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A4. Direct effect
GENERAL​
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Directive provision unconditional and sufficiently precise
"[51] It must be borne in mind that, in accordance with settled case-law (see, in particular, Case 8/81 Becker [1982] ECR 53, paragraph 25, Case C-193/91 Mohsche [1993] ECR I-2615, paragraph 17, and Case C-134/99 IGI [2000] ECR I-7717, paragraph 36), wherever the provisions of a directive appear, so far as their subject-matter is concerned, to be unconditional and sufficiently precise, those provisions may, in the absence of implementing measures adopted within the prescribed period, be relied upon as against any national provision which is incompatible with the directive or in so far as the provisions define rights which individuals are able to assert against the State." (Kugler C-141/00)
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Direct effect applies against the state (where it has failed to correctly implement)
"[78] It must be borne in mind that, in accordance with settled case-law (see, in particular, Case 8/81 Becker [1982] ECR 53, paragraph 25; Case C-193/91 Mohsche [1993] ECR I-2615, paragraph 17; Case C-134/99 IGI [2000] ECR I-7717, paragraph 36; and Kügler, cited above, paragraph 51), wherever the provisions of a directive appear, so far as their subject-matter is concerned, to be unconditional and sufficiently precise, those provisions may, in the absence of implementing measures adopted within the prescribed period, be relied upon as against any national provision which is incompatible with the directive or in so far as the provisions define rights which individuals are able to assert against the State." (Dornier C-45/01)
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Cannot rely on direct effect for some purposes but not others
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- Cannot rely on incompatible domestic law exemption but also rely on direct effect to claim input VAT
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"[45] It follows from the foregoing that, even where an exemption provided for by national law is incompatible with the VAT Directive, Article 168 of that directive does not permit a taxable person both to benefit from that exemption and to exercise the right to deduct tax." (MDDP C-319/12)
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CONDITIONAL PROVISIONS​
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Mandatory exemptions giving member state discretion ​
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- Requirement to lay down conditions to ensure correct application does not prevent direct effect
"[79] In addition, although Article 13A(1) of the Sixth Directive provides that the Member States are to apply the exemptions prescribed by that provision 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, a Member State may not rely, as against a taxpayer who is able to show that his tax position actually falls within one of the categories of exemption laid down in the Sixth Directive, on its failure to adopt the very provisions which are intended to facilitate the application of that exemption (Kügler, cited above, paragraph 52)." (Dornier C-45/01)
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"[52] First, although Article 13(A)(1) of the Sixth Directive provides that the Member States are to apply the exemptions prescribed by that provision ‘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, a Member State may not rely, as against a taxpayer who is able to show that his tax position actually falls within one of the categories of exemption laid down in the Sixth Directive, upon its failure to adopt the very provisions which are intended to facilitate the application of that exemption (see, in relation to Article 13(B) of the Sixth Directive, Becker, cited above, paragraph 33)." (Kugler C-141/00)
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- Option to lay down additional conditions does not prevent direct effect
"[59] This conclusion cannot be affected by the possibility under Article 13(A)(2) of the Sixth Directive of making the grant of the exemptions provided for in Article 13(A)(1) subject to one or more conditions.
[60] That limitation on the rule excluding liability to tax is purely contingent in nature and a Member State which has omitted to adopt the measures necessary for that purpose cannot rely on its own omission in order to refuse a taxpayer entitlement to an exemption which he may legitimately claim under the Sixth Directive." (Kugler C-141/00)
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- Discretion to identify beneficiaries of exemption does not prevent direct effect
"[51] The Court has, however, already held that the fact that that provision of the VAT Directive laying down an exemption grants the Member States a discretion to establish the beneficiaries thereof does not prevent that provision from being held to be sufficiently precise to be relied upon directly if, according to objective evidence, the supply at issue meets the criteria for that exemption (see, inter alia, JP Morgan Fleming Claverhouse Investment Trust and The Association of Investment Trust Companies, paragraphs 60 and 61 and case-law cited)." (MDDP C-319/12)
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- Direct effect only applies where limits of discretion exceeded by identifying body that could not objectively be recognised
"[51] The Court has, however, already held that the fact that that provision of the VAT Directive laying down an exemption grants the Member States a discretion to establish the beneficiaries thereof does not prevent that provision from being held to be sufficiently precise to be relied upon directly if, according to objective evidence, the supply at issue meets the criteria for that exemption (see, inter alia, JP Morgan Fleming Claverhouse Investment Trust and The Association of Investment Trust Companies, paragraphs 60 and 61 and case-law cited).
[52] Likewise, where a Member State has exceeded its discretion by exempting supplies or taxable persons with regard to which such an exemption could not objectively be granted under that provision of the VAT Directive, the person concerned may rely directly on that provision so that that exemption is not applied to him.
[53] It follows that it is only where the Member State has exceeded its discretion, by defining a taxable person as an organisation with objects similar to those of bodies governed by public law, that that taxable person may then rely on point (i) of Article 132(1) of the VAT Directive in order to contest national legislation and have its services made liable to VAT." (MDDP C-319/12)
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EXAMPLES ​
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- Medical exemptions can have direct effect
"[80] As regards the content of Article 13A(1)(b) and (c) of the Sixth Directive, the Court finds that, contrary to the assertions of the German Government, those provisions indicate in a sufficiently precise and unconditional manner the activities to which the exemption applies (see, by analogy, as regards Article 13A(1)(g) of the Sixth Directive, Kügler, cited above, paragraph 53)." (Dornier C-45/01)
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