IOW - Car Parking - Advocate General's Opinion - 12th June 2008

The Advocate General has, today, released his opinion in respect of the three questions put to the European Court of Justice by the High Court in the case of Isle of Wight, and others. The questions were –

1. Is the expression “distortions of competition” to be ascertained on a public body by public body basis such that, in the context of the present case, it should be determined by reference to the area or areas where the particular body in question provides off-street parking or by reference to the totality of the national territory of the Member State?

2. What is meant by the expression “would lead to”? In particular, what degree of probability or level of certainty is required for that condition to be satisfied?

3. What is meant by the word “significant”? In particular, does “significant” mean an effect on competition that is more than trivial or de minimis, a “material” effect or an “exceptional” effect?’

The Opinion states –

1. Competition is to be determined on the basis of the activities concerned, ie. in line with Customs' submission that the matter be considered nationally.

2. The words “would lead to” must be understood as including both actual competition and potential competition, ie. in line with Customs' submission.

3. The word “significant” neither means that the effect on competition is “trivial” nor does it mean that the effect is “exceptional”; it means that the effect is “out of the ordinary” – and the interpretation of such a concept falls within the discretion of the Member State.

There were many interesting observations made within the Opinion, for example, “it is not certain that the provision of off-street parking is subject to a legal regime specific to the public body” and the “effect of not taxing (car parking) would be … to divert the VAT system which rests above all on the principle of fiscal neutrality”.

Not good news for the Isle of Wight, and other local authorities which have been pursuing this case with great interest. – though, of course, it should be borne in mind that this is the initial opinion and not the final decision of the Court.

This Opinion, the text of which is now available in the Members’ Area of our website, was discussed during the Summer 08 round of LAVAT’s local authority VAT Forums. Our detailed analysis of the Opinion can also be found in the Members’ Area.