© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
E2. Economic activity in general
GENERAL
Article 9(1): two tests
- Transaction within second sub-paragraph need not amount to economic activity in general definition
"[30] Accordingly, Article 12(1) of the VAT Directive should be interpreted as referring only to persons who are not already a taxable person for VAT purposes in respect of their main economic activities. On the other hand, in the case of such a taxable person, like Mr Kostov, it would not be consistent with, in particular, the objective that VAT should be levied with simplicity and in as general a manner as possible to interpret the second subparagraph of Article 9(1) of the VAT Directive as meaning that the term ‘economic activity’ appearing in that provision does not encompass an activity which, whilst carried out only occasionally, falls within the general definition of that term in the first sentence of that provision and is carried out by a taxable person who also carries out, permanently, another economic activity for the purposes of the VAT Directive.
[31] Having regard to the foregoing, the answer to the question referred is that Article 9(1) of the VAT Directive is to be interpreted as meaning that a natural person who is already a taxable person for VAT purposes in respect of his activities as a self-employed bailiff must be regarded as a ‘taxable person’ in respect of any other economic activity carried out occasionally, provided that that activity constitutes an activity within the meaning of the second subparagraph of Article 9(1) of the VAT Directive." (Kostov C-62/12)
- But must involve supplies for consideration
"[32] In that regard, the Court has stated that an activity may be regarded as an economic activity, within the meaning of the second subparagraph of Article 9(1) of the VAT Directive, only where the activity corresponds to one of the chargeable events defined in Article 2(1) of that directive (judgment of 12 May 2016, Gemeente Borsele et Staatssecretaris van Financiën, C‑520/14, EU:C:2016:334, paragraph 21)." (EQ C-846/19)
Consideration v. remuneration
- Supplies for consideration does not give rise to presumption of economic activity
"[53] Satisfaction of the test for a supply for consideration under article 2 does not give rise to a presumption or general rule that the supply constitutes an economic activity. However, as Mr Puzey for HMRC pointed out, the Advocate General remarked in her Opinion in Borsele at [49], "the same outcomes may often be expected"." (Wakefield College v. HMRC [2018] EWCA Civ 952)
- Necessary to look at English and French decisions to distinguish concepts
"[14] When considering the CJEU cases, it is important to note that there is on occasions some inconsistency between the English and French versions of the judgments as to the use of the words "consideration" and "remuneration". In the text of the VAT Directive "consideration" is, in French, "à titre onéreux". This is the phrase used at some points in the French versions where the word "consideration" is used in the English judgments, but the words "rétribution" and "contre-valeur" are also used. Those are all occasions on which article 2 is under consideration. Where the word "rémunération" appears in the French versions, the equivalent in the English versions is in some places "consideration", as well as being in other places "remuneration". Given the distinct meanings of the words "consideration" and "remuneration" in this area of law, spelt out clearly and explicitly in the Opinion of Advocate General Kokott in Borsele, it is necessary, when reviewing the CJEU cases, to look at both the French and the English versions of the judgments." (Wakefield College v. HMRC [2018] EWCA Civ 952)
- Consideration means some value is given, remuneration refers to income on a continuing basis
"[14] When considering the CJEU cases, it is important to note that there is on occasions some inconsistency between the English and French versions of the judgments as to the use of the words "consideration" and "remuneration". In the text of the VAT Directive "consideration" is, in French, "à titre onéreux". This is the phrase used at some points in the French versions where the word "consideration" is used in the English judgments, but the words "rétribution" and "contre-valeur" are also used. Those are all occasions on which article 2 is under consideration. Where the word "rémunération" appears in the French versions, the equivalent in the English versions is in some places "consideration", as well as being in other places "remuneration". Given the distinct meanings of the words "consideration" and "remuneration" in this area of law, spelt out clearly and explicitly in the Opinion of Advocate General Kokott in Borsele, it is necessary, when reviewing the CJEU cases, to look at both the French and the English versions of the judgments.
...
[54] Having concluded that the supply is made for consideration within the meaning of article 2, the court must address whether the supply constitutes an economic activity for the purposes of the definition of "taxable person" in article 9. The issue is whether the supply is made for the purposes of obtaining income therefrom on a continuing basis. For convenience, the CJEU has used the shorthand of asking whether the supply is made "for remuneration". The important point is that "remuneration" here is not the same as "consideration" in the article 2 sense, and in my view it is helpful to keep the two terms separate, using "consideration" in the context of article 2 and "remuneration" in the context of article 9." (Wakefield College v. HMRC [2018] EWCA Civ 952)
Partly economic activities
- Query whether the same activity (e.g. transport or teaching a classroom) can be partly economic and partly non-economic
"[76] It should be noted that the appeal in the present case was argued on the basis that the supply of courses to students paying subsidised fees was a separate activity and the issue was whether that supply was an economic activity for the purposes of article 9. In the same way, the parties had agreed that the supply of courses to students paying full fees and to students paying no fees were separate activities, with the former constituting an economic activity and the latter not doing so. It was nothing to the point that all three categories of student might attend the same course. This distinction between recipients was not made in the judgments in Finland and Borsele, nor was it commented on, although in Borsele the questions referred by the domestic court included asking whether a distinction should be made between transport of 6 to 20kms and transport of over 20kms. In his reply, Mr Prosser, no doubt in response to questions from the court on this question, suggested that the correct comparator for the income derived from the students paying subsidised fees was all the students on LSC-funded courses provided in the new building. In my judgment, it was too late for the case to be presented on this altered basis." (Wakefield College v. HMRC [2018] EWCA Civ 952)
GENERAL MEANING
Permanent activity in return for remuneration
"[42]...Thus, an activity is generally classified as economic where it is permanent and is carried out in return for remuneration which is received by the person carrying out the activity...which implies that the remuneration itself must be regarded as having a continuing basis..." (TP C-288/22)
"[34] An activity is thus, in general, classified as ‘economic’ where it is permanent and is carried out in return for remuneration which is received by the person carrying out the activity (judgment of 15 April 2021, Administration de l’Enregistrement, des Domaines et de la TVA, C‑846/19, EU:C:2021:277, paragraph 47 and the case-law cited)." (Gmina O C-612/21)
- Objective: activity per se without regard to purpose or result of activity
"[34] The notion of ‘economic activity’ is defined in the second subparagraph of Article 9(1) of the VAT Directive as covering all activities of producers, traders and persons supplying services including mining and agricultural activities and activities of the professions. It is apparent from the Court’s case-law that that definition shows that the scope of the term ‘economic activities’ is very wide and that the term is objective in character, in the sense that the activity is considered per se and without regard to its purpose or results. Thus, an activity is generally classified as economic where it is permanent and is carried out in return for remuneration which is received by the person carrying out the activity (see, to that effect, judgment of 12 November 2009, Commission v Spain, C‑154/08, not published, EU:C:2009:695, paragraph 89 and the case-law cited)." (WEG C-449/19)
"[28] As regards, secondly, the concept of ‘economic activity’ within the meaning of Article 9(1) of the VAT Directive, it is settled case-law that that term is objective in character, in the sense that the activity is considered per se and without regard to its purpose or results (see, to that effect, Case C-223/03 University of Huddersfield [2006] ECR I-1751, paragraphs 47 and 48 and the case-law cited)." (Rēdlihs C-263/11)
- Examine all the circumstances in which supply is made
"[43] In order to determine whether a service is supplied in return for remuneration, so that the activity in question is to be classified as an economic activity, all the circumstances in which it is supplied have to be examined..." (TP C-288/22)
"[55] Whether article 9 is satisfied requires a wide-ranging, not a narrow, enquiry. All the objective circumstances in which the goods or services are supplied must be examined: see the judgment in Borsele at [29]. Nonetheless, it is clear from the CJEU authorities that this does not include subjective factors such as whether the supplier is aiming to make a profit. Although a supply "for the purpose of obtaining income" might in other contexts, by the use of the word "purpose", suggest a subjective test, that is clearly not the case in the context of article 9. It is an entirely objective enquiry." (Wakefield College v. HMRC [2018] EWCA Civ 952)
- Including the nature of the property
