On June 14, 2007, the ECJ issued its decision in the C-445/05 (Haderer). Teh case deals about the question whether there is an exemption for the tuition given privately by teachers and covering school or university education.
Sixth VAT Directive – Exemptions – Article 13A(1)(j) – Tuition given privately by teachers and covering school or university education – Education provided in the context of courses organised by adult education centres – No direct contractual link with pupils
Article in the EU VAT Directive
Article 13A(1)(j) of Directive 77/388/EEC
Article 13 of the Sixth Directive provides:
‘A. Exemptions for certain activities in the public interest
1. Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of such exemptions and of preventing any possible evasion, avoidance or abuse:
(i) 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, provided by bodies governed by public law having such as their aim or by other organisations defined by the Member State concerned as having similar objects;
(j) tuition given privately by teachers and covering school or university education;
- Mr Haderer worked for a number of years in a freelance capacity for the Land of Berlin. In 1990, he provided assistance with schoolwork at an adult education institute (‘Volkshochschule’) and ran ceramics and pottery courses at another adult education institute and at a parents’ centre (‘Elternzentrum’). During that year, Mr Haderer’s teaching activities, taken together, regularly amounted to over 30 hours per week.
- The contracts on the basis of which Mr Haderer carried out those activities were concluded each semester with the Land of Berlin for a period of six months. The contracts contained clauses which stated that no ‘employment relationship’ – within the meaning of that term under German employment law – was thereby established.
- Mr Haderer’s fees, paid by the Land of Berlin, were calculated on an hourly basis. Social security contributions, insurance and taxes were not included. He was not entitled to the continued payment of those fees if he was prevented from working, and he bore the risk of losing those fees if courses were cancelled, even if this was as a result of a lack of participants.
- Under those contracts, Mr Haderer was given financial assistance in respect of his pension contributions and health insurance, and also a proportional leave allowance.
- Since the Finanzamt did not receive VAT returns from Mr Haderer for the period from 1989 to 1991, it fixed a lump sum amount of VAT for which he was liable in respect of 1990, on the ground that he did not satisfy the conditions for exemption under Paragraph 4(21) or (22) of the UStG.
- The Finanzgericht (Finance Court) dismissed as unfounded the action brought by Mr Haderer to challenge that decision as to his liability, taking the view that Mr Haderer’s activities were not exempted under the UStG.
- In his appeal to the Bundesfinanzhof on a point of law, Mr Haderer submits inter alia that the teaching activities which he carried out in 1990 are exempt from VAT under Article 13A(1)(i) and (j) of the Sixth Directive.
- The Bundesfinanzhof takes the view that those activities cannot be exempted under Article 13A(1)(i) of the Sixth Directive because a natural person cannot be deemed to fall within ‘other organisations defined by the Member State concerned as having similar objects’. On the other hand, as regards Article 13A(1)(j), the Bundesfinanzhof is unsure whether, in order for the exemption provided for under that provision to apply, the tuition services of a self-employed teacher are required to be supplied directly to the students as recipients of those services, meaning that the teacher is paid by those students, or whether it is sufficient for those services to be carried out in a school or university, as in the main proceedings.
Is tuition for school or university given by a private teacher to be exempt from tax under Article 13A(1)(j) of Directive 77/388/EEC 1 only where the private teacher provides his tuition services directly to the pupils/students as recipients of those services – and therefore is paid by them – or is it sufficient for the private teacher to provide his tuition services to a school or university as recipient of those services?
AG Opinion provided in the case C-434/05
On a proper construction of Article 13A(1)(j) of Directive 77/388, the concept of tuition given privately by teachers does not include a situation in which a self-employed teacher contracts with an educational establishment to provide tuition to students in courses organised by that establishment on its premises and under its responsibility, for which the establishment and not the teacher receives payment from the students.
In circumstances such as those in the main proceedings, the activities of an individual acting in a freelance capacity, consisting of providing assistance with schoolwork and also running ceramics and pottery courses in adult education centres, can be exempted from value added tax under Article 13A(1)(j) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment only where such activities consist of tuition given by a teacher on his own account and at his own risk, and covering school or university education. It is for the referring court to verify whether that is the case in the main proceedings.
Private lessons given privately by teachers and relating to school or university education – Education in the context of courses organized by adult education centers
Activities undertaken by an individual with freelancer status, which consist of conducting homework assistance and ceramic and pottery courses in adult education centers, can only qualify for the education exemption if those activities constitute classes taught by a teacher on their own account and under their own responsibility. provides and relate to school or university education.
Similar ECJ cases
- C-449/17 (A & G Fahrschul-Akademie GmbH) – Motor vehicle driving tuition provided by a driving school is not VAT exempted