Decision of the Conseil d’Etat dated June 24, 2015 “Center Parcs”, or the summary of the EC case law in relation to complex provisions.

January 8th 2016

The company Center Parcs requested, through a litigation claim, the reimbursement of the difference in VAT between the standard rate and the reduced rate on the prices of stays paid for and including the access to certain “Acqua Mundo” aquatic centers of the residences which it manages.

The Conseil d’Etat has approved the company’s claim by considering that such an access constitutes a provision that is complementary to the accommodation service invoiced in principal and must benefit in this regard from the same VAT rate, i.e., the reduced rate provided in Article 279 of the French General Tax Code.

Going beyond this given solution, this ruling provides a summary of the case law of the ECJ and recalls in clear terms, the analysis grid that must be followed when faced with an economic operation referred to as “complex” and comprised of several elements.

The Supreme Court has initially specified, following the interpretation of the ECJ, the general context of the appreciation to operate in the presence of an economic operation comprised of multiple elements and events.

Therefore, all the circumstances must be taken into account in which the operation takes place in order to determine whether faced with several separate provisions or consignments or a sole complex provision or consignment.

Then, the Conseil d’Etat has recalled the two leading guidelines drawn from the European case law on the basis of the VAT directive: on the one hand, that each provision or consignment must, in principle, be considered as separate and independent and, on the other hand, that the operation comprised of only one provision from an economic standpoint must not, however, be superficially decomposed, in order not to alter the functioning of the value added tax system.

In application of these principles, it shall be necessary to find out whether, in certain circumstances, several operations that are expressly separate, and which could be provided and taxed separately, must be considered as a sole operation when they are not independent.

At this stage of the analysis, two situations may arise depending on the circumstances in which the envisaged economic operation takes place:

  • within the characteristics of the operation in question, certain elements constitute the principal provision, whereas the others, insofar as they do not constitute for the clients a solution per se, but the means to benefit, in the best conditions, from the principal provision, must be considered as ancillary provisions that share the latter’s tax solution;
  • several elements provided by the taxpayer to the consumer, considered as an average consumer, are so closely related that they form, objectively, one sole and inseparable economic operation, that the tax solution of the latter shall be defined by that of the predominant provision in this operation.

In its decision “Center Parcs”, the Conseil d’Etat makes an objective appreciation of the events and retains the existence of an ancillary provision sharing the tax solution of the principal accommodation provision.

To do so, the Conseil d‘Etat makes reference, in particular, to the circumstance that the price of the stay includes the access to the aquatic center without the clients having the option to refuse this provision, that the aquatic facilities only contribute for up to 10 % of the accommodation cost price and only meets a minor part of the activities offered amongst the sixty possible activities in each domain, and that the access to the aquatic center is never guaranteed given its limited accommodation capacities.

Consequently, the access to the “Acqua Mundo” center shall not constitute essential criteria for the choice to stay in a Center Parcs domain, and must be considered as constituting for the accommodated clientele, not a solution per se, but the means to benefit, in the best conditions, from the principal accommodation provision.

The taxpayers may assert this decision to assess whether, amongst the economic operations in which they are involved, they could benefit from a more favorable VAT rate or even an exemption from VAT.

Clément Resta

Link to the decision Conseil d’Etat, June 24, 2015 no.365849 8th and 3rd s.-s., Sté Center Parcs Resorts France