"[19] The issue of whether that activity is designed to obtain income on a continuing basis is an issue of fact which must be assessed having regard to all the circumstances of the case, which include the nature of the property concerned (see Case C-263/11 Rēdlihs [2012] ECR, paragraph 33)." (Unabhängiger C-219/12)
- Intention to obtain income does not require intention to make a profit
"[37] It is apparent both from the wording of Article 9(1) of the VAT Directive and from the case-law of the Court that, for a finding that the exploitation of tangible or intangible property is carried out for the purpose of obtaining income therefrom, it is irrelevant whether or not that exploitation is intended to make a profit (judgment of 2 June 2016, Lajvér, C‑263/15, EU:C:2016:392, paragraph 35 and the case-law cited)." (WEG C-449/19)
"[25] It is clear both from the wording of Article 4(1) of the Sixth Directive and the case-law of the Court that, for a finding that the exploitation of tangible or intangible property is carried out for the purpose of obtaining income therefrom, it is irrelevant whether or not that exploitation is intended to make a profit."(Unabhängiger C-219/12)
- Irrelevant that operator required by legislation to carry out economic activity
"[35] Even if the activities carried on by an association of residential property owners such as WEG Tevesstraße consist in exercising the functions assigned to it by national legislation, that fact is in itself irrelevant for the purposes of classifying the provision of those services as economic activities (see, to that effect, judgment of 29 October 2015, Saudaçor, C‑174/14, EU:C:2015:733, paragraphs 39 and 40)." (WEG C-449/19)
"[40] The fact that the activity at issue consists in the performance of duties conferred and regulated by law in the public interest is irrelevant for the purposes of determining whether that activity can be classified as a supply of services effected for consideration. In that context, the Court has held that, even when the object of the activity in question is to fulfil a constitutional obligation exclusively and directly incumbent upon the Member State concerned, the direct link between the supply of services and the consideration received cannot be called into question by that fact alone (see, inter alia, judgment of 2 June 2016, Lajvér, C‑263/15, EU:C:2016:392, paragraph 42)." (Nagyszénás Településszolgáltatási Nonprofit C-182/17)
"[41] The fact that, in the context of that activity, the maintenance of the public roads in order to ensure that the water flows freely constitutes a legal obligation can have no bearing on the assessment as to whether the activity at issue in the main proceedings is effected ‘for consideration’, such a fact not being liable to call into question the classification of such an activity as a ‘supply of services’ or the direct link between the service provided and the consideration given for it.
[42] It has been held that the fact that the activity in question consists in the performance of duties conferred and regulated by law in the public interest is irrelevant for the purposes of determining whether that activity can be classified as a supply of services effected for consideration (see, to that effect, judgments of 12 September 2000 in Commission v France, C‑276/97, EU:C:2000:424, paragraph 33, and 29 October 2009 in Commission v Finland, C‑246/08, EU:C:2009:671, paragraph 40). Furthermore, it has also been held that even where the activity in question is designed to fulfil a constitutional obligation exclusively and directly incumbent upon the Member State concerned, the direct link between the supply of services and the consideration received cannot be called into question by this fact alone (see, to that effect, judgment of 29 October 2015 in Saudaçor, C‑174/14, EU:C:2015:733, paragraph 39)." (Lajvér C-263/15)
- Legal form of activity not relevant
"[32] At the outset, it is important to point out that, in accordance with the requirements of the principle of neutrality of the common system of value added tax, the term ‘exploitation’ refers to all transactions, whatever may be their legal form, by which it is sought to obtain income from the goods in question on a continuing basis (see, to that effect, Case C-186/89 Van Tiem [1990] ECR I-4363, paragraph 18; EDM , paragraph 48; and Case C-8/03 BBL [2004] ECR I-10157, paragraph 36)." (Hutchinson 36 UK Ltd C-369/04)
- Irrelevant that supplies of timber only made as a result of storm damage to forest
"[29] Consequently, the fact that supplies such as those at issue in the main proceedings were made in order to alleviate the consequences of a case of force majeure, that fact thus being related to the objective of the transactions carried out, has no effect on the question whether those supplies must be regarded as an ‘economic activity’ within the meaning of Article 9(1) of the VAT Directive." (Rēdlihs C-263/11)
But CJEU seemed to consider it relevant that vendor was only selling properties to recovery debt
"[39] In those circumstances, the legal transactions carried out by the defendant must be regarded as falling within the scope of the management of private assets provided that, as is apparent from the information available to the Court, which it is for the referring court to verify, first, the interested party’s objective was the recovery of his debts and his assets, and, second, he did not take active steps to market the property. It follows that the interested party cannot be considered a taxable person for the purposes of VAT within the meaning of the first subparagraph Article 9(1) of the VAT Directive, in respect of the sale of the buildings at issue in the main proceedings, so that those transactions should not have been subjected to that tax." (LN C-655/19)
Level of activity
- Economic activity not dependent on satisfying a threshold amount of activity
"[23] It follows that the status of taxable person is not subject to the satisfaction of the requirement related to a person carrying out transactions that are subject to VAT and the economic value of which exceeds an income threshold set in advance, which corresponds to the return that can reasonably be expected from the assets held by that person. The only relevant question in that regard is whether that person actually carries out an economic activity and, as stated in paragraph 21 of the present judgment, that that person exploits tangible or intangible property for the purposes of obtaining income on a continuing basis." (Feudi C-341/22)
Compare to the typical conduct of entrepreneur in field concerned
"In that regard, it should be borne in mind that comparing the circumstances in which the person concerned supplies the services in question with the circumstances in which that type of service is usually provided may be one way of ascertaining whether the activity concerned is an economic activity (judgment of 12 May 2016, Gemeente Borsele and Staatssecretaris van Financiën, C‑520/14, EU:C:2016:334, paragraph 30 and the case-law cited)." (TP C-288/22)
"[43] Given the difficulty of establishing a precise definition of economic activity, all the circumstances in which it is supplied have to be examined (see, to that effect, judgment of 12 May 2016, Gemeente Borsele and Staatssecretaris van Financiën, C‑520/14, EU:C:2016:334, paragraph 29 and the case-law cited), by making a case-by-case assessment, referring to the typical conduct of an active entrepreneur in the field concerned, here, an asbestos removal undertaking." (Gmina L C-616/21)
"[35] Given the difficulty of establishing a precise definition of economic activity, all the circumstances in which it is supplied have to be examined (see, to that effect, judgment of 12 May 2016, Gemeente Borsele and Staatssecretaris van Financiën, C‑520/14, EU:C:2016:334, paragraph 29 and the case-law cited), by making a case-by-case assessment, referring to the typical conduct of an active entrepreneur in the field concerned, here, an RES installer." (Gmina O C-612/21)
"[30] Comparing the circumstances in which the person concerned supplies the services in question with the circumstances in which that type of service is usually provided may therefore be one way of ascertaining whether the activity concerned is an economic activity (see, by analogy, judgment of 26 September 1996 in Enkler, C‑230/94, EU:C:1996:352, paragraph 28)." (Gemeente Borsele C-520/14)
- Local authority did not employ staff or seek customers for asbestos removal
"[44] In that regard, first, it should be noted that, while an entrepreneur aims to derive from his or her activity income of a permanent nature (see, to that effect, judgment of 20 January 2021, AJFP Sibiu and DGRFP Braşov, C‑655/19, EU:C:2021:40, paragraphs 27 to 29 and the case-law cited), the Municipality of L. does not employ staff for asbestos removal and does not seek customers, but merely sets up, in the context of a programme defined at national level, asbestos removal activities, which will take place after the owners of immovable property situated in the municipality and likely to be concerned by that programme have expressed their wish to benefit from it and have been deemed eligible for it. Moreover, by definition, an asbestos removal activity in a given municipality is not of a recurrent nature, which distinguishes the present case from those in which municipal services were of a permanent nature." (Gmina L C-616/21)
- Local authority did not offer transport services generally and only charged a small fraction of the cost
"[33] In that regard, it should be noted, first, that the municipality of Borsele recovers, through the contributions that it receives, only a small part of the costs incurred. The contributions at issue in the main proceedings are not payable by each user and were paid by only a third of the users, with the result that they account for only 3% of the overall transport costs, the balance being financed by public funds. Such a difference between the operating costs and the sums received in return for the services offered suggests that the parental contribution must be regarded more as a fee than as consideration (see, by analogy, judgment of 29 October 2009 in Commission v Finland, C‑246/08, EU:C:2009:671, paragraph 50).
