On January 1, 2015, the ECJ issued its decision in the case C-55/14 (Régie communale autonome du stade Luc Varenne).
Context: Reference for a preliminary ruling — Directive 77/388/EEC — VAT — Exemptions — Article 13B(b) — Concept of ‘exempted letting of immovable property’ — Provision, for consideration, of a football stadium — Contract for provision reserving certain rights and prerogatives to the owner — Supply, by the owner, of various services representing 80% of the charge specified in the contract
Article in the EU VAT Directive
Article 135(1)(l) of the EU VAT Directive 2006/112/EC (13B(b) the Sixth Council Directive)
Article 135
1. Member States shall exempt the following transactions:
(l) the leasing or letting of immovable property
Facts
- The corporation runs the Luc Varenne football stadium, for the purchase of which it had to pay the sum of EUR 6 428 579.97, with the addition of VAT amounting to EUR 1 350 001.79.
- On 25 August 2003 the corporation entered into a contract with Royal Football Club de Tournai ASBL (‘RFCT’) under which RFCT uses, for consideration, the facilities of the Luc Varenne football stadium.
- The corporation deducted the whole of the VAT charged on the purchase of those facilities.
- Following two inspections at the offices of the corporation in 2004 and 2006, the Belgian tax authority considered that the corporation was effecting a number of transactions with regard to VAT, namely:
- transactions subject to VAT and in respect of which there is a right to deduct input VAT;
- transactions outside the scope of VAT and in respect of which there is no right to deduct input VAT, such as the provision to RFCT, free of charge and without consideration, of certain facilities at the Luc Varenne football stadium, and
- transactions which are exempt from VAT and, consequently, in respect of which there is no right to deduct input VAT.
- The Belgian tax authority therefore considered that the provision of certain facilities at the abovementioned stadium to RFCT on the terms of the contract entered into with the corporation had to be regarded as a letting of immovable property and, consequently, had to be exempted from VAT under Article 44(3), 2° of the VAT Code.
- In the written record drawn up on 22 December 2006, the Belgian tax authority stated that an analysis of the corporation’s activities using the method of actual use demonstrated that the corporation could deduct input VAT only to the level of 36%, in accordance with the rule for pro rata deduction of VAT referred to in Article 46(2) of the VAT Code.
- On 10 January 2007 the Belgian tax authority issued a summons to the corporation demanding payment of that part of the VAT which it had incorrectly deducted, namely a sum of EUR 864 001.15, a fine amounting to EUR 86 400, late payment interest and default interest.
- The corporation challenged that summons before the court of first instance in Mons which, by judgment of 12 May 2011, held that the supply by the corporation of certain facilities at the Luc Varenne football stadium to RFCT had to be classified as a letting of immovable property and that the tax authority had been correct to refuse deduction of input tax. The corporation brought an appeal against that judgment before the cour d’appel de Mons.
Questions
Does the making available of the facilities of a sports installation used exclusively for footballing purposes, understood as being the right to use and exploit the football stadium playing surface (the pitch) and the players’ and referees’ changing rooms on an ad hoc basis for up to 18 days per season (a season starting on 1 July each calendar year and ending on 30 June the following year), constitute an exempt letting of immovable property for the purposes of Article 13B(b) 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 1 (Article 135(1)(l) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1)), 2 in so far as the party granting the right of use and exploitation:
- is fully entitled to confer identical rights on other natural or legal persons of its choice in respect of days other than the 18 days referred to above;
- has the right to access those facilities at any time, without the prior consent of the holder of the right of use and exploitation, in order, in particular, to satisfy itself of the proper use of the facilities and to pre-empt any damage, on the sole condition that it does not disrupt the smooth running of sports events;
- retains, in addition, a right of permanent control over access to those facilities, including during the period of their use by RFCT;
- seeks a flat-rate fee of EUR 1 750 per day for use of the playing surface, the changing rooms, the bar and the caretaking, surveillance and monitoring service for the facilities as a whole, it being understood that it has been agreed between the parties that, of the amount sought, 20% represents the right of access to the football pitch and 80% the consideration for various services connected with the maintenance, cleaning, upkeep (mowing, sowing, and so on) and regulatory compliance of the playing surface and ancillary services supplied by the party granting the right of use and exploitation (namely, RCA, the present appellant)?
AG Opinion
None
Decision
Article 13B(b) the 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, must be interpreted as meaning that the act of making available, for consideration, a football stadium under a contract reserving certain rights and prerogatives to the stadium owner and providing for the supply, by the owner, of various services, including services of maintenance, cleaning, repair and upgrading, representing 80% of the charge which is agreed in the contact to be payable, does not constitute, as a general rule, a ‘letting of immovable property’ within the meaning of that provision. The finding of the facts is for the referring court.
Personal comments/VATupdate
Régie communale autonomous du stade Luc Varenne (SLV) owns the football stadium Luc Varenne in Tournai (Tournai). In 2003, SLV signed a contract with Tournai football club. SLV hereby makes the installations of the football stadium available to Tournai. SLV deducts the VAT charged on the installations as input tax. Following an investigation, the Belgian tax authorities state that making the stadium installations available to Tournai must be regarded as the rental of immovable property, a service exempt from VAT. According to the Belgian tax authorities, only 36% of the input tax is then deductible. The Belgian court has referred a question for a preliminary ruling in this case. The Court of Justice of the EU (CJEU) has ruled that making a football stadium available in principle does not constitute a rental of immovable property. The CJEU considers it important in this regard that SLV had reserved some rights and privileges when the stadium was made available, and that it provided various services. Furthermore, the CJEU considers that these services account for 80% of the contractual fee.
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