Flashback on ECJ cases C-149/97 (Institute of the Motor Industry) – Definition of a ”Trade Union”

On November 12, 1998, the ECJ issued its decision in the joined cases C-148/97 & C-149/97 (Institute of the Motor Industry)

Context: VAT – Exemptions – Non-profit-making organisations with aims of a trade-union nature

Article in the EU VAT Directive

Article 13A(1)(l)of the Sixth Council Directive (Article 132(1)(l) of the EU VAT Directive 2006/112/EC).

Article 132
1. Member States shall exempt the following transactions:

(l) the supply of services, and the supply of goods closely linked thereto, to their members in their common interest in return for a subscription fixed in accordance with their rules by non-profit- making organisations with aims of a political, trade-union, religious, patriotic, philosophical, philanthropic or civic nature, provided that this exemption is not likely to cause distortion of competition;

Facts

A question on the interpretation of Article 13A(1)(l) of the Sixth Council Directive 77/388/EEC was referred to the Court for a preliminary ruling by the VAT and Duties Tribunal, London, in proceedings between the Institute of the Motor Industry and the Commissioners of Customs and Excise concerning the application of an exemption from value added tax for items in Group 9 of Schedule 9 to the Value Added Tax Act 1994.
The Institute argued that it falls within the scope of Article 13A(1)(l) of the Directive and that its supplies and services are therefore exempt from VAT.
The national tribunal considered that, having regard to the ordinary meaning of the expression ‘trade union’ used in the English version of Article 13A(1)(l) of the Directive, the supplies of goods and services effected by the Institute cannot be exempted from VAT by virtue of that provision.
However, it observed that the term ‘syndicale’ in the French version and its equivalents in certain other language versions appear to be used in a wider sense than that of the expression ‘trade union’ in the English version.

Questions

In the light of the findings of fact in paragraphs 3-19 and 21 of the decision of theTribunal and in circumstances of the sort found in paragraph 21 (which issummarised below), are the services supplied by such an association, being a non-profit-making organisation, exempt from VAT as falling within the scope of Article13A(1)(l) of the Sixth Directive by virtue of the following words: ”… organisationswith aims of a … trade-union … nature …”?

Paragraph 21, in summary, states that the association is a voluntary association ofindividuals comprising employees in the retail motor industry. The primary purposes of the association are the improvement of the standards of its members at work, the improvement of career structures within the different sectors of theindustry and the consequent enhancement of the public perception of the industry and the people working within it. The association seeks to achieve these ends by responding to the requirements of the industry for skills at all levels, by validating courses (run by other institutions) that teach those skills, by making awards oncompletion of those courses and by grading its members, by disseminating information designed to keep its members up to date with developments in the industry and in their skills and by keeping a job placement register.

AG Opinion

Article 13(A)(1)(l) of 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 construed as meaning that an organisation with the characteristics described in the order for reference cannot be deemed to be ‘pursuing aims of a trade-union nature’ and, accordingly, the services which it supplies to its members are not exempt from VAT.

Decision

For the purposes of Article 13A(1)(l) of the Sixth Council Directive 77/388/EEC of17 May 1977 on the harmonisation of the laws of the Member States relating toturnover taxes Common system of value added tax: uniform basis of assessment,an organisation with aims of a trade-union nature means an organisation whose main aim is to defend the collective interests of its members whether they are workers, employers, independent professionals or traders carrying on a particulareconomic activity and to represent them vis-à-vis the appropriate third parties,including the public authorities.

Summary

A body whose purpose is of a trade union nature within the meaning of Article 13A(1)(l) of the Sixth Directive is an organization whose primary object is to promote the collective interests of its members, whether or not they are employees , employers, practitioners of the liberal professions or entrepreneurs engaged in a specific economic activity — and to represent them vis-à-vis third parties, including government authorities.

Source