...
[35] It should be noted, second, that the conditions under which the services at issue in the main proceedings are supplied are different from those under which passenger transport services are usually provided, since the municipality of Borsele, as the Advocate General observed in point 64 of her Opinion, does not offer services on the general passenger transport market, but rather appears to be a beneficiary and final consumer of transport services which it acquires from transport undertakings with which it deals and which it makes available to parents of pupils as part of its public service activities.
[36] It follows from all the forgoing considerations that, in answer to the questions submitted by the referring court, Article 9(1) of the VAT Directive must be interpreted as meaning that a regional or local authority which provides a service for the transport of schoolchildren under conditions such as those described in the main proceedings does not carry out an economic activity and is not therefore a taxable person." (Gemeente Borsele C-520/14)
- College charging 30% of cost of courses was a typical participant in subsidised education market
"[78] I consider that overall the evidence establishes that the supply of courses to students paying subsidised fees is an economic activity being carried on by the College. I reach this conclusion for a number of reasons.
[79] First, the sole activity of the College, in the most general terms, is the provision of educational courses. It is not comparable to the municipality in Borsele for whom the provision of school transport was very much ancillary to its principal activities.
[80] Second, the provision of courses to students paying subsidised fees is a significant, albeit minority, part of the College's total undertaking.
[81] Third, the fees paid by such students are significant in amount. Taking the example of the BTEC civil engineering course, the fee was £896 pa in 2007/08. The proportion of the cost of courses assumed by the LSC to be covered by fees was set to rise in the following years. The total fee income from courses run in the new building in 2009/10 was approximately £290,000, all but a small part of which was represented by subsidised fees.
[82] Fourth, the subsidised fees made a significant contribution to the cost of providing courses to the students paying those fees, to the extent of some 25-30%.
[83] Fifth, the level of fees was fixed by reference to the cost of the courses. The national base rate for a course, with an adjustment for a more costly course, may not have precisely equalled the cost to the College of providing the course but it was intended to reflect the cost of the course. It was by reference to that rate that the fee was fixed, although generally at a lower level than that assumed by the LSC.
[84] Sixth, the fees were not fixed by reference to the means of the students or employers or others paying the fees. The fee was a fixed fee for each course, published each year in the College's prospectus. It may be the case that the College charged less than it was entitled to, as a response to the prevailing economic circumstances in its local catchment area, but that is a factor that any economic activity must take into account and is not comparable to an individual means-tested basis for fixing fees.
[85] Seventh, it is undeniable that there is a market in the provision of further and higher education, whose viability is underpinned by a combination of grant aid and fees. There is no reason to suppose that the College is other than a typical participant in that market or that it provides courses to students paying subsidised fees on anything other than a typical basis, allowing no doubt for some variations between different institutions. If the College was in any way in a position that was unique or atypical, it was for the College to put evidence of it before the FTT." (Wakefield College v. HMRC [2018] EWCA Civ 952)
Remuneration
- Number of customers and amount of earnings may be relevant
"[33] Other factors, such as, inter alia, the number of customers and the amount of earnings, may be taken into account along with others when that question is under consideration (see, by analogy, judgment of 26 September 1996 in Enkler, C‑230/94, EU:C:1996:352, paragraph 29)." (Gemeente Borsele C-520/14)
- Remuneration set on a basis intended to at least cover costs is relevant
"[44] ... The question whether the amount of the compensation was determined on the basis of criteria which ensured that it was sufficient to cover the operating costs of the provider of the service may also be a relevant factor..." (TP C-288/22)
- Flat fee rather than rate determined by referenced to individualised services irrelevant
"[25] To carry out his activities as a member of the Supervisory Board of the foundation concerned, the applicant in the main proceedings receives a gross remuneration of EUR 14 912 per year. In that regard, the fact that that remuneration is determined not on the basis of individualised services but at a flat rate and annually is irrelevant (see, to that effect, judgment of 22 February 2018, Nagyszénás Településszolgáltatási Nonprofit Kft., C‑182/17, EU:C:2018:91, paragraph 37 and the case-law cited)." (IO C-420/18)
- Lawyer was taxable person irrespective of providing service for free/contingency
"[21] In the present case, as the Advocate General noted, in essence, in points 33 and 34 of her Opinion, T.P.T.’s lawyer, who is registered in accordance with the Bulgarian law on VAT, must be regarded as a taxable person, within the meaning of Article 9(1) of the VAT Directive, without it being relevant, in that context, that the lawyer’s fees were awarded to him in respect of a person to whom he provided legal assistance free of charge and who was successful." (Zlakov C-744/23)
"[33] The law firm is registered as a taxable person. There is nothing to indicate that the law firm does not carry out an economic activity within the meaning of Article 9 of the VAT Directive. Even in so far as it acted for its client free of charge, and was entitled to do so (see Article 38(1)(2) of the ZA), that is not the primary decisive factor for the purposes of VAT law.
[34] As Article 9 of the VAT Directive states, any person who carries out an economic activity is a taxable person, whatever the results of that activity. The Court of Justice has, in the meantime, made it clear on several occasions that the decisive factor in that regard is whether the activity is carried out in a manner similar to that of a typical taxable person (typological approach). (8) That can easily be affirmed where the person concerned is a lawyer – as in the present case – especially since not only contingency fees, but also the fact that, as a general rule, the unsuccessful party pays the fees (directly or indirectly), are fairly typical in that professional sector." (Zlakov C-744/23 AGO Kokott)
- Is the remuneration determined in a way that is typical for that activity?
"[26] Moreover, since that remuneration has been determined in the light of the rules laid down in the Law on the standardisation of the remuneration of senior officials in the public and semi-public sector, the circumstances in which the applicant in the main proceedings performs the service in question correspond to those in which that type of service is usually performed (see, to that effect, judgment of 12 May 2016, Geemente Borsele and Staatssecretaris van Financiën, C‑520/14, EU:C:2016:334, paragraphs 29 and 30)." (IO C-420/18)
- Fees calculated by reference to recipient's income/assets rather than value of service not remuneration
"[48] Although this part payment represents a portion of the fees, its amount is not calculated solely on the basis of those fees, but also depends upon the recipient’s income and assets. Thus, it is the level of the latter – and not, for example, the number of hours worked by the public offices or the complexity of the case concerned – which determines the portion of the fees for which the recipient remains responsible.
[49] It follows that the part payment made to the public offices by recipients of legal aid services depends only in part on the actual value of the services provided – the more modest the recipient’s income and assets, the less strong the link with that value will be.
...
[51] Therefore, in light of the foregoing, it does not appear that the link between the legal aid services provided by public offices and the payment to be made by the recipients is sufficiently direct for that payment to be regarded as consideration for those services and, accordingly, for those services to be regarded as economic activities for the purposes of Article 2(1) and Article 4(1) and (2) of the Sixth Directive." (Commission v. Finland C-246/08)
- Large difference between cost of providing service and charges made pointing against economic activity
"[33] In that regard, it should be noted, first, that the municipality of Borsele recovers, through the contributions that it receives, only a small part of the costs incurred. The contributions at issue in the main proceedings are not payable by each user and were paid by only a third of the users, with the result that they account for only 3% of the overall transport costs, the balance being financed by public funds. Such a difference between the operating costs and the sums received in return for the services offered suggests that the parental contribution must be regarded more as a fee than as consideration (see, by analogy, judgment of 29 October 2009 in Commission v Finland, C‑246/08, EU:C:2009:671, paragraph 50).
