Court of Justice of the European Communities (including Court of First Instance Decisions)

Provisional text

OPINION OF ADVOCATE GENERAL

KOKOTT

delivered on 12 January 2023 (1)

Case C‑677/21

Fluvius Antwerpen

v

MX

(Request for a preliminary ruling from the Vredegerecht te Antwerpen (Magistrates’ Court of Antwerp, Belgium))

(Request for a preliminary ruling – Value added tax (VAT) – Directive 2006/112/EU – Taxable transactions – Taxable person – Illegal consumption of electricity – Charging by the competent distribution network operator for illegally consumed electricity – Concept of ‘economic activity’ – Concept of ‘other body governed by public law’ – Negligible scope of activities referred to in the third subparagraph of Article 13(1) of the VAT Directive)

I.      Introduction

1.        In this request for a preliminary ruling, the Court must consider the consequences of ‘electricity theft’ in terms of value added tax (VAT). This is because the referring court is unsure whether an illegal user of electricity must pay for the electricity consumed plus any VAT incurred or only the so-called net price without VAT. In the present case, the distribution network operator discovered that a person had unlawfully taken electricity at his residential address for his personal use and subsequently charged the ‘electricity thief’ for it.

2.        The Court is thus confronted with the fundamental question whether a consumer who is acting unlawfully has to bear VAT in the same way as a consumer who is acting lawfully if he or she (the consumer who is acting unlawfully) consumes a similar amount of electricity – or whether he or she can ‘save’ himself the VAT. In essence, this depends entirely on whether even an ‘involuntary’ supply to a consumer by a taxable person constitutes an assessable and taxable transaction pursuant to VAT law.

II.    Legal framework

A.      Union law

3.        Directive 2006/112/EC on the common system of value added tax (the ‘VAT Directive’) determines the EU legal framework. (2)

4.        Article 2(1)(a) of the VAT Directive provides:

‘The following transactions shall be subject to VAT:

(a)      the supply of goods for consideration within the territory of a Member State by a taxable person acting as such’.

5.        Article 9(1) of the VAT Directive provides:

‘“Taxable person” shall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity.

Any activity of producers, traders or persons supplying services, including mining and agricultural activities and activities of the professions, shall be regarded as “economic activity”. The exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis shall in particular be regarded as an economic activity.’

6.        Article 13(1) of the VAT Directive provides:

‘(1) States, regional and local government authorities and other bodies governed by public law shall not be regarded as taxable persons in respect of the activities or transactions in which they engage as public authorities, even where they collect dues, fees, contributions or payments in connection with those activities or transactions.

However, when they engage in such activities or transactions, they shall be regarded as taxable persons in respect of those activities or transactions where their treatment as non-taxable persons would lead to significant distortions of competition.

In any event, bodies governed by public law shall be regarded as taxable persons in respect of the activities listed in Annex I, provided that those activities are not carried out on such a small scale as to be negligible.’

7.        Article 14(1) and Article 14(2)(a) of the VAT Directive determine when there is a supply:

‘(1)      “Supply of goods” shall mean the transfer of the right to dispose of tangible property as owner.

(2)      In addition to the transaction referred to in paragraph 1, each of the following shall be regarded as a supply of goods:

(a)      the transfer, by order made by or in the name of a public authority or in pursuance of the law, of the ownership of property against payment of compensation’.

8.        Article 15(1) of the VAT Directive concerns the supply of electricity and clarifies:

‘Electricity, gas, heat, refrigeration and the like shall be treated as tangible property.’

B.      Belgian law

9.        The Belgian BTW-Wetboek (‘Belgian VAT Code’) has implemented the VAT Directive in Belgium. In addition, the Flemish Energiebesluit (‘Energy Decision’) contains regulations concerning the supply of energy and invoicing for such supply.

10.      Article 5.2.3(1) of the Energy Decision provides that a household customer whose contract is terminated by his energy supplier, e.g. for non-payment, and who does not enter into a new contract with another energy supplier, should be supplied by the distribution network operator.

11.      Specific provisions regulating the unlawful usage of energy, and compensation for it, have applied since 1 May 2018, following the amendment of the Energiedecreet (‘Energy Decree’) and the Energy Decision. These provisions are currently set out in Article 1.1.3(40)(1) read in conjunction with Article 5.1.2 of the Energy Decree and Article 4.1.2 of the Energy Decision.

