The EU General Court has begun having references for a preliminary ruling under Article 267 TFEU, sent down to it by the Court of Justice of the European Union (who are still the recipients of the referrals from national courts).
One of the first cases it will hear in the procedure for this newly conferred jurisdiction is Case T-558/24, Studieförbundet Vuxenskolan Riksorganisationen v Skatteverket, a reference for a preliminary ruling submitted by the Supreme Administrative Court of Sweden (Högsta förvaltningsdomstolen) concerning the VAT Directive.
Transfer of jurisdiction
Since October 2024, cases referred to the CJEU concerning the following areas will, in principle, be heard by the General Court:
- the common system of value added tax;
- excise duties;
- the Customs Code;
- the tariff classification of goods under the Combined Nomenclature;
- compensation and assistance to passengers in the event of denied boarding or of delay or cancellation of transport services; and,
- the system for greenhouse gas emission allowance trading.
Background of the case
Case T-558/24, Studieförbundet Vuxenskolan Riksorganisationen v Skatteverket, known as Case 1863-24 in the national courts, concerns the interpretation of Article 132(1)(f) of Directive 2006/112/EC on the common system of value-added tax (the VAT Directive).
The non-profit organization (Studieförbundet Vuxenskolan Riksorganisationen) coordinates the activities of three regional associations and 28 local branches, and primarily engages in public education, funded largely by state grants and exempt from tax. However, some local branches also provide taxable commissioned education. The national organisation provides services such as accounting, payroll administration, personnel matters, and IT to its local branches. It sought a preliminary ruling from the Swedish Tax Authority (Skatteverket) on whether these services are exempt from tax.
The organisation argues that the services are essential for the local branches to conduct their public education activities efficiently and cost-effectively. They argue that the services are directly necessary and that exempting them would not distort competition, as the organisation is guaranteed to retain its members regardless of tax status.
On the other hand, the Swedish Tax Authority is of the view the services are not exempt, as they are general in nature and not specific to the exempt activities, and could distort competition. For it, the services must be directly necessary for the public interest activities to qualify for exemption. General services used by other businesses do not meet this criterion, and could distort competition if exempted.
The applicable law and questions referred
Article 132(1)(f) of the Directive states:
‘Member States shall exempt the following transactions:…the supply of services by independent groups of persons, who are carrying on an activity which is exempt from VAT or in relation to which they are not taxable persons, for the purpose of rendering their members the services directly necessary for the exercise of that activity, where those groups merely claim from their members exact reimbursement of their share of the joint expenses, provided that such exemption is not likely to cause distortion of competition;...’
Specifically, the referring court is seeking clarification on how the VAT Directive’s provision for exemption from tax liability for services provided within independent groups should be interpreted. The referring court wants to understand what is meant by services being “directly necessary” for the exempt activities and what criteria should be used to determine if granting an exemption could distort competition.
In the words of the referring court in two questions, it wants to know:
- First, can services provided to members of an independent group be considered directly necessary under Article 132(1)(f) of the VAT Directive if they are general in nature and also used by businesses outside the public interest sector?
- Second, what criteria should be used to determine if granting an exemption could distort competition, particularly regarding the guarantee that the group will retain its members regardless of tax status?
The first VAT case at the General Court, and an Opinion of an Advocate General
Whilst this is not the first case to be ‘sent down’ to the General Court from the Court of Justice (that award goes to Case T-534/24, Gotek, a case referred by a Croatian court on excise duties), the Studieförbundet Vuxenskolan Riksorganisationen v Skatteverket will be the first case heard by the General Court concerning the VAT Directive.
The case, now before the General Court, will receive an Opinion of an Advocate General. But the Advocate General will be a judge of the General Court acting as Advocate General in the case.
Only four Opinions have ever been rendered in the General Court. And its been nearly a quarter of a century since the last. The most recent Opinion of a Judge acting as Advocate General in the General Court was that of Judge David Edward in Case T-24/90 and T-28/90, Automec and Asia Motor France v Commission. He recounted his experience in:
- David Edward, ‘Reflections of a Judge Acting as Advocate General in the Court of First Instance: 1990–1992’ in Graham Butler and Adam Łazowski (eds), Shaping EU Law the British Way: UK Advocates General at the Court of Justice of the European Union (Hart Publishing 2022).
In that contribution, he noted that,
“My appointment by the President of the [General Court] to act as AG in Automec and Asia Motor France was an unusual opportunity to speak with my own voice in my mother tongue. I was the fourth and the last judge of the [General Court] to be given that opportunity.” (p. 584)
Note too that of the four Opinions delivered during that time, the ‘styling’ was different. Note the difference:
- Opinion of Mr Kirschner, Judge in the Court of First Instance in Case T-51/89, Tetra Pak, ECLI:EU:T:1990:15.
- Opinion of Mr Vesterdorf acting as Advocate General in Case T-1/89, Rhône-Poulenc, ECLI:EU:T:1991:38.
- Opinion of Judge Biancarelli of the Court of First Instance in Case T-120/89, Stahlwerke Peine-Salzgitter, ECLI:EU:T:1991:6.
- Opinion of Judge Edward acting as Advocate General in Case T-24/90, Automec, and Case T-28/90 Asia Motor France, ECLI:EU:T:1992:39.
On this point of the different way of styling the Opinions, Judge Edward noted that,
“For an unexplained reason, we were styled differently in the reports of these cases. The experiment has not been repeated ever since, and not even in the General Court, despite the increased number of judges. I do not know why.” (p. 584)
Thus, for the non-VAT specialists, the style of the way that Opinions of the judges providing such, just like an Advocate General, in the forthcoming cases will be one to watch, now that the procedure has been revived, albeit now in references for a preliminary ruling, and not necessarily actions for annulment.
Read the referral
More on the referral in Case T-558/24, Studieförbundet Vuxenskolan Riksorganisationen v Skatteverket, pending before the General Court, and referred by the Supreme Administrative Court of Sweden, can be read here.