The European Court of Justice (Third Chamber) ruled that art. 13(A)(1)(e) of Council Directive 77/388 (‘the sixth directive’) did not apply to supplies of dental prostheses effected by an intermediary who did not have the status of dentist or dental technician, but had acquired such prostheses from a dental technician.

Facts

The taxpayer was an undertaking established in the Netherlands and was engaged in having dental fittings such as crowns, inlays and bridges manufactured to order for dentists established in the Netherlands, other member states and non-member countries. After ascertaining whether the dental plaster casts supplied by the dentists were usable for the purposes of making a dental prosthesis, the taxpayer sent those plaster casts to a laboratory (usually established outside the Community) and requested that a dental prosthesis be manufactured on the basis thereof. When that prosthesis was finished, the laboratory supplied it to the taxpayer which paid remuneration for it to the laboratory and, where necessary, had it imported into the Community. The taxpayer then supplied the prosthesis, in return for payment, to the dentist who ordered it. The taxpayer did not employ any dental technicians or dentists.

In its VAT declarations for the period 1 January 1996 to 31 December 1998, the taxpayer took the view that the supplies it made to dentists based in the Netherlands were exempt from VAT and consequently, it did not deduct the input VAT in respect of such supplies, with the exception of the input VAT relating to supplies made to dentists based outside the Netherlands.

Issue

Whether, under art. 13(A)(1)(e) of the sixth directive, dental prostheses supplied by a taxable person who contracted out the manufacture thereof to a dental technician were covered by the notion of ‘dental prostheses supplied by dental technicians’.

Decision

The European Court of Justice (Third Chamber) (ruling accordingly) said that art. 13(A)(1)(e) provided for the exemption of ‘dental prostheses supplied by dentists and dental technicians’. Like most of the exemptions provided for in art. 13(A) and unlike several of those provided for in art. 13(B), that exemption was thus not only defined according to the nature of the goods supplied, but also according to the status of the supplier. It was clear from the wording of art. 13(A)(1)(e) that that provision did not exempt from VAT all supplies of dental prostheses, but only those which were made by the members of two particular professions, namely those of ‘dentist’ and ‘dental technician’. Consequently, supplies of dental prostheses made by an intermediary who did not have the status of dentist or dental technician could not be covered by the exemption provided for in that provision.

Therefore, the exemption in the present case under the national law was inconsistent with the wording of the corresponding provisions of the sixth directive. The broad interpretation advocated in that respect by the Netherlands government was at variance with Community law according to which the exemptions provided for in art. 13, and in particular the terms ‘dentists’ and ‘dental technicians’, were to be strictly interpreted.

European Court of Justice (Third Chamber).
Judgment delivered 14 December 2006.