12.      Article 1.1.3(40)(1) of the Energy Decree defines the term energy fraud as any unlawful act by a person, whether active or passive, which involves obtaining an undue advantage.

13.      Article 5.1.2 of the Energy Decree also stipulates that the relevant network user should bear the costs incurred by the network operator to undo the energy fraud as defined in Article 1.1.3(40)(1), the costs of disconnection, the regularisation of the connection or of the metering device, the reconnection, the unlawfully obtained advantage, the costs of the unlawfully obtained advantage and interest. It also stipulates that the network operator or its representative should claim the specified costs, together with the unlawfully obtained advantage and interest, directly from the network user.

14.       Article 4.1.2(1) of the Energy Decision prescribes how the undue advantage should be calculated, and which items the unlawfully obtained advantage includes. The unlawfully obtained advantage thus includes, inter alia, any costs that have been avoided for the energy supplied (Article 4.1.2(1), third paragraph, point 4 of the Energy Decision).

15.       Article 4.1.2(3) of the Energy Decision further provides that the compensation charged for the unlawfully obtained advantage should be determined in a precisely defined manner and should indeed include taxes, levies and VAT.

III. Facts of the case and reference for a preliminary ruling

16.      The natural person MX (‘the defendant’) was sued by the distribution network operator Fluvius Antwerpen (‘Fluvius’) for the payment of EUR 813.41 (including VAT) for electricity consumption during the period from 7 May 2017 to 7 August 2019.

17.      It appears from publicly available information on the internet that Fluvius, the distribution network operator, is a legal person which is governed by public law and, as an association of several municipalities, has been entrusted with tasks that are in the public interest. These include the management of distribution networks in respect of electricity and gas in accordance with the Flemish regulations. Fluvius, on the other hand, asserts that it is a civil entity, which the Kingdom of Belgium designates as a legal form sui generis.

18.      Fluvius charged the defendant the sum of EUR 813.41, which included EUR 131.45 in VAT, for its supply of electricity. That charge did not take place because Fluvius had supplied electricity to the defendant on the basis of its public service obligation under Article 5.2.3(1) of the Energy Decision. It occurred because the defendant took electricity at his residential address without having concluded a contract with a commercial energy supplier and without his contract having been terminated at that address by a (different) commercial energy supplier. The referring court considers that using electricity from the network, without concluding a commercial contract and notifying this to the distribution system operator, may be regarded as an unlawful act that involved obtaining an undue advantage and therefore constitutes energy fraud.

19.      The charge occurred after Fluvius had over time established the actual electricity usage (‘the unlawful usage’). Based on a comparison between the meter reading at the start of the unlawful usage and the meter reading at the end of the unlawful usage, it invoiced the sum of EUR 813.41, which included EUR 131.45 in VAT, for the usage over that period.

20.      Fluvius’s connection rules govern the invoiced period. However, those connection rules are silent as to the amount of compensation that should be charged in the event of unlawful usage and as to whether VAT should be levied on that compensation. They merely state, under the heading ‘Unlawful usage of energy and compensation for regularisation’, that the distribution network operator will charge the user for both registered and, if applicable, unregistered consumption which results from unlawful usage.

21.      Fluvius takes the view that the network operator can charge the user for usage, even if it takes place without a supply contract. Under the Belgian VAT Code, VAT should be charged on this unlawful usage. It provides namely that there is a supply subject to VAT if there is a transfer of the ownership of property against payment of a fee pursuant to an order made by or in the name of a public authority or, more generally, pursuant to a law, decree, ordinance, decision or administrative regulation.

22.      Prior to 1 May 2018, there was no regulatory text expressly stating whether or not VAT ought to be charged on the sum (which the referring court refers to as compensation) that was payable by a person who had taken energy unlawfully. Rules on this matter have applied since 1 May 2018, following the amendment of the Energy Decree and the Energy Decision, and these also provide for VAT to be charged. However, the referring court is unsure whether these provisions, which provide for VAT to be charged, are contrary to the VAT Directive.

23.      The Vredegerecht te Antwerpen (Magistrates’ Court of Antwerp, Belgium) has therefore decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

1.      Must Article 2(1)(a), read in conjunction with Article 14(1) of the VAT Directive, be interpreted as meaning that the unlawful usage of energy is a supply of goods, being the transfer of the right to dispose of tangible property as owner?

