OPINION OF ADVOCATE GENERAL Sharpston delivered on 6 June 2013 (43) Case C‑189/11 European Commission v Kingdom of Spain (VAT – Special scheme for travel agents)

 

 

 

  1. I deliver a joint Opinion today in the present case, together with Cases C‑193/11 Commissionv Poland, C‑236/11 Commission v Italy, C‑269/11 Commission v Czech Republic, C‑293/11Commission v Greece, C‑296/11 Commission v France, C‑309/11 Commission v Finland and C‑450/11 Commission v Portugal. That Opinion is confined to one issue which is common to all eight cases (and which is the only issue in the other seven cases): whether, on a correct interpretation of Directive 2006/112, (44) the special VAT margin scheme for travel agents (‘the margin scheme’) set out in Articles 306 to 310 of that directive applies regardless of whether the customer is actually the traveller or not (‘the customer approach’) or whether it applies only where the customer is the traveller (‘the traveller approach’).
  2. For the background to the EU legislation on the margin scheme, for the procedural background to the infringement proceedings and for all matters relating to the issue which is common to all eight cases, I refer to that Opinion, in which I conclude that the Commission’s actions should be dismissed in so far as they seek declarations to the effect that, by permitting travel agents to apply the margin scheme when providing travel services to persons other than travellers, the Member States have failed to fulfil their obligations under Articles 306 to 310 of Directive 2006/112 (for the text of those provisions and of Article 26 of the Sixth Directive, see Annexes I and II to my joint Opinion).
  3. In the present Opinion, I address three additional issues raised by the Commission, which concern only the Spanish legislation relating to the margin scheme and are unrelated to that main issue or any of the other seven infringement proceedings. They concern, respectively, the exclusion from the margin scheme of situations in which retail travel agents sell travel packages organised by wholesale agents, (45) the statement of the amount of VAT included in the price and the determination of the taxable amount over a tax period. I shall set out here only the legislation and argument relevant to those issues.

 EU legislation

  1. Article 1(2) of Directive 2006/112 reads:

‘The principle of the common system of VAT entails the application to goods and services of a general tax on consumption exactly proportional to the price of the goods and services, however many transactions take place in the production and distribution process before the stage at which the tax is charged.

On each transaction, VAT, calculated on the price of the goods or services at the rate applicable to such goods or services, shall be chargeable after deduction of the amount of VAT borne directly by the various cost components.

The common system of VAT shall be applied up to and including the retail trade stage.’

  1. Article 73 of Directive 2006/112 provides:

‘In respect of the supply of goods or services, other than as referred to in Articles 74 to 77, [(46)] the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price of the supply.’

  1. Articles 168 and 169 of Directive 2006/112 are among those which regulate the right to deduct input tax. In essence, under Article 168, where a taxable person uses goods or services supplied by another taxable person for the purposes of his taxed output transactions, all within the same Member State, he is entitled to deduct the VAT due or paid by him on the supplies of those goods or services from the VAT which he is liable to pay. Article 169 adds certain other purposes for which the inputs may be used in order for VAT on them to be deductible from output tax. They include, under (a), transactions carried out outside the Member State in which VAT is due or paid, in respect of which VAT would be deductible if they had been carried out within that Member State. In that regard, Article 5(a) of Directive 2008/9 (47) requires each Member State to refund to any taxable person not established in its territory any VAT charged to him there, in so far as the supplies in question are used for the purposes of, inter alia, transactions referred to in Article 169(a) of Directive 2006/112.
  2. Article 220 of Directive 2006/112 requires every taxable person to ensure that an invoice is issued in respect of, inter alia, supplies of goods or services which he has made to another taxable person or to a non-taxable legal person.
  3. Article 226 of Directive 2006/112 provides, in particular:

‘Without prejudice to the particular provisions laid down in this Directive, only the following details are required for VAT purposes on invoices issued pursuant to Articles 220 and 221:

…

(10)      the VAT amount payable, except where a special arrangement is applied under which, in accordance with this Directive, such a detail is excluded;

…’

 Spanish legislation

  1. Law No 37/1992 is the basic legislative text governing VAT in Spain. Articles 141 to 147 regulate the margin scheme. The Commission cites the following provisions:

‘Article 141

  1. The special scheme for travel agents shall apply to:
  2. Transactions carried out by travel agents when they deal with travellers in their own name and use goods or services supplied by other business or professional undertakings in the provision of travel.

