Brussels, 08/03/2012 (Agence Europe) - France has incorrectly applied the directive on the common VAT system on certain operations involving equidae, particularly horses. These are not as a matter of course intended for use in the preparation of foodstuffs or in agricultural production. The European Court of Justice made the statement in a ruling on Thursday 8 March (C-596/10).
The Court of Justice was called on to rectify the lack of compliance with the 2006/112/EEC directive on VAT, introduced by the European Commission on 16 December 2010. The latter criticised France: - for applying reduced VAT rates of 5.5% on equidae, particularly horses, when these are not supposed to be used other than in the preparation of foodstuffs. According to the Commission, these operations are not eligible for exceptions stipulated in the VAT directive; - for applying a rate of 2.1% (a rate less than the 5% minimum set out in the directive) on sales to people, not subject to VAT, of living animals that are not used in butchery or pork butchers, particularly racing horses or those used for competitions, pleasure or riding.
The Court of Justice looked at both complaints. With regard to the first, it indicated that the authorisation of reduced VAT rates in any operation linked to horses, particularly those used for racing and activities at equestrian centres (competition, sport, leisure and tourism), implied a broad interpretation of the derogation included in the above-mentioned directive, which would be contrary to case law. Subsequently, the directive does not authorise the application of reduced VAT rates for living animals “normally” used in the preparation of foodstuffs or in agricultural production (harvests, forestry or fishing, riding or services to constitute farm supplies or inputs for breeding horses, including racehorses). With regard to the second complaint, the Court of Justice confirms that the French administrative practice consists of applying a reduced VAT rate (2.10%) on sales to people not subject to VAT for animals that are not used by butchers or pork butchers (particularly race horses and those used for pleasure or riding), which does not comply to the directive. (FG/transl.fl)