1. Group Members: Tawiah Samuel: 0235222 Dodou Jammeh: 0232916
Case c-219/12
Group Members:
Tawiah Samuel:
Dodou Jammeh:

2. Facts of the case
(VAT- Definition of “economic activity- photovoltaic system installed on the roof of a private household- Electricity sold to a provider who supplies the household’s electricity need)
- A householder has installed a photovoltaic (solar Panel) system which produces electricity but has no storage capacity. Its annual production is less than the household’s annual consumption. The household has a contract with an electricity provider under which he sells electricity to that provider, who also supplies electricity to the household. Since he considers that his sale of electricity constitutes an economic activity, the householder seeks to recover the input value added tax(VAT) paid on his system and its installation.

3. Relevant provisions of Austrian Law
In Austrian law, paragraph 2(1) of the 1994 law on turnover tax( Umsatzsteuergesetz 1994, BGBI. 663/1994).
Under that system, A trader is any person who independently carries out a commercial or professional activity. Commercial or professional activity mean any sustained activity carried out of the purpose of obtaining income, even where there is no intention to make profit or an association carries out its activities only in relation to its members.
In that case, the householder activity is regarded as commercial or professional activity.

4. The sixth vat directive
The Solar panels in question were installed in 2005, when the relevant European Union(EU) legislation was the sixth VAT directive.
The following provisions in particular are relevant:
Under Article 2, the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such is subject to VAT
Article 4(1) defines a taxable person as any person who independently carries out in any place.
Article 4(2) economic activities of producers, traders and persons supplying including mining and agricultural activities and activities of professions.
Under article 5(1), a supply of goods is a transfer of the right to dispose of tangible property as owner.

5. The case was brought up to the Austrian( independent finance tribunal, Linz district
The consideration for that supply is the market price; it is then subjected to VAT. Such electricity as is necessary to meet Mr. Fuchs’s household needs is bought back from Ökostrom Solarpartner at the same price as Mr. Fuchs charges for supplying the electricity produced by his photovoltaic installation to the network. Mr. Fuchs applied to the competent tax authority – the Finanzamt Freistadt Rohrbach Urfahr (Freistadt Rohrbach Urfahr Tax Office) (Austria) – for reimbursement of VAT which he had paid when purchasing the photovoltaic installation. The Finanzamt refused to reimburse Mr. Fuchs’s input tax on the ground that he had not carried out any economic activity by operating his photovoltaic installation. Mr. Fuchs therefore brought an appeal before the Unabhängiger Finanzsenat Außenstelle Linz (Independent Finance Tribunal, Linz District); that appeal was upheld.

6. Appealed to by the finanzamt
Which in turn, asks, whether, under EU law , the operation of a photovoltaic installation on or adjacent to a privately-owned house used for private residential purposes, which is designed such that the electricity produced is (i) always less than the electricity privately consumed by its operator and (ii) supplied to the network in exchange for income on a continuing basis, falls within the concept of ‘economic activities’.

7. After the Austrian tax office involved has appealed against this decision, the Austrian administrative high court (vwgh) applied to the cjeu for a preliminary ruling
The Austrian Administrative court submitted the following questions to the CJEU:
- Is the operation of a network- connected photovoltaic installation with no independent power storage capability or adjacent to a privately-owned house used for private residential purposes, which is technically designed such that the power generated by the installation is, on a continuing basis, below the total quantity of power privately consumed by the installation operator in the privately- owned house, an “ economic activity” of installation operator with the meaning of Article 4 of the Sixth Directive…?

8. The cjeu’s decision
The Court notes that the operation of a photovoltaic installation constitutes an ‘economic activity’ if it is carried out for the purpose of obtaining income on a continuing basis: the concept of ‘income’ must be understood as meaning remuneration received as consideration for the activity carried out. It follows that, for a finding that the exploitation of property is carried out for the purpose of obtaining income therefrom, it is irrelevant whether or not that exploitation is intended to make a profit. Given that the installation on the roof of Mr. Fuchs’s house produces electricity which is fed into the network in return for remuneration, Mr. Fuchs’s exploitation of that installation is carried out for the purpose of obtaining income therefrom. By the same token, as the supply of electricity to the network is being carried out on the basis of a contract concluded for an indefinite duration, that income is obtained on a continuing basis. In view of those considerations, it is irrelevant that the amount of electricity produced by that installation is always lower than the amount of electricity consumed by the operator in meeting his household needs. The Court also makes reference to the fact that, according to the structure of the VAT system, input VAT on goods or services used by a taxable person for his taxable transactions may be deducted. The deduction of input taxes is linked to the collection of output taxes. Where goods or services are used for the purposes of transactions that are taxable as outputs, deduction of the input tax on them is required in order to avoid double taxation. In order to be classified as a ‘taxable person’, the person concerned must carry out some form of ‘economic activity’.

9. The impact
On the basis of the decision of the CJEU, thus, the specific facts as defined by the court really determined the outcome of the case, Fuchs nevertheless implies that when an individual sets up a production facility, even where the purpose is only to meet his own private consumption needs, in so far as agreements made concerning the production facility entail supplies for consideration on a continuous basis to a third party, the activity is an “economic activity”. The purpose is always to obtain income when the arrangement are as they were in Fuchs. The effect of this will be that input VAT is deductible upon purchase of the production facilities and that VAT will be charged on supplies made to third parties and on any self- supplies made.

10. Article 267 tfeu
The Court of Justice of the European Union shall have jurisdiction to give preliminary rulings concerning:
(a) the interpretation of the Treaties;
(b) the validity and interpretation of acts of the institutions, bodies, offices or agencies of the Union;
Where such a question is raised before any court or tribunal of a Member State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court to give a ruling thereon.
Where any such question is raised in a case pending before a court or tribunal of a Member State against whose decisions there is no judicial remedy under national law, that court or tribunal shall bring the matter before the Court.
If such a question is raised in a case pending before a court or tribunal of a Member State with regard to a person in custody, the Court of Justice of the European Union shall act with the minimum of delay.

11. Thank you for your attention