«(Failure of a Member State to fulfil obligations – Sixth VAT Directive – Article 12(3)(a) and (b) – Supplies of gas and electricity delivered by the public networks – Standing charge for supply networks – Reduced rate)»

Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Member States' option to apply a reduced rate to certain supplies of goods and services – Supply of natural gas and electricity – Selective application of the reduced rate to a particular aspect of the supply – Whether permissible (Council Directive 77/388, Art. 12(3)(b)) There is nothing in the text of Article 12(3)(b) of the Sixth Directive 77/388, as amended by Directive 96/95, which permits the charging of a reduced rate of value added tax on supplies of natural gas and electricity, which requires that provision to be interpreted as requiring that the reduced rate can only be charged if it is applied to all supplies of natural gas and electricity. A selective application of the reduced rate to concrete and specific aspects, such as the standing charge conferring entitlement to a minimum quantity of electricity for account holders, cannot be excluded, provided that no risk of distortion of competition exists.see paras 24, 26-28

JUDGMENT OF THE COURT (Fifth Chamber) 8 May 2003 (1)

((Failure of a State to fulfil obligations – Sixth VAT Directive – Article 12(3)(a) and (b) – Supplies of gas and electricity delivered by the public networks – Standing charge for supply networks – Reduced rate))

In Case C-384/01,

applicant,

v

defendant,

APPLICATION for a declaration that, by applying a reduced rate of value added tax to the fixed part of the prices for gas and electricity supplied by the public networks, the French Republic has failed to fulfil its obligations under Article 12(3)(a) and (b) of Sixth Council Directive 77/388/EC 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), as amended by Council Directive 96/95/EC of 20 December 1996 amending, with regard to the level of the standard rate of value added tax, Directive 77/388/EEC (OJ 1996 L 338, p. 89),

THE COURT (Fifth Chamber),,

composed of: M. Wathelet, President of the Chamber, D.A.O. Edward (Rapporteur), A. La Pergola, P. Jann and A. Rosas, Judges,

Advocate General: S. Alber,

having regard to the report of the Judge-Rapporteur,

after hearing the Opinion of the Advocate General at the sitting on 10 October 2002,

gives the following

Classification of the standing charge as a supply

The principle of neutrality

The procedure laid down by Article 12(3)(b) of the Sixth Directive

On those grounds,

THE COURT (Fifth Chamber)

hereby:

Wathelet

Edward

La Pergola

Jann

Rosas

Delivered in open court in Luxembourg on 8 May 2003.

R. Grass

M. Wathelet

Registrar

President of the Fifth Chamber