Value added tax – Supply – Leasing or letting of immovable property – Appellant owning houseboat, without a system of propulsion, being permanently attached alongside a riverbank – Appellant leasing of houseboat, including landing stage, plot of land and area of water contiguous therewith – Occupier exclusively using houseboat for permanent operation of restaurant-discotheque – Whether leasing constituting single supply for VAT purposes – Preliminary ruling made
The appellant had an agreement with the German waterways administration (WSV) to occupy a parcel of land situated on the left bank of the Rhine, near the City of Cologne, and a portion of the river, adjacent to that land for the purposes of operating a houseboat with a landing stage as a restaurant. The houseboat had been moored in the same place for many years, had never been moved, and was immobilised by means of ropes, chains and anchors. It had no engine or system of propulsion. Moreover, it was connected to the water and electricity networks and had an address, a telephone line and a septic tank.
In 2000, the appellant let the houseboat, the landing stage and the adjoining area to a company, which used the houseboat exclusively as a café-restaurant and, later, as a discotheque. No VAT was charged on the rent, given that, according to the advice of tax advisers, this was the letting of immovable property exempt from VAT. However, the tax authority considered that, for the years when the appellant was the sole proprietor of the let property, the letting was of movable property so that she was liable for VAT.
The taxpayer brought a civil action against the respondent tax advisers, seeking reimbursement of the sums paid by way of VAT for the relevant period. The national court took the view that the houseboat did not constitute immovable property or an essential element of such property, since it was not incorporated into the ground. It could be moved in a few hours, even if that implied a certain preparation and the use of specialist personnel. Therefore it was an item of moveable property outside the exception in article 13B(b) of Council Directive 77/388 (the Sixth VAT Directive).
In an appeal lodged against that judgment, the court raised questions whether: (i) the houseboat constituted a building within the meaning of the sixth directive, since it could not, naturally, be fixed to an area of water as solidly as to dry land; (2) the leasing of the houseboat and the landing stage constituted a single supply for VAT; and (iii) the houseboat was a vehicle within article 13B(b), point 2. Therefore, court stayed the proceedings and referred to the European Court of Justice for a preliminary ruling.
Held: The preliminary ruling was made.
(1) It was not necessary for a construction to be indissociably incorporated into the ground in order to be regarded as immovable property for the purposes of applying the rules on VAT. Taking account of the houseboat’s link with the elements that constituted its site and of the fact that it was fixed to those elements, which rendered it, in practice, a part of that space taken as a whole, and that the contract which allocated the houseboat exclusively and permanently to the operation, on that site, of a restaurant-discotheque, and that the latter was connected to the various mains, the whole constituted by the houseboat and the elements which composed the site where it was moored had to be regarded as immovable property for the purposes of applying the exemption referred to in article 13B(b) of the sixth directive. Having regard to the objective envisaged by the contracting parties and the function allocated by them to the houseboat, it was immaterial, from an economic point of view, whether it was a building incorporated into the ground in a fixed manner, for example by piles, or a simple houseboat: Maierhofer v Finanzamt Augsburg-Land (Case C-315/00) [2003] ECR I-563 considered.
(2) The placing of the landing stage at the lessee’s disposal was essentially designed to allow access to the houseboat. It was thus apparent that, together with the elements constituting its mooring, namely the submerged and non-submerged ground, the area of water and the adjoining landing stage, the houseboat formed a functional and economic unity and the leasing contract, which covered all those elements, encompassed a single supply, in the context of which the letting of the landing stage was ancillary to the letting of the houseboat. Consequently, the letting of that landing stage did not have to be regarded as a separate supply for VAT purposes.
(3) The houseboat in this case did not constitute a vehicle within the meaning of art. 13(B)(b), point 2 so as to exclude it from the VAT exemption. The word ‘vehicles’ in point 2 covered all means of transport, including boats. On the normal interpretation of those words, that meant methods for transporting persons or goods, namely methods actually used for that function. It was not the initial use of an object which was significant, but its actual and current function. In accordance with the principle of fiscal neutrality, the function of the houseboat was comparable with that of a building used as a restaurant installed close to the latter, on dry land. Therefore, the restaurant-discotheque functioning on that houseboat was in economic competition with similar establishments situated in buildings incorporated into the ground.
H Bister, rechtsanwalt, appeared for the appellant; A Funke and R Lenzen, rechtsanwälte, appeared for the respondents; T Wahlen and S Schneider, rechtsanwälte, appeared for the interested parties; T Henze and K Petersen, acting as agents, appeared for the German Government; C Soulay and B-R Killman, acting as agents, appeared for the European Commission.
Eileen O’Grady, barrister