For the purposes of this special scheme, accommodation or transport services, whether provided singly or as a package, together with any complementary or ancillary services, shall be considered to be travel.

  1. Transactions carried out by tour operators in the circumstances set out in the previous subparagraph;
  2. The special scheme for travel agents shall not apply to the following transactions:
  3. Sales to the public by retail travel agents of travel organised by wholesale agents.

…’

‘Article 142

In transactions to which this special scheme applies, taxable persons shall not be required to indicate separately on their invoices amounts passed on which, where they are present, are to be deemed to be included in the price of the transaction.

In transactions carried out for other business or professional undertakings, comprising only supplies of goods or services falling entirely within the territorial scope of the tax, the invoice may indicate, at the request of the person concerned and under the heading “amounts of VAT included in the price”, a figure obtained by multiplying the total price of the transaction by six and dividing the result by 100. Such amounts shall be regarded as being directly passed on to and borne by the business or professional undertaking which is the recipient of the supply.’

‘Article 146

  1. Taxable persons may choose to determine their taxable amount on a transaction by transaction basis or globally for each tax period.

The choice shall be effective for all transactions to which the special scheme applies carried out by the taxable person for a period of at least five years and, in the absence of any intervening declaration to the contrary, for subsequent years.

  1. Global determination for each tax period of the taxable amount in respect of transactions to which the special scheme applies shall be effected as follows:
  2. The actual overall cost, including tax, of supplies of goods or services made by other business or professional undertakings to the agency during the relevant tax period, which are used in the provision of travel for the benefit of the traveller, shall be subtracted from the overall price, including value added tax, charged to customers in respect of transactions for which the chargeable event occurred during the same period.
  3. The global taxable amount shall be determined by multiplying the result by 100 and dividing the product by 100 plus the standard rate of tax laid down in Article 90 of this Law. [(48)]
  4. The taxable amount shall never be negative.

However, where the taxable amount is determined globally, any sum by which the amount to be subtracted exceeds the amount from which it is to be subtracted may be added to the amounts to be subtracted during the tax periods immediately following.’

 Declaration sought

  1. I have dealt with the Commission’s complaint concerning the application of the customer approach in my joint Opinion, concluding that it should be dismissed. In addition, the Commission asks the Court to declare that

–        by excluding from the margin scheme sales to the public, by retail agents acting in their own name, of travel services organised by wholesale agents,

–        by authorising travel agents, in certain circumstances, to charge in the invoice an overall amount that is not related to the actual VAT charged to the customer, and by authorising the latter, where he is a taxable person, to deduct that overall amount from the VAT payable, and

–        by authorising travel agents, in so far as they benefit from the special scheme, to determine their taxable amount globally for each tax period,

the Kingdom of Spain has failed to fulfil its obligations under Articles 73, 168, 169, 226 and 306 to 310 of Directive 2006/112, and to order the Kingdom of Spain to pay the costs.

 Exclusion of sales by retail travel agents of travel services organised by wholesale agents

 Argument

  1. The Commission considers that, in accordance with Article 306 of Directive 2006/112, the margin scheme should always apply to ‘sales to the public by retail travel agents of travel services organised by wholesale agents’, except where the retail agents are acting not in their own name but as intermediaries. However, Article 141(2)(1) of Law No 37/1992 excludes allsuch sales from the scope of the scheme, not only according to its clear terms but also according to the Spanish authorities’ own interpretation. To interpret Article 141(2)(1) as concerned only with cases where the travel agent is acting in the name of another (which is Spain’s contention) would be to deprive it of any useful purpose, since that situation is already covered by Article 141(1)(1). Nor would it explain why the provision is confined to cases where that other person is a wholesale travel agent. Article 141(2)(1) of Law No 37/1992 is, at the very least, ambiguous and therefore contrary to Article 306 of Directive 2006/112.
  2. Spain agrees that the margin scheme should apply in the way described by the Commission. It asserts that the disputed provision merely clarifies the fact that, in accordance with the second subparagraph of Article 306(1) of Directive 2006/112, retail travel agents may not apply the scheme when they act simply as intermediaries, in the name and on behalf of wholesale agents. The interpretations to which the Commission refers are not binding. There is no ambiguity in Article 141(2)(1) of Law No 37/1992: because Article 141(1)(1) makes it clear that any transaction carried out by a travel agent in his own name falls within the scope of the scheme, it is clear that Article 141(2)(1) can concern only transactions other than those carried out in his own name.

