Austria - Austria to amend reduced VAT rate
ECJ: Austria to amend reduced VAT rate to the supply, importations and intra-Community acquisitions of horses.
On 12 May 2011, the Court of Justice of the European Union (ECJ) gave its decision in Commission v. Austria (Case C-441/09). The case was referred to the ECJ by the European Commission on 11 November 2009. There was no opinion of the Advocate General in the case.
Decision: The Court first observed that point 1 of Annex III to the EU VAT Directive provides that a lower VAT rate only may be used in respect of live animals "normally" intended for use in the preparation of foodstuffs.
The Court noted that by using of the adverb "normally" in the second part of the phrase in point 1 of Annex III, the EU legislature intended to refer to animals which, usually and in general, are intended to enter the human and animal food chain. This is usually and generally not the case for horses. Consequently, only the supply of a horse for slaughter to be used in the preparation of foodstuffs may be subject to a reduced VAT rate. This means that point 1 of Annex III of the EU VAT Directive does not allow a Member State to apply a reduced VAT rate to all supplies of live horses, whatever their intended use.
Consequently, the Court held that by applying a reduced VAT rate to all supplies, imports and intra-Community acquisitions of horses, Austria has failed to fulfil its obligations under Arts. 96 and 98 in conjunction with Annex III of the EU VAT Directive.
Note: On 3 March 2011 the ECJ decided the same with respect to the Netherlands.
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