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European Court of Justice: Opinion of Advocate General on application of reduced VAT rate on supplies of horses

In Case C-41/09 the Advocate-General Y. Bot has taken a conclusion on 5 October 2010. The case was brought before the European Court of Justice by the Commission against the Netherlands. The Commission asked the Court to rule that, by applying a reduced rate of VAT to the supply, importation and intra-Community acquisition of certain live animals, in particular horses, which are not normally intended for the preparation or production of foodstuffs for human or animal consumption, the Netherlands has failed to fulfil its obligations under Article 12 of, in conjunction with Annex H to, the Sixth VAT Directive, and under Articles 96, 97, 98 and 99(1) of, in conjunction with Annex III to, the VAT Directive. The Commission took the view that the Netherlands Wet op de omzetbelasting (Law on turnover tax) breaches the provisions of Articles 96, 97, 98 and 99(1) of, in conjunction with Annex III to, the VAT Directive by applying a reduced rate of VAT to the supply of certain live animals (in particular, horses) even in cases where those animals are not intended for the preparation or production of foodstuffs. More specifically, the Commission is of the opinion that live animals ? and, in particular, horses ? which are not normally intended for use as foodstuffs do not come under Category 1 of Annex III to the VAT Directive. According to the Commission settled case-law, Category 1 of Annex III to the VAT Directive must, in the same way as any other provision concerning the reduced rates of VAT, be subject to strict interpretation. Furthermore, in the light of the wording of Category 1 of Annex III to the Directive, the reduced rate applies to foodstuffs. The Advocate General Y. Bot agrees with the view of the Commission, and held that the Netherlands should not generally apply the reduced VAT rate to supply of animals if they are not intended for use as foodstuff. The decision of the Europewn Court of Justice is to be awaited. Probably the outcome of this procedure will also be followed with interest by interested parties in other EU Member States which still apply reduced VAT rates to the envisaged transactions.
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Prof. Guglielmo Maisto
Maisto e Associati, Milano

Dr. Dick Molenaar
All Arts Tax Advisors, Rotterdam

 

Mr. Kevin Offer
Hardwick & Morris LLP, London

Mr. Mario Tenore
Maisto e Associati, Milano

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