2.      If not, must Article 14(2)(a) of the VAT Directive be interpreted as meaning that the unlawful usage of energy is a supply of goods, being a transfer, by order made by or in the name of a public authority or pursuant to the law, of the ownership of property against payment of compensation?

3.      Must Article 9(1) of the VAT Directive be interpreted as meaning that, if Fluvius is entitled to compensation for unlawfully taken energy, it is to be regarded as a taxable person since the unlawful usage is the result of an ‘economic activity’ of Fluvius, namely the exploitation of tangible property for the purposes of obtaining income therefrom on a continuing basis?

4.      If Article 9(1) of the VAT Directive must be interpreted as meaning that the unlawful usage of energy constitutes an economic activity, must the first paragraph of Article 13(1) of the VAT Directive then be interpreted as meaning that Fluvius is a public authority and, if so, must the third paragraph of Article 13(1) then be interpreted as meaning that the unlawful usage of energy is the result of an activity of Fluvius that is not carried out on such a small scale as to be negligible?

24.      Fluvius, the Kingdom of Belgium and the European Commission submitted written observations in the proceedings before the Court. In accordance with Article 76(2) of the Rules of Procedure, the Court decided not to hold an oral hearing.

IV.    Legal assessment

25.      Through questions 1 and 2, the referring court seeks to ascertain, in essence, whether unlawful usage of electricity at the expense of the distribution network operator constitutes an assessable and taxable transaction for the purposes of VAT law. Article 15 of the VAT Directive provides that electricity should be treated as tangible property. Since the defendant consumed this property, it must be considered whether a supply in terms of Article 14(1) or (2) of the VAT Directive (see A.) existed. If there is an assessable and taxable supply of electricity, the referring court would also like to know whether Fluvius is thereby engaged in economic activity (see B.) and whether Article 13 of the VAT Directive might nevertheless exclude taxability (see C.).

A.      Unlawful usage of electricity as a supply under Article 14(1) or Article 14(2)(a) of the VAT Directive (Questions 1 and 2)

26.      The first two questions aim to establish whether and, if so, in accordance with which provision a supply of goods for consideration within the meaning of Article 2(1)(a) of the VAT Directive is present in this case. If the defendant had acted in accordance with the law, no one would doubt that an assessable and taxable supply of electricity (within the meaning of Article 15 of the VAT Directive) had taken place. The question only arises because the defendant took electricity without first concluding an electricity contract with an energy supplier and without the requirements for a statutory obligation relationship (such as a ‘basic supply’ by the distribution network operator) having been satisfied.

27.      Under Belgian law, the distribution network operator has therefore suffered ‘electricity theft’. It has, however, discovered the theft and now wants the ‘thief’ to pay for the electricity that he has taken. The applicable Belgian energy decision describes that as an undue advantage on the part of the relevant user (the ‘thief’), which can be charged for as compensation. In other Member States, one might speak of compensation for value or even damages.

28.      The requirements of Article 2(1)(a) and Article 14(1), read in conjunction with Article 15, of the VAT Directive have in fact all been satisfied. According to these provisions, the supply of goods carried out by a taxable person as such in the territory of a Member State for consideration is subject to VAT. The place of supply was Belgium, Fluvius was a distribution network operator that was subject to VAT (whether it also acted as such in this respect is discussed in response to the third question under B.), and Article 15 of the VAT Directive provides that electricity should be treated as tangible property.

29.      On withdrawal of the electricity, the right of disposal (within the meaning of Article 14 of the VAT Directive) was also transferred from Fluvius to the defendant, who then immediately consumed the electricity. Fluvius may not have agreed to this consumption but could not prevent it. It can therefore be said that Fluvius objectively – although perhaps unwillingly – supplied goods to the defendant. In return, the defendant must now pay a sum of money depending on the amount of electricity consumed, so that this supply also took place for consideration.