[34] It therefore follows from that lack of symmetry that there is no genuine link between the amount paid and the services supplied. Hence, it does not appear that the link between the transport service provided by the municipality in question and the payment to be made by parents is sufficiently direct for that payment to be regarded as consideration for that service and, accordingly, for that service to be regarded as an economic activity within the meaning of Article 9(1) of the VAT Directive (see, by analogy, judgment of 29 October 2009 in Commission v Finland, C‑246/08, EU:C:2009:671, paragraph 51)." (Gemeente Borsele C-520/14 - the Court had already said the service was for "consideration" in the Article 2 sense at §27)
- Activity that can only be continued due to subsidies and donations does not allow generation of income on continuing basis
"[21] In this connection, it should be pointed out that the activity at issue in the main proceedings, as described in paragraph 18 of this judgment, is advertising. In the present case, that exploitation does not allow the generation of revenue on a continuing basis.
[22] It must be held that, in order to ensure its continuity, the SPÖ is financed by subsidies from public funds in accordance with the Austrian national legislation on the financing of political parties, by various donations and by subscriptions paid by the members of that party.
[23] Therefore, the only income obtained on a continuing basis comes from public funding and the party members’ contributions, that income having been raised in particular to cover losses made by the activity at issue in the main proceedings.
[24] By such activities, the SPÖ is therefore carrying out a communication exercise in keeping with attainment of its political objectives and which seeks to spread its ideas as a political organisation. More specifically, the SPÖ’s activity, particularly through the intermediary of the Landesorganisation, is the development of informed political opinion with a view to participation in the exercise of political power. In carrying out that activity, the SPÖ does not however participate in any market.
[25] Consequently, the activity at issue in the main proceedings cannot constitute an ‘economic activity’ within the meaning of Article 4(1) and (2) of the Sixth VAT Directive." (SPO C-267/08)
- Subsidised asbestos removal activity carried out by public authority with no prospect of profit, only loss not economic activity
"[45] Secondly, it is apparent from the information provided by the referring court that the Municipality of L. will offer to remove the asbestos from the properties concerned and to collect asbestos products and waste free of charge, although it will have previously paid the undertaking in question at market price.
[46] The Court has already had occasion to rule that, when a municipality recovers, only a small part of the costs which it has incurred, the balance being financed by public funds, such a difference between those costs and the amounts received in return for the services offered is such as to exclude the existence of consideration (see, to that effect, judgment of 12 May 2016, Gemeente Borsele and Staatssecretaris van Financiën, C‑520/14, EU:C:2016:334, paragraph 33 and the case-law cited). That is all the more so where, as in the present case, the consideration paid by the recipients of the supply of services is non-existent.
[47] Consequently, even taking into account the subsidies granted to the Municipality of L. by the Environmental Protection Fund, which relate to 40% to 100% of the costs incurred, the nature of such a supply of services does not correspond to the approach that would have been taken, where applicable, by an asbestos removal undertaking which would have endeavoured, by setting its prices, to absorb its costs and to make a profit. Moreover, the costs connected with the organisation, by that municipality, of the asbestos removal campaign to its residents are not reimbursed, since only activities delegated to the selected undertaking are reimbursed. Thus, that municipality bears only risks of loss, without any prospect of profit.
[48] Thirdly, it does not appear to be economically viable, for such an asbestos removal undertaking, to not to impose on the recipients of its supply of services any costs which it has incurred, while awaiting partial compensation, by means of a subsidy, of those costs. Not only would such a mechanism place its cash flow in a structurally loss-making situation, given, first of all, the absence of a profit margin, next, the lack of reimbursement of the costs associated with the organisation of the asbestos removal campaign and, finally, the significant fluctuation in the percentage of reimbursements, which may vary between 40% and 100% of the sums paid to the selected undertaking, but, in addition, that mechanism would place an unusual uncertainty on it for a taxable person, since the question of whether, and to what extent, a third party will reimburse such a significant part of the costs incurred remains in fact open until the decision of that third party, subsequent to the transactions at issue." (Gmina L C-616/21)
- Activity largely financed by state aid and for which modest fee charged economic activity
"[45] It should be noted that the fact that the price paid for an economic transaction is higher or lower than the cost price, and, therefore, higher or lower than the open market value, is irrelevant for the purpose of establishing whether it was a transaction effected for consideration (see, to that effect, judgments of20 January 2005 in Hotel Scandic Gåsabäck, C‑412/03, EU:C:2005:47, paragraph 22; 9 June 2011 in Campsa Estaciones de Servicio, C‑285/10, EU:C:2011:381, paragraph 25; and 27 March 2014 in Le Rayon d’Or, C‑151/13, EU:C:2014:185, paragraphs 36 and 37).
[46] Therefore, such a fact is not such as to affect the direct link between the services supplied or to be supplied and the consideration received or to be received, the amount of which is determined in advance on the basis of well-established criteria (see, to that effect, judgment of 29 October 2015 in Saudaçor, C‑174/14, EU:C:2015:733, paragraph 36)." (Lajvér C-263/15 - but note the reference to whether the fee "partly remunerates" at §49)
- Employer carries on economic activity where it supplies vouchers to employees in return for them giving up part of salary
"[24] Having regard to the wide scope of VAT, it must be held that a company such as Astra Zeneca, in so far as it provides retail vouchers to its employees in exchange for them giving up part of their cash remuneration, carries out an economic activity within the meaning of the Sixth Directive." (Astra Zeneca UK Ltd C-40/09)
Continuing basis
- Assessed objectively
"[27] Furthermore, as is clear from the articles of association of the foundation concerned, the members of the Supervisory Board of that foundation are appointed for a term of office of four years and, in view of that duration, it must be considered that that remuneration is received on a continuing basis (see, to that effect, judgment of 2 June 2016, Lajvér, C‑263/15, EU:C:2016:392, paragraph 33)." (IO C-420/18)
- Fact that property is only suitable for economic exploitation is normally sufficient to find exploitation for purpose of obtaining income on a continuing basis
"[27] That criterion must also make it possible to determine whether an individual has used property in such a way that his activity is to be regarded as "economic activity" within the meaning of the Sixth Directive. The fact that property is suitable only for economic exploitation will normally be sufficient to find that its owner is exploiting it for the purposes of his economic activities and, consequently, for the purpose of obtaining income on a continuing basis..." (Enkler C-239/94 see also Rēdlihs C-263/11 §§33 - 35 and Unabhängiger C-219/12, §20 - 21)
- If property is suitable for both economic and private use, examine all the circumstances
"[27] ... On the other hand, if, by reason of its nature, property is capable of being used for both economic and private purposes, all the circumstances in which it is used will have to be examined in order to determine whether it is actually used for the purpose of obtaining income on a regular basis.
