On June 19, 2025, the ECJ issued the judgment in the case C-785/23 (Bulgarian posts).
Context: Reference for a preliminary ruling — Taxation — Common system of value added tax — Directive 2006/112/EC — Exemptions for certain activities in the public interest — Article 132 — Public postal services — Directive 97/67/EC — Article 12 — Universal postal service provider — The concepts of ‘public postal service’ and ‘service in the public interest’
Summary
- Case Background: The case involves a dispute between Bulgarian Posts and the tax administration regarding the VAT exemption status of certain postal services provided under individually concluded contracts, questioning whether these services qualify as “public postal services” under EU law.
- Questions Referred to the Court: The Supreme Administrative Court of Bulgaria referred several questions to the Court of Justice of the EU, asking whether services provided under specific conditions (e.g., lower prices, individual contracts) can be exempt from VAT and whether such exemptions align with the definitions and principles set forth in EU directives.
- Court’s Decision: The Court ruled that the supplies of postal services provided under separate contracts do not qualify for VAT exemption if they are not offered to all consumers and are conducted under conditions more favorable than those mandated by the national regulatory authority.
- Justification of the Decision: The Court emphasized that VAT exemptions must adhere strictly to the conditions outlined in the directives, stressing that exemptions are intended to support public interest services available to the general public, rather than tailored services for specific clients.
- Implications for Universal Service Providers: This ruling clarifies that universal service providers must ensure their services comply with established regulations and are uniformly accessible, preventing selective treatment that could undermine the universal postal service’s objectives and fiscal fairness in VAT applications.
Article in the EU VAT Directive
Article 132(1)(a) of the EU VAT Directive 2006/112/EC
Article 132
1. Member States shall exempt the following transactions:
(a) the supply by the public postal services of services other than passenger transport and telecommunications services, and the supply of goods incidental thereto;
Facts
The applicant in cassation is the Directorate of ‘Disputes and Tax and Social Security Affairs’ in Sofia. The defendant in cassation is the company ‘Bulgarian Posts EAD’ (hereinafter: postal service). The postal service has an individual license to provide universal postal service services. During a tax audit, it was determined that the postal service has declared exempt transactions of the services provided that, according to the tax inspector, do not have the characteristics of universal postal services. The tax authority issued a tax assessment, against which the postal service appealed.
Consideration:
The postal service provides its services on the basis of individual agreements with users, rather than on the basis of the general provisions of the universal postal service agreement. The referring court therefore doubts whether these services fall within the definition of ‘services’ within the meaning of Article 132 of Directive 2006/112. The costs of the services offered are also lower than prices approved by the universal postal service, which causes the referring court to doubt, among other things, whether the postal service has the status of a universal postal service within the meaning of Article 12 of Directive 97/67.
Questions
1. Services provided by the license holder for the provision of the universal postal service in the territory of the Republic of Bulgaria under individual agreements with users of postal services shall be considered as services within the meaning of Article 132 [of] Title IX, Chapter 2 of Council Directive 2006/112/ЕG of 28 November 2006 on the common system of value added tax are provided by a ‘public postal service’ and ‘serve the general interest’, where those individual agreements provide that the performance must meet all the conditions below, namely: collection of the shipments outside the access points (collection and delivery take place at the client’s address); collection and delivery take place at a time agreed in advance with the clients; the frequency of collection and delivery is higher than the frequency regulated in the legally established rules for the quality of the universal postal service and the effectiveness of the services, with additional collection also taking place at the request of the client above the frequency expressly agreed in the agreement outside the opening hours of the post offices; provision of the service at a price lower than the prices approved by the Komisia za regulirane na saobshteniata (Communications Regulation Commission, the national regulatory body that approves prices for the universal postal service in Bulgaria; hereinafter “KRS”) or with higher discounts than the discounts approved by the KRS?
2. Follows from the second indent of Article 12 of Directive 97/67/EC of the European Parliament and of the Council of 15 December 1997 on common rules for the development of the internal market for postal services in the Community and the improvement of the quality of the service that the services provided by the license holder for the provision of the universal postal service do not have the quality of a universal postal service within the meaning of the Directive when these services are provided under an individual contract at a price lower than the price charged for the corresponding type of universal postal service approved price and it is not demonstrated that the price thus agreed covers the costs of the performance?
3. Does the fourth indent of Article 12 of Directive 97/67/EC of the European Parliament and of the Council of 15 December 1997 on common rules for the development of the internal market for postal services in the Community and the improvement of quality principle of transparency and non-discrimination enshrined in the service is violated when the license holder for the provision of the universal postal service concludes individual agreements for the provision of universal postal services in which these other and, compared to the published and generally accessible conditions, more favorable conditions for the provision of performance?
4. If this question is answered in the affirmative, it constitutes a reason for not treating the transactions as exempt from tax within the meaning of Article 132 of Council Directive 2006/112/EC of 28 November 2006 on the common system of added tax value to treat?
AG Opinion
None
Decision
Article 132(1)(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, read in conjunction with the second and fourth indents of Article 12 of Directive 97/67/EC of the European Parliament and of the Council of 15 December 1997 on common rules for the development of the internal market for Community postal services and for improving the quality of service, as amended by Directive 2008/6/EC of the European Parliament and of the Council of 20 February 2008,
must be interpreted as meaning that
precludes supplies of postal services carried out in accordance with separate contracts by a holder of an individual licence to operate the universal postal service from benefiting from the exemption from value added tax provided for in Article 132 where such supplies which are intended to meet the special needs of the persons concerned are not offered to all consumers; are carried out under different and more favourable conditions than those approved by the national authority designated in the Member State concerned as the regulatory authority for the universal postal service, or those provided for in the regulations on this service.
Similar ECJ Cases
- Roadtrip through ECJ Cases – Focus on ”Exemption for Public Postal Services” (Art. 132(1)(a))
- C-4/18 and C-5/18 (Winterhoff/Eisenbeis) – VAT exemption for public postal services for formal service of documents
- C-357/07 (TNT Post UK) – Concept of ‘public postal services’
- C-287/06 to C-292/06 Deutsche Post and others
- C-340/13 bpost
- C-256/17
Source
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