 Assessment

  1. The issue between the parties on this head of claim does not concern the interpretation of Directive 2006/112 but the effect of Article 141(2)(1) of Law No 37/1992, which the Commission considers to be incompatible with the interpretation of the directive on which both parties agree.
  2. First of all, I note that the wording of that provision in no way indicates that its effect is limited to situations in which a retail travel agent acts merely as an intermediary, on behalf of a wholesale agent. On the face of it, it applies to all sales by a retail travel agent of travel services organised by a wholesale agent, whether the retail agent is acting as an intermediary or is purchasing the services from the wholesale agent and selling them in his own name. A rule having such an effect is, the parties agree, contrary to Article 306 of Directive 2006/112: when a travel agent is dealing with customers in his own name, the margin scheme must apply regardless of whether he acquired the services sold directly or from another travel agent or tour operator.
  3. The Commission has produced excerpts from a collection of VAT precedents published by the Spanish Economy and Finance Ministry, showing non-binding notices issued by the Directorate-General for Revenue which confirm an interpretation to the effect that the disputed provision excludes from the margin scheme not only sales in which the retail agent is acting as an intermediary (which is consistent with Article 306 of Directive 2006/112) but also those in which he is selling them in his own name (which is not).
  4. In those circumstances, it seems to me that the Commission has established a clear prima facie case and that this head of claim should be upheld unless Spain provides specific evidence to counter that produced by the Commission or some cogent reason for discounting it.
  5. Spain has produced no evidence. It asserts that the disputed provision is in fact merely a clarification – and an unambiguous one – of the general rule that the margin scheme does not apply where a travel agent is not acting in his own name; the clarification is simply intended to cover the specific situation of retail and wholesale travel agents. It states further that the interpretative notices produced by the Commission are out of date and, in any event, not binding.
  6. I do not consider that to be a sufficient rebuttal of the Commission’s case. The disputed provision is, as the Commission points out, both unnecessary (in that it repeats a rule stated earlier in the same article) and inadequate (in that it does not clearly indicate its scope) as a clarification. The Spanish Government’s contention that the provision is unambiguous and leaves no scope for interpretation seems disingenuous. The Commission has demonstrated that it has been interpreted in the past in a way quite different from that in which the Government now states that it is interpreted and is clearly to be interpreted. The fact that the past interpretations are not binding and may (though there is no concrete evidence for this) no longer be applied does not reduce the ambiguity. In the absence of any clear, binding indication that the provision concerns only cases in which the retail agent acts not in his own name but in the name and on behalf of the wholesale agent, operators are more than likely to apply the exclusion from the margin system in all the cases covered by the explicit terms of the provision.
  7. I would therefore uphold this head of claim.

 Statement of the amount of VAT included in the price

 Argument

  1. The Commission takes issue with two aspects of the second paragraph of Article 142 of Law No 37/1992. First, that provision allows travel agents to specify an ‘amount of VAT included in the price’ of a travel service equivalent to 6% of the total price of that service, and allows customers who are taxable persons to deduct that amount where the conditions for deduction are met. Under the margin scheme, however, the only VAT included in the price of a travel service is that charged on the travel agent’s margin. In its application, the Commission asserts that the travel agent must invoice a global, VAT-inclusive amount, and no VAT may be deducted by customers. Moreover, 6% does not correspond to any VAT rate applied in Spain. (49) Second, the provision in issue is discriminatory. It applies only to supplies made in Spain, so that no deduction at all is possible where the supplies are made in other Member States. Article 309 of Directive 2006/112, which concerns only supplies made outside the European Union, cannot justify such a provision.
  2. Spain counters that the margin scheme does not preclude deduction of input tax where the relevant conditions are fulfilled. Article 310 of Directive 2006/112 precludes deduction of ‘VAT charged to the travel agent by other taxable persons in respect of transactions … and which are for the direct benefit of the traveller’ but does not concern the VAT due when a travel agent supplies a single service to his customer under the margin scheme. The amount of VAT in the price of that service should therefore be deductible in accordance with the normal rules. However, there is no guidance as to how that amount should be determined. The rule adopted in Spain seeks to solve the problem and does so in a way which is approximate but – being based on statistical analysis – broadly accurate, and which allows travel agents to maintain commercial secrecy as to their actual profit margins. The limitation of the rule to supplies made in Spain is, for its part, designed simply to exclude supplies made outside the European Union, in accordance with Article 309 of Directive 2006/112.
  3. At the hearing, the Commission retreated somewhat from its stark position that, under the margin scheme, the travel agent must invoice a global, VAT-inclusive, amount and no VAT may be deducted by customers. It accepted that the provisions could be read to the effect that the VAT on the travel agent’s marginmay be stated on the invoice (50) and, where the conditions for deduction are fulfilled, deducted by the customer. It considered, however, that that would not be a usual way for travel agents to do business, since it would mean disclosing the amount of their profit margin on the supply. (51)