[28] In the latter case, comparing the circumstances in which the person concerned actually uses the property with the circumstances in which the corresponding economic activity is usually carried out may be one way of ascertaining whether the activity concerned is carried on for the purpose of obtaining income on a continuing basis." (Enkler C-239/94)
- Solar panels on house are dual use
"[22] In that regard, it must be stated that the property at issue in the main proceedings, namely a network-connected photovoltaic installation on or adjacent to a house which is used as a dwelling, is, by reason of its very nature, capable of being used for both economic and private purposes." (Unabhängiger C-219/12)
- For dual use property, actual use/exploitation of property may indicate answer
"[38] Although criteria based on the results of the activity in question cannot in themselves make it possible to determine whether the activity is carried on for the purpose of obtaining income on a continuing basis, the actual length of the period over which the supplies at issue in the main proceedings took place, the number of customers and the amount of earnings are also factors which, forming part of the circumstances of the case as a whole, may be taken into account, with others, when that question is under consideration (see Enkler, paragraph 29)." (Rēdlihs C-263/11)
"[29] Although criteria based on the results of the activity in question cannot in themselves make it possible to determine whether the activity is carried on for the purpose of obtaining income on a continuing basis, the actual length of the period for which the property is hired, the number of customers and the amount of earnings are also factors which, forming part of the circumstances of the case as a whole, may be taken into account with others when that question is under consideration." (Enkler C-239/94)
- Fact that property was originally acquired for private purposes not relevant
"[39] It is, furthermore, necessary to state that the fact that the applicant in the main proceedings acquired the tangible property in issue to meet his own personal needs, as is suggested by the wording of the first question in the reference, does not preclude that property from being subsequently used for the purposes of the exercise of an ‘economic activity’ within the meaning of Article 9(1) of the VAT Directive. The question as to whether an individual, in a given case, has acquired property for the needs of his economic activities or for his own needs arises when that individual requests the right to deduct the input VAT paid in respect of the acquisition of that property (see, by analogy, Case C-415/98 Bakcsi [2001] ECR I-1831, paragraph 29). Such an issue does not, however, arise in the case in the main proceedings." (Rēdlihs C-263/11)
- Possibility of summary termination of service contract does not prevent continuing basis
"[45] In view of that case-law, it should be considered that the appointment of a natural person, such as TP, as a member of the board of directors of a public limited company under Luxembourg law for a renewable term of office of a maximum of six years means that TP’s activity must be regarded as having a continuing basis. The fact that such a term of office may be summarily terminated at any time and without reason, and that its holder may also withdraw from the agreement at any time, cannot, in itself, deprive that activity of its continuing basis where a maximum duration of six years is, ab initio, attached to that term of office." (TP C-288/22)
- Multi-year contract is continuing basis
"[46] In view of that six year duration of the term of office, it can be considered that that remuneration in the form of percentage fees is received on a continuing basis (see, to that effect, judgment of 13 June 2019, IO (VAT – Activities of a member of a supervisory board), C‑420/18, EU:C:2019:490, paragraph 27 and the case-law cited)..." (TP C-288/22)
"[27] Furthermore, as is clear from the articles of association of the foundation concerned, the members of the Supervisory Board of that foundation are appointed for a term of office of four years and, in view of that duration, it must be considered that that remuneration is received on a continuing basis (see, to that effect, judgment of 2 June 2016, Lajvér, C‑263/15, EU:C:2016:392, paragraph 33)." (IO C-420/18)
- Indefinite contract for home owner to supply electricity to grid amounts to economic activity
"[27] Secondly, it is clear from the order for reference that the contract granting access to the network, which came into force on 1 July 2005, was concluded for ‘an indefinite duration’. As the operation of that photovoltaic installation is being carried out within that time frame, it must be found that the supply of electricity by that photovoltaic installation to the network takes place on a continuing and not just on an occasional basis. Remuneration such as that received by the operator of the installation is thus provided on a continuing basis for the purposes of Article 4(2) of the Sixth Directive.
[28] Since the photovoltaic installation at issue in the main proceedings produces electricity which is supplied to the network in exchange for income on a continuing basis, it must be found that the activity in question meets the requirements for inclusion in the concept of ‘economic activities’ as defined in Article 4 of the Sixth Directive." (Unabhängiger C-219/12)
- Even if the electricity consumed by the home owner is always greater than the amount supplied
"[29] That finding is not undermined by the fact, noted by the referring court, that the amount of electricity produced by that installation is always lower than the amount of electricity consumed by the operator in meeting his household needs.
[30] Indeed, it should be noted that, in the present case, it is clear from the order for reference that, due to the technical nature of the installation in question, the electricity produced is supplied to the network and the electricity consumed is purchased from the operator of that network. As noted by the referring court, since the case concerns a network-connected installation for producing electricity, it may well be impossible to classify and determine the fungible property in question, namely, the electricity, after it has been fed into the network and been supplied back to the consumer by that network.
[31] In those circumstances, it must be held that the electricity supply activity at issue in the main proceedings takes place independently of the activity whereby the operator of the photovoltaic installation takes electricity from the network for his household needs and that the relationship between the amount of electricity produced on the one hand and the amount consumed on the other is therefore irrelevant for the purposes of defining that supply activity as an economic activity." (Unabhängiger C-219/12)
- Local authority carrying out one-off asbestos removal activity
"[44] In that regard, first, it should be noted that, while an entrepreneur aims to derive from his or her activity income of a permanent nature (see, to that effect, judgment of 20 January 2021, AJFP Sibiu and DGRFP Braşov, C‑655/19, EU:C:2021:40, paragraphs 27 to 29 and the case-law cited), the Municipality of L. does not employ staff for asbestos removal and does not seek customers, but merely sets up, in the context of a programme defined at national level, asbestos removal activities, which will take place after the owners of immovable property situated in the municipality and likely to be concerned by that programme have expressed their wish to benefit from it and have been deemed eligible for it. Moreover, by definition, an asbestos removal activity in a given municipality is not of a recurrent nature, which distinguishes the present case from those in which municipal services were of a permanent nature." (Gmina L C-616/21)
Occasional activities as economic activity
- Activities carried out on occasional basis not economic activity
"[20] First, a comparison of Article 4(2) with Article 4(3) of the Sixth Directive shows that the concept of economic activity referred to in both the first and second sentences of Article 4(2) does not include activities carried out on an occasional basis." (Enkler C-239/94)
- Whether occasional or not depends on whether for the purpose of obtaining income on a continuing basis
"[22] Accordingly, the answer to the first question must be that the hiring out of tangible property constitutes exploitation of such property which must be classified as an "economic activity" within the meaning of Article 4(2) of the Sixth Directive if it is done for the purpose of obtaining income therefrom on a continuing basis." (Enkler C-239/94)
- If person mobilises resources similar to those deployed by a trader, activity must be regarded as an economic activity
"[36] Thus, where the person concerned takes active steps in forestry management by mobilising resources similar to those deployed by a producer, a trader or a person supplying services within the meaning of the second subparagraph of Article 9(1) of the VAT Directive, the activity at issue in the main proceedings must be regarded as an ‘economic activity’ within the meaning of that provision (see, to that effect, Joined Cases C-180/10 and C-181/10 Słaby and Others [2011] ECR I-8461, paragraph 39)." (Rēdlihs C-263/11)
- Number and scale of sales does not distinguish private v. economic activity
"[30] First, as regards the criteria which may be taken into account in order to determine whether an activity constitutes an economic activity within the meaning of the second subparagraph of Article 9(1) of the VAT Directive, it follows from the Court’s case-law that the number and scale of sales cannot constitute a criterion for distinguishing between the activities of an operator acting in a private capacity which fall outside the scope of the VAT Directive, and those of an operator whose transactions constitute an economic activity (judgments of 15 September 2011, Słaby and Others, C‑180/10 and C-181/10, EU:C:2011:589, paragraph 37, and of 17 October 2019, Paulo Nascimento Consulting, C‑692/17, EU:C:2019:867, paragraph 25)." (LN C-655/19 - 3 sales of land)
"[25] It is also apparent from the case-law of the Court that the number and scale of the transactions cannot constitute a criterion for distinguishing between the activities of an operator acting in a private capacity, which fall outside the scope of that directive, and those of an operator whose transactions constitute an economic activity (see, to that effect, judgment of 15 September 2011, Słaby and Others, C‑180/10 and C‑181/10, EU:C:2011:589, paragraph 37 and the case-law cited)." (Paulo Nascimento Consulting C-692/17)
See further below in relation to sales of assets - in particular the distinction between active steps and sound management of private assets.