30.      Prima facie, the VAT Directive does not treat an illegal user of electricity (in this case the defendant) differently from a law-abiding user of electricity. Both have to pay a VAT-inclusive price (one in accordance with a contract, and the other by operation of law) for their objective consumption of electricity. Neither VAT law’s nature as a consumption tax nor the principles of neutrality or proportionality stand in the way of that result. On the contrary, the principle of neutrality requires that lawful and unlawful activities should be treated equally in principle. (3)

31.      Nevertheless, the referring court in Belgium apparently considers that the defendant’s illegal usage of electricity could constitute a non-taxable event. In that case, the defendant could not be charged for VAT under the VAT Directive. The crucial question is therefore whether an otherwise assessable and taxable supply of electricity should be treated as non-taxable solely because the consumer obtained the supplied goods (in this case, the electricity) for himself illegally, but is nevertheless obliged – not contractually, but by operation of law – to pay a comparable amount for the goods based on the amount he consumed.

1.      The taxation of illegal activities under VAT law

32.      To the best of my knowledge, the Court has not yet ruled on the question of the illegal procurement of a consumer good by the service recipient. However, there is well-established case-law on how to deal with the service supplier’s illegal activities in VAT law.

33.      According to that case-law, the principle of fiscal neutrality in the area of VAT collection precludes any general distinction between legal and illegal transactions. (4) According to the Court, a distinction is permitted only in cases in which, due to the special characteristics of particular goods, there is no possibility of competition between a legal and an illegal economic sector. (5)

34.      In any case, no such res extra commercium exception applies in the present case. Electricity is not a commodity whose marketing is prohibited because of its nature or its relevant characteristics. Consequently, legal and illegal supplies of electricity must be treated in the same way for VAT purposes.

35.      The case-law has so far only concerned illegal activities on the part of the service supplier. However, service recipients can also be engaged in business activities, and can therefore also be competitors. If they are not fully entitled to deduct input tax, not taxing their illegal activities would give them a competitive advantage and thereby violate the principle of fiscal neutrality. The illegal procurement of a consumer good by a service recipient should therefore be treated in the same way as if it had been procured legally.

2.      The nature of VAT as a general tax on consumption

36.      The fact that VAT is a general tax on consumption also supports the argument that legal and illegal use of electricity should be treated equally. It aims to tax a consumer’s financial capacity, which is reflected in his expenditure of wealth to procure a consumable benefit. (6) Illegally consumed electricity is such a consumable benefit. The ‘electricity thief’ must also expend money on it in such a case.

37.      If the financial expenditure incurred for an end user’s consumption of goods should generally be taxable, it is irrelevant whether the consumption took place illegally, without the service provider’s knowledge or even against its will, so long as money had to be expended for it.

38.      This approach can readily be inferred from the Court’s case-law. In some decisions, the Court has held that a supply of goods or services for consideration exists if there is a direct link between the service provided and the consideration received. (7) The key factor was whether the amount of the benefits was related to the amount of the consideration. (8) Since, in this case, the amount of electricity illegally taken (i.e. the value of the benefit) is directly related to the amount that Fluvius has claimed, the requirement for a supply of electricity by Fluvius to the defendant for consideration appears to be satisfied.

39.      The Court later placed more emphasis on a service only being provided ‘for consideration’ if there is a legal relationship between the service supplier and the service recipient. (9) However, this does not change anything, because the Court has so far left open what quality such a legal relationship should have. This question should be considered quite broadly in the context of a general tax on consumption. (10) It does not have to be a ‘normal’ contractual legal relationship, because even a so-called debt of honour could not prevent a link from arising between the service and consideration which is paid as a matter of ‘honour’. (11)

40.      Consequently, any legal relationship between the service supplier and the service recipient will suffice. This will generally be a contractual legal relationship, but it could be a statutory legal relationship. The decisive factor is the direct link between the monetary payment and a specific consumer good. (12) The Court therefore affirmed the existence of a service for consideration even if a ‘contractual penalty’ (corresponding to the price that would have been payable if there had been no termination) became payable due to a premature termination. (13) The same applied if a motorist used a parking space in breach of contract. (14)

41.      In the present case, there is likewise a direct link between the monetary payment and the consumption of the electricity that was taken. The Energy Decision, which regulates payment for this electricity, undoubtedly establishes a legal relationship, namely a statutory legal relationship between the distribution network operator (Fluvius) and the consumer (the defendant).

42.      Why an honest electricity consumer should be burdened with a tax that a dishonest (illegal) electricity consumer does not have to bear, despite a common market for these services existing and both spending money for the same consumable benefit, is also hard to reconcile with Article 20 of the Charter of Fundamental Rights of the European Union. There are no obvious factual grounds that would justify unequal treatment of this sort.