 Assessment

  1. As regards the indication and possible deduction of VAT on the travel agent’s margin, it seems to me that the Commission’s position at the hearing is preferable to that which it expressed in its written pleadings. Articles 306 to 310 of Directive 2006/112 provide no reason why the normal rules concerning invoicing and deduction should not operate within the confines of the margin scheme. It is explicitly provided that VAT included in the price of the supplies which the travel agent acquires for the benefit of the traveller cannot be deducted under that scheme. By contrast, the VAT due on the travel agent’s margin is nowhere excluded from deduction, and it should be possible for a taxable person to deduct that amount from his output tax under the normal rules, where the conditions for deduction are fulfilled. Nor is there anything in Articles 306 to 310 which derogates from the requirements of Articles 220 and 226 regarding the details required in an invoice issued to another taxable person or non-taxable legal person.
  2. I therefore wonder whether the Commission went far enough at the hearing by regarding an invoice indicating the VAT on the travel agent’s margin as merely an option, unlikely to be exercised in practice. There may, it seems to me, be grounds for considering it a requirement.
  3. However, that point has not been argued before the Court nor, in my view, need it be decided in order to rule on the present head of claim. I would therefore suggest that the Court should base its decision on the following considerations.
  4. First, it is clear that the amount arrived at by the calculation set out in the second paragraph of Article 142 of Law No 37/1992 will rarely, if ever, correspond to any amount of VAT included in the price. At 6% of the tax-inclusive price, it is unlikely ever to correspond to the total amount of VAT on both the components of the travel package and the travel agent’s margin. If it did, to allow customers to deduct such a sum would be contrary to Article 310 of Directive 2006/112, which precludes deduction of VAT on components of a travel package. There is perhaps a greater chance of its corresponding to the amount of VAT on the travel agent’s margin – but the operative word is ‘chance’. In order for any amount of input VAT to be deductible, it must correspond exactly – and not merely approximately or by chance – to the amount of output VAT accounted for by the supplier to the tax authority. Any other result would offend against the principle of VAT neutrality. There would be a gain or loss of VAT for one or other of the taxable persons concerned or for the tax authority.
  5. Second – although the above is in my view sufficient reason to uphold the Commission’s claim in this regard – application of the disputed provision is clearly limited to supplies made in Spain and not to supplies made within the European Union. Moreover, the Commission has produced tax authority decisions establishing that the limitation is in fact applied in that way, and does not simply exempt supplies made outside the Union, pursuant to Article 309 of Directive 2006/112. Thus, even if the disputed provision were otherwise in conformity with the rules governing the margin scheme, it would be discriminatory vis-à-vis travel services provided in Member States other than Spain.
  6. I would therefore uphold this head of claim.

 Determination of the taxable amount over a tax period

 Argument

  1. The Commission submits that nothing in Directive 2006/112 allows Member States to permit travel agents applying the margin scheme to calculate a single profit margin for all travel package transactions in a given tax period, as under Article 146 of Law No 37/1992. Article 73 et seq. of Directive 2006/112 refer to the taxable amount for individual supplies, and those provisions apply within the margin scheme, to the extent that it does not derogate from them. (52) The possibility of a global calculation is envisaged in the Commission’s proposed amendments to Article 26 of the Sixth Directive, (53) but is not available under Directive 2006/112 as it currently stands. Article 318 of that directive does allow Member States to provide for a similar simplification in the context of the margin scheme for taxable dealers, but there is no equivalent for the travel agents’ margin scheme. The option introduced in Spanish law could, moreover, lead to non-collection of amounts of VAT and a loss of the Union’s own resources.
  2. Spain considers that the terms of Article 308 of Directive 2006/112 are sufficiently broad to allow the travel agent’s margin to be calculated globally for each tax period, as in the Spanish legislation. The provisions are optional, their aim is to simplify VAT procedures and they are neutral as regards their effect on revenue.