- Occasional transactions carried out by person who is already a taxable person in respect of a different economic activity are economic activity
"[24]...The Court held that a taxable person for VAT purposes in respect of an economic activity which he carries out permanently must be regarded as a ‘taxable person’ in respect of any other economic activity carried out occasionally, provided that that activity constitutes an activity within the meaning of the second subparagraph of Article 9(1) of Directive 2006/112 (see, to that effect, judgment of 13 June 2013, Kostov, C‑62/12, EU:C:2013:391, paragraph 31)." (Paulo Nascimento Consulting C-692/17)
"[28] Next, whilst it is true that it may be inferred, upon interpreting Article 12(1) of the VAT Directive a contrario, that a person who carries out only occasionally a transaction generally effected by a producer, trader or person supplying services is not, in principle, to be considered a ‘taxable person’ within the meaning of that directive, it does not, however, necessarily follow from that provision that a taxable person acting in a certain field of activity who occasionally carries out a transaction falling within another field of activity is not liable to VAT on that transaction.
...
[30] Accordingly, Article 12(1) of the VAT Directive should be interpreted as referring only to persons who are not already a taxable person for VAT purposes in respect of their main economic activities. On the other hand, in the case of such a taxable person, like Mr Kostov, it would not be consistent with, in particular, the objective that VAT should be levied with simplicity and in as general a manner as possible to interpret the second subparagraph of Article 9(1) of the VAT Directive as meaning that the term ‘economic activity’ appearing in that provision does not encompass an activity which, whilst carried out only occasionally, falls within the general definition of that term in the first sentence of that provision and is carried out by a taxable person who also carries out, permanently, another economic activity for the purposes of the VAT Directive." (Kostov C-62/12)
- Self-employed bailiff who carried out one-off agency transaction was carrying on economic activity
"[31] Having regard to the foregoing, the answer to the question referred is that Article 9(1) of the VAT Directive is to be interpreted as meaning that a natural person who is already a taxable person for VAT purposes in respect of his activities as a self-employed bailiff must be regarded as a ‘taxable person’ in respect of any other economic activity carried out occasionally, provided that that activity constitutes an activity within the meaning of the second subparagraph of Article 9(1) of the VAT Directive." (Kostov C-62/12)
- Occasional transaction that is direct extension of main economic activity is part of that economic activity (e.g. debt enforcement)
"[27] In that regard, it must be pointed out, as the Advocate General notes in point 42 of his Opinion, that the assignment at issue in the main proceedings occurred in the context of a dispute relating to the enforcement of a debt stemming from a contract concluded in the course of PNC’s taxable economic activity, consisting in the provision of property agency services, and PNC has not denied that it acted, as regards the transaction giving rise to the enforcement procedure, in the course of its economic activity. Consequently, the transaction at issue in the main proceedings is a direct extension of PNC’s main activity.
[28] In those circumstances, the fact that the transaction at issue in the main proceedings, carried out by a person already subject to VAT, is not that person’s main activity, and was carried out only on an ad hoc basis, does not preclude that person from having acted, as regards that transaction, in the course of its economic activity, within the meaning of the first subparagraph of Article 9(1) of Directive 2006/112." (Paulo Nascimento Consulting C-692/17)
- Unlawful and unwanted taking of electricity is inherent part of electricity distribution activity
"[45] In that regard, it is apparent from the file in the Court’s possession, first, that Fluvius is required, within the jurisdiction of the municipalities participating in the inter-municipal cooperation structure which it constitutes, to supply any person who no longer has a contract with a commercial distributor and who has given prior notice thereof to a body such as Fluvius. Consequently, it appears that, in so far as it proves necessary, Fluvius may be led to assume directly the role of electricity supplier, with the result that such an activity is not marginal and, moreover, far from being unconnected with its activity as an electricity distribution network operator, cannot be severed from its tasks considered as a whole." (Fluvius Antwerpen C-677/21)
Contingent remuneration
- Query whether director fee dependent on company profit amounts to remuneration on continuing basis
"[46] However, for that continuing basis to subsist, it is important that, where the percentage fees are paid on the basis of the profits achieved by the company concerned, percentage fees may also be paid to members of the board of directors for business years in which the company did not achieve a profit." (TP C-288/22)
Service provision
- No requirement for active marketing
"[29] Although it is true that the Court has held, with regard to the tax treatment of the sale of land included in private assets, that the mere exercise of the right of ownership by its holder cannot, in itself, be regarded as constituting an economic activity, but that is not the case where the party concerned takes active steps to market property ... , it should be noted that not only is that case-law specific to the tax treatment of the sale of land included in private assets, but that, in any event, it cannot be inferred from it that the fact that such steps are taken is a condition for an activity to be able to be regarded as being carried out for the purpose of obtaining income therefrom on a continuing basis and may therefore be able to be classified as ‘economic’.
[30] Accordingly, the economic nature of an activity as a member of the Supervisory Board of a foundation, such as that at issue in the main proceedings, cannot be called into question by the fact that that member performs only one term of office since that activity is permanent and is carried out in return for remuneration." (IO C-420/18)
Financing
- Activity financed by state aid not relevant
"[38] Lastly, the fact that the investments were largely financed by aids granted by the Member State and the European Union cannot have a bearing on whether or not the activity pursued or planned by the applicants in the main proceedings is to be regarded as an economic activity, since the concept of ‘economic activity’ is objective in nature and applies not only without regard to the purpose or results of the transactions concerned but also without regard to the method of financing chosen by the operator concerned, which also holds true in relation to public subsidies (see, as regards the prohibition of limiting the right to deduct, judgments of 6 October 2005 in Commission v France, C‑243/03, EU:C:2005:589, paragraphs 32 and 33, and 23 April 2009 in PARAT Automotive Cabrio, C‑74/08, EU:C:2009:261, paragraphs 20 and 26)." (Lajvér C-263/15)
EXPLOITATION OF PROPERTY TO PRODUCE INCOME
- Exploitation refers to all transactions seeking income on a continuing basis
"[27] As regards the term ‘exploitation’ within the meaning of the second subparagraph of Article 9(1) of the VAT Directive, it is well-established case-law that that concept, in accordance with the requirements of the principle of neutrality of the common system of VAT, refers to all transactions, whatever may be their legal form, by which it is sought to obtain income from the goods in question on a continuing basis (see, to that effect, judgments of 6 October 2009, SPÖ Landesorganisation Kärnten, C‑267/08, EU:C:2009:619, paragraph 20 and the case-law cited, and of 2 June 2016, Lajvér, C‑263/15, EU:C:2016:392, paragraph 24 and the case-law cited)." (LN C-655/19)
- Active steps not essential
"[73] Similarly, the fact that the Municipality of Wrocław took no active steps for the purpose of transforming the right of perpetual usufruct into full immovable property ownership rights, since that transaction took place by operation of law, cannot, in itself, lead to the finding that that transformation does not fall within the scope of the exploitation of tangible property for the purpose of obtaining income therefrom on a continuing basis for the purposes of the second subparagraph of Article 9(1) of the VAT Directive" (Gmina Wroclaw C-604/19)
- Does not include the simple acquisition and sale of an asset
"[28] By contrast, the simple acquisition and the mere sale of an asset cannot amount to exploitation of an asset intended to produce income on a continuing basis within the meaning of the second subparagraph of Article 9(1) of the VAT Directive, as the only consideration for those transactions consists of a possible profit on the sale of that asset (judgment of 15 September 2011, Słaby and Others, C‑180/10 and C‑181/10, EU:C:2011:589, paragraph 45 and the case-law cited)." (LN C-655/19)
- Mere exercise of rights of ownership is not economic activity
"[29] Similarly, the mere exercise of the right of ownership by its holder cannot, in itself, be regarded as constituting an economic activity (see, to that effect, judgments of 15 September 2011, Słaby and Others, C‑180/10 and C‑181/10, EU:C:2011:589, paragraph 36; of 9 July 2015, Trgovina Prizma, C‑331/14, EU:C:2015:456, paragraph 23; and of 13 June 2019, IO (VAT – Activity as a member of a supervisory board), C‑420/18, EU:C:2019:490, paragraph 29)." (LN C-655/19)
- Transformation of usufruct into full ownership for fee was an economic activity
"[70] In the present case, account must be taken, in particular, of the fact that the Municipality of Wrocław collects a fee, as consideration for the transformation of the right of perpetual usufruct into full immovable property ownership rights, from the former perpetual usufructuaries which is payable, in principle, for a period of 20 years from the day of that transformation. Similarly, if that fee is paid in the form of a one-off fee, that one-off fee is to correspond to the fee payable for the year in which the intention to make a lump sum payment has been expressed multiplied by the number of years remaining until expiry of the 20-year period, calculated from the day of that transformation.
