and of the Council of 20 December 2006 on driving licences.
Personal comments/VATupdate
The ECJ repeats that the VAT exemptions are to be interpreted strictly, since they constitute exceptions to the general principle, arising from Article 2 of that directive, that VAT is to be levied on all services supplied for consideration by a taxable person.
However, the concept of ‘school or university education’, is not limited solely to education which leads to examinations for the purpose of obtaining qualifications or which provides training for the purpose of carrying out a professional or trade activity, but includes other activities which are taught in schools or universities in order to develop pupils’ or students’ knowledge and skills, provided that those activities are not purely recreational.
In that regard, it must be noted, that activities which are not purely recreational are likely to be covered by the concept of ‘school or university education’ as long as the tuition is provided in schools or universities.
The concept of ‘school or university education’ for the purposes of the VAT system refers generally to an integrated system for the transfer of knowledge and skills covering a wide and diversified set of subjects, and to the furthering and development of that knowledge and those skills by the pupils and students in the course of their progress and their specialisation in the various constituent stages of that system.
Source Curia
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