 Assessment

  1. While the argument on this head of claim has not been extensive, it seems to me that the Commission’s position is essentially correct, on the basis of the provisions which it cites. Defining the principle of the common VAT system, the second paragraph of Article 1(2) of Directive 2006/112 specifies that VAT is to be chargeable on ‘each transaction’. Article 73 defines the taxable amount in terms of an individual supply. Moreover, a system of global calculation for each tax period, with the possibility of carrying over negative amounts to subsequent periods, renders it impossible for customers to ascertain how much VAT is included in their input supplies and thus to deduct any such tax where appropriate – and I have concluded above that it is at least possible, if not compulsory, within the margin scheme to apply the normal rules concerning the indication of VAT on the travel agent’s margin on invoices and its subsequent deduction by the customer.
  2. Thus, even though I am not convinced by the Commission’s argument regarding a possible loss of the Union’s own revenue, for which it has provided no evidence, I would uphold this head of claim.

 Costs

  1. Under Article 138(3) of the Court’s Rules of Procedure, where each party succeeds on some and fails on other heads, the parties are to bear their own costs. However, if it appears justified in the circumstances of the case, the Court may order that one party, in addition to bearing its own costs, pay a proportion of the costs of the other party. In the present case, I consider that the Court should dismiss the Commission’s action in so far as it seeks a declaration to the effect that, by permitting travel agents to apply the margin scheme when providing travel services to persons other than travellers, the Kingdom of Spain has failed to fulfil its obligations under Articles 306 to 310 of Directive 2006/112; but uphold the three other heads of claim discussed in this Opinion. It therefore seems appropriate to order the Kingdom of Spain to pay three quarters of both parties’ costs and the Commission to pay one quarter of those costs. Under Article 140(1) of the Rules of Procedure, Member States which intervene in proceedings are to bear their own costs.

 Conclusion

  1. Having regard to all the above considerations, together with those set out in my joint Opinion in this case and Cases C‑193/11 Commissionv Poland, C‑236/11 Commission v Italy, C‑269/11Commission v Czech Republic, C‑293/11 Commission v Greece, C‑296/11 Commission v France, C‑309/11 Commission v Finland and C‑450/11 Commission v Portugal, I am of the opinion that the Court should:

–        declare that,

–        by excluding, from the special scheme for travel agents laid down in Articles 306 to 310 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, sales to the public, by retail agents acting in their own name, of travel services organised by wholesale agents,

–        by authorising travel agents, in certain circumstances, to charge in the invoice an overall amount that is not related to the actual VAT charged to the customer, and by authorising the latter, where he is a taxable person, to deduct that overall amount from the VAT payable, and

–        by authorising travel agents, in so far as they benefit from the special scheme, to determine their taxable amount globally for each tax period,

the Kingdom of Spain has failed to fulfil its obligations under Articles 73, 168, 169, 226 and 306 to 310 of Directive 2006/112,

–        dismiss the remainder of the application,

–        order the Kingdom of Spain to bear three quarters of its own costs, together with three quarters of the Commission’s costs

–        order the Commission to bear one quarter of its own costs, together with one quarter of the costs of the Kingdom of Spain, and

–        order the Member States which have intervened in the case to bear their own costs.

1 – Original language: English.

2 – Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1; ‘Directive 2006/112’).

3 – Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours (OJ 1990 L 158, p. 59). Article 1 states its purpose as being ‘to approximate the laws, regulations and administrative provisions of the Member States relating to packages sold or offered for sale in the territory of the Community’.

4 – Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1; ‘the Sixth Directive’). Articles 306 to 310 of Directive 2006/112 merely recast the structure and wording of Article 26 of the Sixth Directive, without, in principle, bringing about any material change (see recital 3 in the preamble to Directive 2006/112).