3.      Converse inference from Article 14(2)(a) of the VAT Directive

43.      That result is confirmed by a converse inference (argumentum e contrario) from Article 14(2)(a) of the VAT Directive. That provision makes it plain that a transfer of ownership of property (which is the prototype of a transfer of a right of disposal within the meaning of Article 14(1) of the VAT Directive) is regarded as a supply of goods, even if the transfer takes place by order of a public authority or pursuant to the law and compensation is payable for it.

44.      The requirements of Article 14(2)(a) of the VAT Directive have not been satisfied in this case – contrary to the Kingdom of Belgium’s submissions. Article 14(2)(a) of the VAT Directive assumes that the transfer of ownership of property takes place by order of a public authority or pursuant to the law. (15) The classic case in which Article 14(2)(a) of the VAT Directive would apply is therefore an expropriation against payment of compensation.

45.      In that case, however, the transfer of ownership of the property (in the present case, electricity) does not take place on the basis of an order of a public authority or pursuant to the law, but on the basis of the defendant taking the property illegally and immediately consuming it. Fluvius is only compelled as a matter of fact to tolerate this deprivation. The defendant, on the other hand, owes his payment pursuant to the law (in the present case, pursuant to the Energy Decision).

46.      However, Article 14(2)(a) of the VAT Directive is based on the view that it should make no difference whether a taxable person transfers a consumer good for consideration voluntarily or involuntarily. This view was even clearer in the Commission’s original proposal for a sixth directive, which still stated in Article 5(2) that a supply should be deemed to include: ‘(f) the transfer, by order made by or in the name of a public authority, of the ownership in property against payment of compensation, where the transfer of such property by private agreement would attract liability to the tax’. (16) That showed more clearly that the legislator’s key concern was that equivalent consumer supplies should be treated equally. Why or on what basis a consumer good is transferred against payment of consideration should be irrelevant.

47.      This view is still discernible in the wording of Article 14(2)(a) of the VAT Directive. In my opinion, it can also be readily applied to the present case. If the owner of the electricity (Fluvius) cannot prevent its ownership from being transferred as a result of illegal usage, but receives a consumption-based payment for it pursuant to the law, then that speaks in favour of a supply for consideration, which (although involuntary) is subject to VAT. That will apply in particular if the process would have been subject to VAT if the owner of the electricity had supplied it voluntarily (i.e. pursuant to a contract).

48.      If a transfer of ownership that takes place involuntarily because the law requires it constitutes a supply, that will apply a fortiori with a transfer of ownership that also takes place involuntarily when the law does not require the transfer but does impose an obligation to pay compensation. In each case, the owner has no choice but to accept its loss of ownership and receives remuneration or compensation for that loss from the recipient of the service (the consumer).

4.      Interim conclusion

49.      I am therefore of the opinion – together with the Commission – that the factual requirements of Article 14(1) of the VAT Directive have been satisfied. The effect of the electricity being taken was for Fluvius to make (or, more precisely, tolerate) a supply of electricity, which the law requires to be remunerated. This constitutes a supply for consideration.

50.      Article 2(1)(a) read in conjunction with Article 14(1) of the VAT Directive must therefore be interpreted as meaning that unlawful usage of electricity is a supply of goods for consideration, if the remuneration that is to be paid pursuant to law is structured to be as dependent on consumption as it would have been in the case of lawful usage. An energy consumer who is acting dishonestly cannot be treated more favourably for VAT purposes than one who is acting honestly.

B.      Supply that results from an unlawful usage of electricity constituting an economic activity of a distribution network operator such as Fluvius (Question 3)

51.      The referring court’s third question concerns Article 9(1) of the VAT Directive. In essence, the referring court wishes to know whether a distribution network operator, which does not normally act as an electricity supplier, should be treated as a taxable person with respect to the electricity that has been taken unlawfully.

52.      In essence, that raises the question of how to treat paid activities that are not part of a person’s actual main activities. That question arises more frequently for natural persons because it essentially concerns the demarcation between entrepreneurial activities (which are subject to VAT) and private activities (which are not subject to VAT). However, it seems improbable that a distribution network operator’s supply of electricity against payment should constitute a non-entrepreneurial (or even private) activity, since it would otherwise have to compensate for any missing electricity quantities at its own expense.

