Flashback on ECJ Cases C-520/14 (Gemeente Borsele and Staatssecretaris van Financiën) – An authority providing transport services for schoolchildren is not a taxable person

On May 12, 2016, the ECJ issued its decision in the case C-520/14 (Gemeente Borsele and Staatssecretaris van Financiën). This case dealt with the question whether a regional or local authority which provides a service for the transport of schoolchildren under conditions such as those described in the main proceedings carries out an economic activity and is therefore a taxable person (or not).

Context: Reference for a preliminary ruling — Value added tax — Directive 2006/112/EC — Articles 2(1)(c) and 9(1) — Taxable persons — Economic activities — Definition — Transport of schoolchildren

Article in the EU VAT Directive

Article 2(1)(c) and Article 9(1) of Directive 2006/112/EC

Article 2 (Taxable transaction)
1. The following transactions shall be subject to VAT:
(c) the supply of services for consideration within the territory of a Member State by a taxable person acting as such;

Article 9 (Taxable person)
1. “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.


  • The municipality of Borsele uses, for the transport of eligible pupils to and from school, the services of transport undertakings. In that respect, for 2008, it paid the sum of EUR 458 231, inclusive of VAT.
  • In accordance with the provisions of the Decree of the municipality of Borsele concerning the transport of pupils, 2008, approximately one third of parents of pupils for whom school transport was provided paid contributions, equivalent to 3% of the amount paid by that municipality to fund school transport services, totalling to EUR 13 958. The difference was financed by the municipality from public funds.
  • The municipality of Borsele claimed, before the tax authorities, that it was a taxable person for the purposes of VAT in respect of the provision of school transport services in return for payment of contributions and was thus entitled to deduct from that payment the VAT that had been charged by transport undertakings. That claim was rejected on the ground that the municipality did not provide services for consideration and thus did not carry out any economic activity.


Should Article 2(1)(c) and Article 9(1) of Directive 2006/112/EC be interpreted as meaning that, with regard to the transport of school pupils, on the basis of an arrangement as described in the present judgment, a municipality should to this extent be regarded as a taxable person within the meaning of that directive?

For the purpose of answering that question, should the arrangement as a whole be considered, or should this assessment be made for each transport operation separately?

If the latter is the case, should a distinction be made according to whether pupils are transported over a distance of between 6 and 20 kilometres or over a distance exceeding 20 kilometres?

AG Opinion

A municipality such as that in the dispute in the main proceedings which organises transport for school pupils by calling on the services of external transport undertakings and receives from the pupils’ parents contributions amounting to only 3% of the costs of providing the transport does not act as a taxable person within the meaning of Article 9(1) of Directive 2006/112/EC. If the referring court finds that there are distortions of competition affecting a not negligible number of particular transport services, the municipality acts as a taxable person to that extent.


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 a regional or local authority which provides a service for the transport of schoolchildren under conditions such as those described in the main proceedings does not carry out an economic activity and is not therefore a taxable person.



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References to the case in the EU Member States






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