5 – Under the provisions of, now, Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State (OJ 2008 L 44, p. 23), which repealed and replaced Eighth Council Directive 79/1072/EEC of 6 December 1979 on the harmonisation of the laws of the Member States relating to turnover taxes – Arrangements for the refund of value added tax to taxable persons not established in the territory of the country (OJ 1979 L 331, p. 11).

6 –      Although the Commission’s definition of ‘traveller’ is in fact somewhat looser than that – see point 28 below.

7 – The Commission explained at the hearing that the text of the Sixth Directive was debated and agreed within the Council in its French version, which was intended to serve as the basis for all other languages; however, contrary to that intention, the final English text was in fact based on a parallel version in English, which had not been the basis of discussions. It cannot, however, be denied that the text was adopted in all six languages, each version being equally authentic.

8 – I reproduce the monolingual text of Articles 306 to 310 of Directive 2006/112 in Annex I to this Opinion, and of Article 26 of the Sixth Directive in Annex II. In both cases, I italicise the word ‘traveller’ or ‘customer’, as the case may be, or its equivalent, on each occurrence. In Annex III, I set out a table which indicates the word used in each provision, in each of the different language versions. At the hearing, the Commission stated that the Council had determined the final text in each language version of Directive 2006/112, without the Commission being in a position to react to any changes.

9 – Proposal for a Council Directive amending Directive 77/388/EEC as regards the special scheme for travel agents (COM(2002) 64 final).

10 – That was, in any event, the intention. In fact, at least the French, Greek, Italian and Swedish versions of the proposed new provisions all seem to have retained the word ‘traveller’ in at least one instance.

11 – At point 4.1.2.1.

12 – Cyprus, Hungary, Latvia and the United Kingdom. The Netherlands amended its legislation at a later stage (from 1 April 2012) and parallel proceedings which had been brought against that Member State (Case C-473/11) were withdrawn.

13 – See Commission press releases IP/08/333 and IP/11/76.

14 – The aim of simplifying procedure for travel agents has, moreover, been repeatedly stressed by the Court (see, for example, Case C-31/10 Minerva Kulturreisen [2010] ECR I‑12889, paragraphs 17 and 18 and case-law cited). The aim of correct allocation of tax yield was stressed by Advocate General Tizzano in his Opinion in First Choice Holidays (Case C-149/01 [2003] ECR I‑6289, point 25, footnote 13).

15 –      See, however, point 28 below.

16 – See, for a recent example, Case C-360/11 Commission v Spain [2013] ECR I-0000, paragraph 18 and case-law cited.

17 – See Article 1(2) of Directive 2006/112.

18 – Case C-204/03 Commission v Spain [2005] ECR I‑8359, paragraph 28 and case-law cited.

19 – I do not think it useful here to attribute individual arguments – of which what follows is, in any event, only a summary – to individual Member States.

20 – See, for example, Case C-41/09 Commission v Netherlands [2011] ECR I‑831, paragraph 44 and case-law cited. See also Case C‑296/95 EMU Tabac and Others [1998] ECR I‑1605, paragraph 36.

21 – Joined Cases C-308/96 and C-94/97 Madgett and Baldwin [1998] ECR I‑6229, paragraphs 18 to 27. See also Case C-200/04 iSt [2005] ECR I‑8691, paragraph 22 et seq.

22 – First Choice Holidays, cited in footnote 14, paragraph 28 of the judgment.

23 – See, for a very recent example with regard to exemptions, Case C-91/12 PCF Clinic AB [2013] ECR I‑0000, paragraph 23.

24 – Cited in footnote 18; see, in particular, paragraph 25.

25 – See the case-law cited in footnote 20 above.

26 – Virginibus puerisque, iv, El Dorado (1881).

27 – There are cases of course in which the voyage or journey itself, or part of it, is the aim (certain cruises, for example, or legendary train journeys such as the Orient Express), and others in which the transport itself is the only service purchased from the travel agent (notably, perhaps, in the case of business travel). However, a significant part of travel agency business involves packages of which the services available at the destination are the central component, transport to and from that destination being simply an inevitable adjunct.

28 – Case C‑163/91 [1992] ECR I‑5723.

29 – In Minerva Kulturreisen, cited in footnote 14, the Court did rule that the margin scheme was not to apply to the sale by a travel agent of opera tickets in isolation ‘without provision of a travel service’, but it made clear that travel services included accommodation (see paragraphs 21 to 28 of the judgment).