53.      In this case, the supply of electricity is directly related to the role of a distribution network operator. Belgian distribution network operators apparently have to compensate at their own expense for any electricity shortages that result from third parties using electricity illegally. Consequently, the law (in the present case the Energy Decision) already assigns this risk of making ‘unconscious’ supplies within the framework of statutory legal relationships to Fluvius’s economic activity, thus giving rise to an entrepreneurial risk that is inherent in Fluvius’s activity as a distribution network operator.

54.      Article 9(1) of the VAT Directive should therefore be interpreted as meaning that a distribution network operator’s supply of electricity also constitutes an economic activity on its part if and because doing so gives rise to a risk that is inherent in its economic activity as a distribution network operator.

C.      On the taxable status of a public distribution network operator under Article 13(1) of the VAT Directive (Question 4)

55.      The fourth question consists of two parts. The first part of the fourth question is whether ‘the first paragraph of Article 13(1) of the VAT Directive [must] then be interpreted as meaning that Fluvius is a public authority’ (meaning an ‘other body governed by public law’, since the term public authority is not used in some language versions of Article 13 and in any event not used in others to describe the status of the actor). This is a question concerning the assessment of the specific facts of the case, and only the referring court is competent to answer it.

56.      The Court has not been given sufficient factual information to answer a modified question as to whether a distribution network operator in Fluvius’s legal form should be regarded as an ‘other body governed by public law’. If Fluvius is, for example, a person governed by private law, as it submitted, then it cannot be an ‘other body governed by public law’.

57.      It is difficult to reconcile the wording of the VAT Directive with an interpretation of the term ‘body governed by public law’ in the sense of a ‘body governed by private law’, all the more so if Article 13(1) of the VAT Directive should indeed be ‘interpreted strictly’. (17) It is true that, in the Saudaçor case, the Court considered it possible for a limited company that was organised under private law to be considered an ‘other body governed by public law’ under certain circumstances. (18) However, the Court expressed the requirements therefor (integration into the public administration, exercise of official authority, and sovereign powers) (19) in such a way that they could never actually exist as regards a limited company organised under private law.

58.      However, it appears from publicly available information on the internet that Fluvius, the distribution network operator, is a legal person which is governed by public law and, as an association of several municipalities, has been entrusted with tasks that are in the public interest. In that case, one can certainly speak of an ‘other body governed by public law’ and the first part of the referring court’s fourth question is unclear.

59.      In the second part of the fourth question, the referring court requests an interpretation of the third subparagraph of Article 13(1) of the VAT Directive. This provides that bodies governed by public law should be regarded as taxable persons in respect of the activities listed in Annex I (and the supply of electricity is one of them – see point 2), even if they are carrying out activities that they are responsible for within the framework of public authority. That applies even if the treatment of those activities as non-taxable transactions would not lead to significant distortions of competition (second subparagraph). However, the third subparagraph contains an exception to this general principle of taxability: ‘provided that those activities are not carried out on such a small scale as to be negligible’. The referring court has requested an interpretation of this exception.

60.      It appears to start from the false premiss that transactions should be regarded as non-taxable per se if they result from activities listed in Annex I that are carried out on such a small scale as to be negligible. However, the provision contained in the third subparagraph of Article 13(1) of the VAT Directive only applies if the requirements of Article 13(1) have been satisfied. It is only intended to ensure that bodies that are governed by public law and carry out the typical consumer supply activities listed in Annex I are treated as taxable persons per se, even if they are acting in this respect within the framework of public authority. Accordingly, if the requirements of Article 13(1) (activities within the framework of public authority) or its second subparagraph (no significant distortions of competition) of the VAT Directive have not been satisfied, the third subparagraph and its exemption of negligible activities are irrelevant.

61.      However, the referring court did not explain why Fluvius’s supply of electricity (which is covered by point 2 of Annex I) in its capacity as a distribution network operator constituted an activity that Fluvius was responsible for within the framework of public authority (Article 13(1) of the VAT Directive). The fact that Fluvius has had to sue before a civil court for payment for its supplies of electricity suggests that this was not the case. It is also impossible for the Court to assess whether treating those supplies as non-taxable would lead to significant distortions of competition (Article 13(1), second subparagraph of the VAT Directive). That would probably depend on the volume of the electricity supplies, which the referring court has also not communicated. The figures that Fluvius has provided somewhat indicate a distortion of competition.