[71] Those factors, which it is for the referring court to verify, support the finding that the transformation of the right of perpetual usufruct into full immovable property ownership rights enables the Municipality of Wrocław to obtain income therefrom on a continuing basis and that, consequently, that transaction constitutes an economic activity within the meaning of Article 9(1) of the VAT Directive.
[72] In that regard, it is irrelevant that such a transformation takes place in pursuance of the law and that the amount of the transformation fee was established by that same law having regard to the necessary compliance with the effectiveness of Article 14(2)(a) of the VAT Directive." (Gmina Wroclaw C-604/19)
Fruits of tangible property
- Sale of fruits of tangible property (e.g. timber) is exploitation
"[31] It is necessary to specify, in this connection, that the sale of the fruits of tangible property, such as the sale of timber from a private forest, must be regarded as ‘exploitation’ of that property within the meaning of the second subparagraph of Article 9(1) of the VAT Directive." (Rēdlihs C-263/11)
- Period of time being necessary before economic exploitation possible does not prevent sales in meantime being exploitation
"[37] IFurthermore, the fact that the supplies of timber at issue were effected with a view to alleviating the consequences of a case of force majeure cannot, in itself, lead to the conclusion that those supplies were made on an occasional basis and not ‘for the purposes of obtaining income therefrom on a continuing basis’ within the terms of Article 9(1) of the VAT Directive. It must be observed in this respect that such supplies may fall within the scope of continuous exploitation of tangible property. The fruits of tangible property, such as timber from a forest, may, by their very nature and depending on their characteristics and, in particular, their age, not be suitable for immediate economic exploitation, as a certain period of time may be objectively necessary before those fruits can become amenable to economic exploitation. Nevertheless, that does not mean that the supplies of timber which have taken place in the meantime, as a result of alleged force majeure, do not come within the scope of exploitation of tangible property for the purposes of obtaining income therefrom on a continuing basis within the meaning of the second subparagraph of Article 9(1) of the VAT Directive." (Rēdlihs C-263/11 - sale of timber from forest as a result of storm damage)
Hiring out assets as an economic activity
Selling assets as an economic activity
- Hiring out tangible property is economic activity if done for purpose of obtaining income on continuing basis
"[22] Accordingly, the answer to the first question must be that the hiring out of tangible property constitutes exploitation of such property which must be classified as an "economic activity" within the meaning of Article 4(2) of the Sixth Directive if it is done for the purpose of obtaining income therefrom on a continuing basis." (Enkler C-239/94 - caravan used for private use and occasional hiring out)
- Simple acquisition and mere sale of asset not economic activity
"[45] According to settled case-law, the simple acquisition and the mere sale of an asset cannot amount to exploitation of an asset intended to produce income on a continuing basis within the meaning of Article 9(1) of the VAT Directive, as the only consideration for those transactions consists of a possible profit on the sale of that asset. As a rule, such transactions cannot, by themselves, constitute economic activities within the meaning of that directive (see Case C-77/01 EDM [2004] ECR I-4295, paragraph 58, and Case C-8/03 BBL [2004] ECR I‑10157, paragraph 39).
[46] The criteria set out in paragraphs 37 to 41 of this judgment are applicable.
...
[51] If, on the other hand, that person takes active steps, for the purpose of concluding those sales, to market property by mobilising resources similar to those deployed by a producer, a trader or a person supplying services within the meaning of the second subparagraph of Article 9(1) of the VAT Directive, that person must be regarded as carrying out an ‘economic activity’ within the meaning of that article and must, therefore, be regarded as a taxable person for VAT." (Slaby C-180/10)
- Number and scale of sales does not distinguish private v. economic activity
"[30] First, as regards the criteria which may be taken into account in order to determine whether an activity constitutes an economic activity within the meaning of the second subparagraph of Article 9(1) of the VAT Directive, it follows from the Court’s case-law that the number and scale of sales cannot constitute a criterion for distinguishing between the activities of an operator acting in a private capacity which fall outside the scope of the VAT Directive, and those of an operator whose transactions constitute an economic activity (judgments of 15 September 2011, Słaby and Others, C‑180/10 and C-181/10, EU:C:2011:589, paragraph 37, and of 17 October 2019, Paulo Nascimento Consulting, C‑692/17, EU:C:2019:867, paragraph 25)." (LN C-655/19 - 3 sales of land)
- Large volume of sales may be carried out by private operator
"[37] The Court would point out that the number and scale of the sales carried out in the present case are not in themselves decisive. As the Court has already held, the scale of the sales cannot constitute a criterion for distinguishing between the activities of an operator acting in a private capacity, which fall outside the scope of the VAT Directive, and those of an operator whose transactions constitute an economic activity. The Court has pointed out that a large volume of sales may also be carried out by operators acting in a private capacity (see, to that effect, Wellcome Trust, paragraph 37)." (Slaby C-180/10)
- Active steps to market in similar way to trader points to economic activity
"[31] Second, as regards the sale of building land, the Court has already stated that a relevant assessment criterion is the fact that the interested party has taken active steps to market property by mobilising resources similar to those deployed by producers, traders or persons supplying services. Such initiatives do not normally fall within the scope of the management of private assets so that the resulting transactions cannot be regarded as the mere exercise of the right of ownership by its holder (see, to that effect, judgment of 9 July 2015, Trgovina Prizma, C‑331/14, EU:C:2015:456, paragraph 24 and the case-law cited). Such initiatives more often fall within the scope of an activity carried out for the purpose of obtaining income therefrom on a continuing basis and thus may be classified as an economic activity." (LN C-655/19)
- But not essential
"[74] It cannot be inferred from the Court’s case-law that the fact of taking active steps to market property is a necessary condition for an activity relating to property asset management to be regarded as being carried out for the purpose of obtaining income therefrom on a continuing basis and therefore to be classified as ‘economic’ (see, to that effect, judgment of 13 June 2019, IO (VAT – Activities of a member of a supervisory board), C‑420/18, EU:C:2019:490, paragraph 29 and the case-law cited)." (Gmina Wroclaw C-604/19)
- Simple exercise of rights of ownership and sound management of private assets not economic activity
"[35] Subject to verification by the referring court, these circumstances appear to establish that the sale of the buildings at issue in the main proceedings in fact fell within the scope of a simple exercise of the right of ownership and of sound management of private assets, and, consequently, does not fall within the scope of the exercise of an economic activity.
...
[38] That fact rather appears to establish that the sales of the buildings at issue in the main proceedings, in the light of the particularities of those transactions, as set out in the preceding paragraphs of the present judgment, fell within the scope of management of the personal assets of the defendant in the main proceedings." (LN C-655/19)
- Dividing land into plots to obtain higher price or time over which sales made not decisive
"[38] Similarly, the fact that, prior to the disposal, the party concerned proceeded to divide the land into plots in order to obtain a higher overall price from that land is not, in itself, decisive, and nor is the period of time over which those transactions take place or the level of income derived therefrom. Indeed, all those circumstances could fall within the scope of the management of the personal property of the party concerned." (Slaby C-180/10)
- Active steps include works preparatory to development and deploying proven marketing measures
"[39] That is not however the case where the party concerned takes active steps to market property by mobilising resources similar to those deployed by a producer, a trader or a person supplying services within the meaning of the second subparagraph of Article 9(1) of the VAT Directive.