30 – See, respectively, Madgett and Baldwin and iSt, both cited in footnote 21.

31 – Case C-253/07 Canterbury Hockey Club and Canterbury Ladies Hockey Club [2008] ECR I‑7821, paragraph 26 et seq. I note that, in that case, the Commission had submitted that the provision was to be interpreted ‘not literally, but so as to ensure the effective application of the exemption for which it provides, on the basis of the supply of services in question and that, therefore, regard must be had not only to the formal, legal recipient of that supply, but also to its material recipient or effective beneficiary’ (see paragraph 25 of the judgment).

32 – See the case-law cited in footnote 14 above.

33 – That would not be the case only if A were both registered for VAT in each of those Member States and made supplies there on which the output VAT exceeded all his input VAT there. Even then, however, there would be a flow of VAT revenue from the Member States in which the services were in fact provided and enjoyed to the Member State in which A was established, which would collect the output tax on his sale to B.

34 – See point 32 above.

35 – For the other sense of fiscal neutrality in the context of VAT, see footnote 40 below.

36 – See Case C‑44/11 Deutsche Bank [2012] ECR I‑0000, paragraph 45.

37 – The difficulty is addressed in the Commission’s proposed amendments to Article 26 of the Sixth Directive, essentially by replacing the word ‘traveller’ by ‘customer’ throughout Article 26(3) (corresponding to the last sentence of Article 26(2) in the unamended version; there are also other changes, but they have no particular bearing on the point under discussion). That, it seems to me, demonstrates the largely contrived nature of the objection.

38 – See point 31 above.

39 – Cited in footnote 18 above. The Commission cites also Case C‑269/00 Seeling [2003] ECR I‑4101, paragraph 54.

40 –      Document cited in footnote 9, point 2, penultimate paragraph. The principle of neutrality referred to here is that VAT should be neutral in its effect on taxable persons, who should not themselves bear the burden of the tax.

41 –      Point (c) of the first paragraph of Article 79 concerns the use of a suspense account for repayment of expenditure in the name and for the account of a purchaser or customer.

42 –      Article 11A(3)(c) was the predecessor to point (c) of the first paragraph of Article 79.

43 – Original language: English.

44 – Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1; ‘Directive 2006/112’). Articles 306 to 310 of Directive 2006/112 replaced Article 26 of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1; ‘the Sixth Directive’).

45 – Wholesale travel agents put together travel packages but do not sell them direct to the public. They sell either to retail travel agents who then (in their own name) sell the packages on to the public, or to the public via such retail agents who act (in the name of the wholesale agent) merely as intermediaries.

46 –      Articles 74 to 77 concern, essentially, the taxable amount in the case of ‘self-supplies’ in which a taxable person uses goods or services supplied by his taxable business other than as normal taxable outputs.

47 – Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State (OJ 2008 L 44, p. 23).

48 –      The standard rate of VAT laid down in Article 90 is currently 21%. The operation thus involves multiplying by 100 and dividing by 121.

49 – I note that, according to the Commission document ‘VAT rates applied in the Member States of the European Union’, as of 14 January 2013 Spain applied, for example, the standard rate of 21% to hotel accommodation and admission to amusement parks (the rate for hotel accommodation is as given in the English version of the document, while the French and German versions give a rate of 10%; unfortunately, the Commission has not seen fit to provide any other language versions) and a reduced rate of 10% to the transport of passengers and restaurant services. 6% of the tax-inclusive price would amount to a tax rate of approximately 6.38%.

50 – A contrario, the Commission pointed out, Articles 325, 332 and 339 do preclude stating the amount of VAT on invoices issued under other comparable special schemes.

51 – The desire of traders to maintain confidentiality as to their profit margins is thus mentioned by both parties to these proceedings. It raises an interesting issue but not one which, in my view, is relevant to the outcome of the action.

52 – See Case C-149/01 First Choice Holidays [2003] ECR I‑6289, paragraph 26 et seq., concerning Article 11A(1)(a) of the Sixth Directive, the predecessor to Article 73 of Directive 2006/112.

53 – See the proposed text of Article 26(4) in Proposal for a Council Directive amending Directive 77/388/EEC as regards the special scheme for travel agents (COM(2002) 64 final).