Court of Justice 13 September 2006, C-277/05 (Société thermale d'Eugénie-les-Bains v Ministère de l'Économie, des Finances et de l'Industrie.)

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This Opinion of the Advocate-General addresses whether deposits paid in advance for hotel services and retained by the provider upon customer cancellation constitute consideration for a taxable supply of services under Article 2(1) of Sixth Directive 77/388/EEC. The Advocate-General opines that the reservation service—comprising the hotelier's obligation to hold a room and refrain from contracting with third parties—constitutes a distinct supply of services for consideration, and that the compensatory characterisation under French civil law (Code de la consommation, Article L114-1) cannot, in the absence of evidence of actual loss, preclude VAT liability under the uniform Community framework. The Advocate-General proposes that Articles 2(1) and 6(1) of the Sixth Directive be interpreted as requiring such retained deposits to be treated as remuneration for the reservation service and therefore subject to VAT.AI