[40] Such active steps may consist, inter alia, in the carrying out on that land of preparatory work to make development possible, and the deployment of proven marketing measures.
[41] Since those initiatives do not normally fall within the scope of the management of personal property, the supply of land designated for development in such a situation cannot be regarded as the mere exercise of the right of ownership by its holder." (Slaby C-180/10)
- Actions of agent (acting on commission) in carrying out marketing activities/preparing land for sale meant principal carrying on economic activity
"[20] It is apparent from the request for a preliminary ruling that, in the present case, the following actions, which may be described as active steps to market property by mobilising resources similar to those of real estate professionals, were carried out:
– subdividing the property into smaller plots and carrying out the necessary steps to amend the entries in the land register and the land and mortgage register;
– changing the designation of the plots in the local land use plan (from agricultural land to building land);
– purchasing an additional plot of land for the purpose of creating internal roads and access roads to individual plots;
– connecting the property to public utility networks;
– removing elements incompatible with the intended use of the plots;
– obtaining the required authorisations from the competent authorities;
– promoting the plots to potential buyers;
– preparing the necessary documents for the conclusion of notarial deeds of sale.
[21] Furthermore, it is also apparent from the case-law that the fact that the tangible property in question was initially acquired in order to meet the personal needs of the buyer does not preclude that property from being subsequently used for the purposes of the exercise of an ‘economic activity’ within the meaning of Article 9(1) of the VAT Directive (judgment of 19 July 2012, Rēdlihs, C‑263/11, EU:C:2012:497, paragraph 39 and the case-law cited). It follows that the fact, highlighted by the referring court, that the land at issue was not acquired for the purpose of carrying out an agricultural or commercial activity does not preclude the sale of that land from being classified as the exercise of an economic activity.
...
[26] It follows from the foregoing that the answer to the first question is that Article 9(1) of the VAT Directive must be interpreted as meaning that a person who transfers land which was initially part of his or her personal assets by entrusting the preparation of the sale to a professional trader who carries out, as that person’s agent, active steps to market the property by mobilising, for the purposes of that sale, resources similar to those deployed by producers, traders or persons supplying services within the meaning of that provision, may be regarded as a taxable person subject to VAT carrying out an economic activity independently." (ET C-213/24)
- Simple sale of assets obtained by creditor at auction of debtor's assets not economic activity
"[34] It is also apparent from the information available to the Court that, in the first place, the legal transactions at issue were carried out by the defendant in the main proceedings for the purpose of recovering his assets and his debts, following the failure to repay the loans granted. In the second place, since his objective was the recovery of his debts and of his assets, the defendant in the main proceedings has not taken active steps to market property and, in particular, has not mobilised resources similar to those deployed by producers, traders or persons supplying services, within the meaning of the second subparagraph of Article 9(1) of the VAT Directive.
[35] Subject to verification by the referring court, these circumstances appear to establish that the sale of the buildings at issue in the main proceedings in fact fell within the scope of a simple exercise of the right of ownership and of sound management of private assets, and, consequently, does not fall within the scope of the exercise of an economic activity.
...
[40] So far as this point is relevant, it should be borne in mind that the main proceedings, as set out by the referring court, and its questions referred for a preliminary ruling do not apply to the sales of buildings considered to be part of the direct extension of the economic activity of granting loans carried on by LN." (LN C-655/19)
At least where not considered to be a direct extension of lending activity
"[40] So far as this point is relevant, it should be borne in mind that the main proceedings, as set out by the referring court, and its questions referred for a preliminary ruling do not apply to the sales of buildings considered to be part of the direct extension of the economic activity of granting loans carried on by LN." (LN C-655/19)
NON-ECONOMIC ACTIVITIES
- Only activities of an economic nature are within the scope of VAT
"[28] In that regard, it must be pointed out that, although Article 4 of the Sixth Directive gives a very wide scope to VAT, only activities of an economic nature are covered by that provision (see, to that effect, Case C-306/94 Régie dauphinoise [1996] ECR I-3695, paragraph 15; Case C‑77/01 EDM [2004] ECR I-4295, paragraph 47; and Case C-465/03 Kretztechnik [2005] ECR I-4357, paragraph 18)." (Hutchinson 36 UK Ltd C-369/04)
- Issuing authorisation to participate in market not an economic activity
[36] Thus, an activity such as that at issue in the main proceedings constitutes a necessary precondition for the access of economic operators such as the applicants in the main proceedings to the mobile telecommunications market. It cannot constitute participation in that market by the competent national authority. Only the operators, who are the holders of the rights granted, operate on the relevant market by exploiting the property in question for the purpose of obtaining income therefrom on a continuing basis.
[37] In those circumstances, an activity such as that at issue in the main proceedings cannot, by its very nature, be carried out by economic operators. In that regard, it must be pointed out that it is irrelevant that those operators thereafter have the right to transfer their rights to use radio frequencies. Such a transfer, apart from remaining subject to the control of the national regulatory authority responsible for spectrum assignment, in accordance with Article 9(4) of Directive 2002/21, cannot be compared to the issuing of an authorisation by the State.
[38] Therefore, in granting such an authorisation, the competent national authority is not participating in the exploitation of property, consisting in rights to use the radio-frequency spectrum for the purpose of obtaining income therefrom on a continuing basis. By means of that allocation procedure, that authority exclusively carries out the activity of controlling and regulating the use of the electromagnetic spectrum which has been expressly delegated to it.
[39] Furthermore, the fact that the issuing of licences such as those at issue in the main proceedings gives rise to a payment cannot affect the legal status of that activity (see, to that effect, Case C‑343/95 Diego Calì & Figli [1997] ECR I-1547, paragraph 24 and the case-law cited)." (Hutchinson 36 UK Ltd C-369/04)
- Query whether regulatory activities can amount to economic activities
"[41] That finding is not called into question by the argument that, having regard to Article 4(5) of the Sixth Directive, it is not inconceivable that a regulatory activity carried out by a body governed by public law may constitute an economic activity within the meaning of Article 4(2) of that directive, so that that body would have to be considered a taxable person in respect of that activity.
[42] Even if such a regulatory activity could be classified as an economic activity, the fact still remains that the application of Article 4(5) of the Sixth Directive implies a prior finding that the activity considered is of an economic nature. It is apparent from the answer given in paragraph 40 of this judgment that that is not the case." (Hutchinson 36 UK Ltd C-369/04)
- Distinction between state acting in official capacity v. carrying on economic activities of commercial nature
"[16] As regards the possible application of the competition rules of the Treaty, a distinction must be drawn between a situation where the State acts in the exercise of official authority and that where it carries on economic activities of an industrial or commercial nature by offering goods or services on the market (Case 118/85 Commission v Italy [1987] ECR 2599, paragraph 7).
...
[24] The levying of a charge by SEPG for preventive anti-pollution surveillance is an integral part of its surveillance activity in the maritime area of the port and cannot affect the legal status of that activity (Case C-364/92 SAT Fluggesellschaft v Eurocontrol, cited above, paragraph 28). Moreover, as stated in paragraph 8 of this judgment, the tariffs applied by SEPG have been approved by the public authorities." (Diego Calì & Figli Srl C-343/95)
- Irrelevant that activity may only be carried out on an ancillary basis
"[34] The finding that the fee constitutes income on a continuing basis cannot be placed in doubt on the ground that the applicants in the main proceedings could engage in commercial activities only on an ancillary basis.
...
[36] On the other hand, the effect of the possible pursuit of the activity at issue in the main proceedings on an ancillary basis on the economic nature of that activity must be determined by examining all the circumstances in which the agricultural engineering works are operated in order to determine whether they are actually used for the purpose of obtaining income on a continuing basis (see, to that effect, judgments of 26 September 1996 in Enkler, C‑230/94, EU:C:1996:352, paragraph 27, and 19 July 2012 in Rēdlihs, C‑263/11, EU:C:2012:497, paragraph 34)." (Lajvér C-263/15)