62.      If the referring court nevertheless concludes that the supply of electricity in the context of unlawful usage is an activity that Fluvius is responsible for within the framework of public authority, the third subparagraph will indeed be applicable even if not taxing Fluvius would not lead to significant distortions of competition. Fluvius would then have to be regarded as a taxable person because its electricity supplies were covered by Annex I, unless those activities were carried out on such a small scale as to be negligible. But even then, the exception in the third subparagraph would not, in my view, apply in this case.

63.      As I have already explained elsewhere, (20) Article 13 of the VAT Directive is based on the premiss that activities in which the State engages as a public authority in the role of tax creditor do not need to be taxed again in order to maintain competitive neutrality. (21) Such ‘official activities’ are generally not economic activities within the meaning of Article 9 of the VAT Directive, according to the required typological approach.

64.      If they are, Article 13(1) of the Directive prevents, in certain circumstances and in terms of a simplification rule, tax obligations (including deduction, recording and declaration obligations) from arising for the State. Consequently, ‘negligible activities’ within the meaning of the third subparagraph can only be present if the simplification approach is still relevant. That assumes that the body governed by public law would now become subject to special deduction, recording and declaration obligations solely because of its negligible activities listed in Annex I.

65.      That is not the case here because Fluvius is already a taxable person due to its activity as a distribution network operator. The taxability of electricity supplies caused by unlawful usage does not result in any additional obligations that should be avoided by applying a simplification rule. Such a restrictive approach is in line with the Court’s case-law, which requires Article 13(1) of the VAT Directive to be interpreted strictly. (22)

V.      Conclusion

66.      I therefore propose that the Court reply as follows to the questions that the Vredegerecht te Antwerpen (Magistrates’ Court of Antwerp, Belgium) has referred for a preliminary ruling:

1.      Article 2(1)(a) read in conjunction with Article 14(1) of the VAT Directive must be interpreted as meaning that unlawful usage of energy is a supply of goods for consideration, if the remuneration that is payable pursuant to law is dependent on consumption.

2.      Article 9(1) of the VAT Directive must be interpreted as meaning that, if a distribution network operator additionally supplies electricity, that can also be regarded as an economic activity on its part. That is the case if the supply, for example due to illegal electricity usage, constitutes a risk inherent in its economic activity as a distribution network operator.

3.      Negligible activities within the meaning of the third subparagraph of Article 13(1) of the VAT Directive can only be present if the body governed by public law should not be regarded as a taxable person on the basis of other activities.

1      Original language: German.

2      Council Directive of 28 November 2006 (OJ 2006 L 347, p. 1) in the version in force during the relevant years (May 2017 to August 2019).

3      J. Kokott, EU Tax Law, 2022, p. 127; paragraph 3 marginal numbers 33 et seq. and 36 et seq. with further references.

4      See only judgments of 10 November 2011, Rank Group (C‑259/10 and C‑260/10, EU:C:2011:719, paragraph 45); of 6 July 2006, Kittel and Recolta Recycling (C‑439/04 and C‑440/04, EU:C:2006:446, paragraph 50); and of 29 June 1999, Coffeeshop ‘Siberië’ (C‑158/98, EU:C:1999:334, paragraphs 14 and 21).

5      This applies, for example, to narcotic drugs and counterfeit currency. See judgments of 29 June 1999, Coffeeshop ‘Siberië’ (C‑158/98, EU:C:1999:334, paragraph 21); 11 June 1998, Fischer (C‑283/95, EU:C:1998:276, paragraph 21); of 28 May 1998, Goodwin and Unstead (C‑3/97, EU:C:1998:263, paragraph 9); and of 2 August 1993, Lange (C‑111/92, EU:C:1993:345, paragraph 16); of 6 December 1990, Witzemann (C‑343/89, EU:C:1990:445, paragraph 19); and of 5 July 1988, Vereniging Happy Family Rustenburgerstraat (289/86, EU:C:1988:360, paragraph 20). See, however, the Swiss Federal Administrative Court, judgment of 3 May 2007 – A-1342/2006, BVGE-2007-23, paragraph 5.5.1 et seq. (on narcotic drugs), for example.

