On July 28, 2016 the Court of Justice of the European Union (CJEU) judged in Case C-543/14 Ordre des barreaux francophones et germanophone and Others, Jimmy Tessens and Others, Orde van Vlaamse Balies, Ordre des avocats du barreau d’Arlon and Others versus Conseil des ministres, (intervening parties: Association Syndicale des Magistrats ASBL, Council of Bars and Law Societies of Europe) (ECLI:EU:C:2016:605).
This request for a preliminary ruling concerns the interpretation and the validity of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1).
The request has been made in proceedings between the Ordre des barreaux francophones et germanophone (Council of French- and German-language Bars), Mr Jimmy Tessens, Orde van Vlaamse Balies (Council of Flemish Bars), Ordre des avocats du barreau d’Arlon (the Arlon Bar) and natural or legal persons, on the one hand, and the Conseil des ministres (the Belgian Council of Ministers), on the other hand, concerning an application for annulment of Article 60 of the loi du 30 juillet 2013 portant des dispositions diverses (Law of 30 July 2013 enacting various provisions) (Moniteur belge of 1 August 2013, p. 48270, ‘Law of 30 July 2013’), by which the value added tax (VAT) exemption for the supply of services by lawyers in the exercise of their regular activity was ended.
The dispute in the main proceedings and the questions referred for a preliminary ruling
· In the main proceedings, a number of actions were brought before the Cour constitutionnelle (Constitutional Court, Belgium) seeking annulment of Article 60 of the Law of 30 July 2013. That provision ended, with effect from 1 January 2014, the VAT exemption on services supplied by lawyers, which Belgium had maintained on the basis of the transitional provision of Article 371 of Directive 2006/112.
· The statutory rate of VAT on services supplied by lawyers is 21% in Belgium.
· The referring court asks whether imposing VAT on services supplied by lawyers and the increase in costs for those services which results from the charging of VAT are compatible with the right to an effective remedy and in particular the right to the assistance of a lawyer. In addition, it asks whether the legislation at issue in the main proceedings complies with the principle of equality of arms, since that cost increase impacts only clients who are not taxable persons and who do not qualify for legal aid, while taxable clients have the possibility of deducting input VAT for those services.
· In those circumstances, the Cour constitutionnelle (Constitutional Court) decided to stay the proceedings and refer the following questions to the Court for a preliminary ruling:
(1)
(a) By making services supplied by lawyers subject to VAT without taking account, having regard to the right to the assistance of a lawyer and the principle of equality of arms, of whether or not a client who does not qualify for legal aid is subject to VAT, is Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax compatible with Article 47 of the Charter of Fundamental Rights of the European Union in conjunction with Article 14 of the International Covenant on Civil and Political Rights and with Article 6 of the European Convention on Human Rights, in so far as that article recognises that everyone is entitled to a fair hearing and has the possibility of being advised, defended and represented and that there is a right to legal aid for those who lack sufficient resources in so far as such aid is necessary to ensure effective access to justice?
(b) For the same reasons, is Directive 2006/112 compatible with Article 9(4) and (5) of the Aarhus Convention in so far as those provisions establish a right of access to justice without the cost of those procedures being prohibitively expensive through “the establishment of appropriate assistance mechanisms to remove or reduce financial and other barriers to access to justice”?
(c) May services provided by lawyers under a national legal aid scheme be included in the services referred to in Article 132(1)(g) of Directive 2006/112 which are closely linked to welfare and social security work, or may they be exempted under another provision of that directive? If that question is answered in the negative, is Directive 2006/112, interpreted as not permitting a VAT exemption for services supplied by lawyers for clients who qualify for legal aid under a national legal aid scheme, compatible with Article 47 of the Charter of Fundamental Rights of the European Union in conjunction with Article 14 of the ICCPR and with Article 6 of the ECHR?
(2) If the questions mentioned in paragraph 1 are answered in the negative, is Article 98 of Directive 2006/112, in so far as it does not provide for the possibility of applying a reduced rate of VAT to services supplied by lawyers, as the case may be depending on whether or not a client who does not qualify for legal aid is subject to VAT, compatible with Article 47 of the Charter of Fundamental Rights of the European Union in conjunction with Article 14 of the ICCPR and with Article 6 of the ECHR, in so far as that article recognises that everyone is entitled to a fair hearing and has the possibility of being advised, defended and represented and that there is a right to legal aid for those who lack sufficient resources in so far as such aid is necessary to ensure effective access to justice?
(3) If the questions mentioned in paragraph 1 are answered in the negative, is Article 132 of Directive 2006/112 compatible with the principle of equality and non-discrimination enshrined in Articles 20 and 21 of the Charter of Fundamental Rights of the European Union and Article 9 TEU, in conjunction with Article 47 of that charter, in so far as it does not provide, among activities in the public interest, for VAT exemption for services of lawyers, when other supplies of services are exempted as activities in the public interest, such as the supply of services by the public postal services, various medical services or services connected with education, sport or culture, and when that difference in treatment between services of lawyers and services exempted by Article 132 of that directive raises sufficient doubts because services of lawyers contribute to respect for certain fundamental rights?
(4)
(a) If the questions mentioned in paragraphs 1 and 3 are answered in the negative, can Article 371 of Directive 2006/112 be interpreted, in accordance with Article 47 of the Charter of Fundamental Rights of the European Union, as authorising a Member State of the European Union partially to maintain the exemption for services supplied by lawyers where those services are performed for clients who are not subject to VAT?
(b) Can Article 371 of Directive 2006/112 also be interpreted, in accordance with Article 47 of the Charter of Fundamental Rights of the European Union, as authorising a Member State of the European Union partially to maintain the exemption for services supplied by lawyers where those services are performed for clients who qualify for legal aid under a national legal aid scheme?
The CJEU judged as follows:
1. The examination of Article 1(2) and Article 2(1)(c) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, in the light of the right to an effective remedy and the principle of equality of arms under Article 47 of the Charter of Fundamental Rights of the European Union has not revealed anything which might affect their validity in so far as those provisions impose VAT on services supplied by lawyers to clients who do not qualify for legal aid under a national legal aid scheme.
2. Article 9(4) and (5) of the Convention on access to information, public participation in decision-making and access to justice in environmental matters, signed at Aarhus on 25 June 1998, cannot be relied on for the purposes of assessing the validity of Article 1(2) and Article 2(1)(c) of Directive 2006/112.
3. Article 132(1)(g) of Directive 2006/112 must be interpreted as meaning that the services supplied by lawyers for clients who qualify for legal aid under a national legal aid scheme, such as that at issue in the main proceedings, are not exempt from VAT.
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