6      See for example: judgments of 3 May 2012, Lebara (C‑520/10, EU:C:2012:264, paragraph 23); of 11 October 2007, KÖGÁZ and Others (C‑283/06 and C‑312/06, EU:C:2007:598, paragraph 37 – ‘it is proportional to the price charged by the taxable person in return for the goods and services which he has supplied’); and of 18 December 1997, Landboden-Agrardienste (C‑384/95, EU:C:1997:627, paragraphs 20 and 23 – ‘Only the nature of the undertaking given is to be taken into consideration: for such an undertaking to be covered by the common system of VAT it must imply consumption’).

7      Judgment of 8 March 1988, Apple and Pear Development Council (C‑102/86, EU:C:1988:120, paragraph 12). Likewise judgments of 29 July 2010, Astra Zeneca UK (C‑40/09, EU:C:2010:450, paragraph 27 with further references) and of 16 October 1997, Fillibeck (C‑258/95, EU:C:1997:491, paragraph 12).

8      Judgment of 8 March 1988, Apple and Pear Development Council (C‑102/86, EU:C:1988:120, paragraph 15). See also judgment of 16 October 1997, Fillibeck (C‑258/95, EU:C:1997:491, paragraph 16).

9      Judgment of 3 March 1994, Tolsma (C‑16/93, EU:C:1994:80, paragraph 14). Likewise judgments of 2 May 2019, Budimex (C‑224/18, EU:C:2019:347, paragraph 30), and of 11 May 2017, Posnania Investment (C‑36/16, EU:C:2017:361, paragraph 31).

10      For a broad understanding, see also my Opinion in the case of MEO – Serviços de Comunicações e Multimédia (C‑295/17, EU:C:2018:413, points 34 et seq.).

11      Judgment of 17 September 2002, Town & County Factors (C‑498/99, EU:C:2002:494, paragraph 16 et seq.).

12      To that effect also, see judgment of 20 January 2022, Apcoa Parking Danmark (C‑90/20, EU:C:2022:37, paragraph 37 et seq.).

13      Judgment of 22 November 2018, MEO – Serviços de Comunicações e Multimédia (C‑295/17, EU:C:2018:942, paragraph 41 et seq.).

14      Judgment of 20 January 2022, Apcoa Parking Danmark (C‑90/20, EU:C:2022:37, paragraphs 33 and 34).

15      Judgments of 25 February 2021, Gmina Wrocław (Transformation of the right of usufruct) (C‑604/19, EU:C:2021:132, paragraph 56), and of 13 June 2018, Gmina Wrocław (C‑665/16, EU:C:2018:431, paragraph 37).

16      Commission proposal for a sixth directive on the harmonization of legislation of Member States concerning turnover taxes, COM(73) 950 of 20 June 1973.

17      Judgments of 25 February 2021, Gmina Wrocław (Transformation of the right of usufruct) (C‑604/19, EU:C:2021:132, paragraph 77); of 22 February 2018, Nagyszénás Településszolgáltatási Nonprofit Kft. (C‑182/17, EU:C:2018:91, paragraph 54); of 29 October 2015, Saudaçor (C‑174/14, EU:C:2015:733, paragraph 49); and of 16 September 2008, Isle of Wight Council and Others (C‑288/07, EU:C:2008:505, paragraph 60).

18      Judgment of 29 October 2015, Saudaçor (C‑174/14, EU:C:2015:733, paragraphs 61 and 68).

19      Judgment of 29 October 2015, Saudaçor (C‑174/14, EU:C:2015:733, paragraphs 56 et seq.).

20      See my Opinion in the case of Gmina O. (C‑612/21, EU:C:2022:874, point 62).

21      See, on the issue of ‘self-taxation by the State’, my Opinion in the case of Gemeente Borsele und Staatssecretaris van Financiën (C‑520/14, EU:C:2015:855, points 23 et seq.).

22      Judgments of 25 February 2021, Gmina Wrocław (Transformation of the right of usufruct) (C‑604/19, EU:C:2021:132, paragraph 77); of 22 February 2018, Nagyszénás Településszolgáltatási Nonprofit Kft. (C‑182/17, EU:C:2018:91, paragraph 54); of 29 October 2015, Saudaçor (C‑174/14, EU:C:2015:733, paragraph 49); and of 16 September 2008, Isle of Wight Council and Others (C‑288/07, EU:C:2008:505, paragraph 60).

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