(Reference for a preliminary ruling– Value added tax (VAT)– Directive 2006/112

14The dispute concerns the application of the reduced rate of VAT to supplies of wood chips.

15In 2015, the applicant in the main proceedings traded in wood chips bearing the protected designations ‘Flokets weiss’ (‘industrial’ wood chips) and ‘Flokets natur’ (‘forest’ wood chips) and ensured the maintenance of heating installations using wood chips as fuel.

16Industrial wood chips are made by cutting logs, the sawmill residue of which is reduced to wood chips with the help of shredding machines. Forest wood chips are made from top wood and small-diameter wood from forest maintenance. The residual wood is mechanically shredded in the forest and subsequently dried by the applicant in the main proceedings.

17During the 2015 tax year, the applicant in the main proceedings supplied forest and industrial wood chips to municipality A and parish B. During that period, it also supplied wood chips as fuel, under an agreement concluded with municipality C concerning the ‘operation of a wood chip heating installation including maintenance and cleaning’.

18In the provisional VAT return for the 2015 financial year, the applicant in the main proceedings applied the standard rate (19%) to the abovementioned supplies, in accordance with the tax authority’s opinion as indicated during an earlier tax inspection.

19The applicant in the main proceedings challenged that rate before the Finanzgericht (Finance Court, Germany), which upheld the action in part. That court held that the supplies of wood chips to municipality A and parish B must be subject to the reduced rate, but that the package of services supplied to municipality C must be taxed at the standard rate, since it constituted a single overall supply.

20Both the applicant in the main proceedings and the tax authority lodged an appeal on a point of law against the judgment of the Finanzgericht (Finance Court) before the Bundesfinanzhof (Federal Finance Court, Germany).

21That court is uncertain, in the first place, about the concept of ‘wood for use as firewood’ in Article122 of the VAT Directive, in particular as to whether that concept encompasses wood chips.

22In the second place, the referring court asks whether, in exercising the option provided for in Article122 of the VAT Directive, Member States are empowered to establish the precise scope of a reduced rate of tax for supplies of wood for use as firewood by having recourse to the CN or whether the empowerment to that effect provided for in Article98(3) of that directive is limited to cases where a reduced rate of tax is applied to the supply of goods falling within the categories listed in AnnexIII to that directive.

23In the third place, supposing that Member States are empowered to establish the precise scope of the reduced rate of VAT for supplies of wood for use as firewood by means of the CN, the referring court seeks clarification as to whether the principle of fiscal neutrality precludes the application of different rates of tax to different types of wood for use as firewood.

24In those circumstances, the Bundesfinanzhof (Federal Finance Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1)Is the term “wood for use as firewood” in Article122 of [the VAT Directive] to be interpreted as meaning that it includes any wood which, on the basis of its objective properties, is intended exclusively for burning?

(2)Can a Member State which introduces a reduced rate for supplies of wood for use as firewood on the basis of Article122 of [the VAT Directive] establish its precise coverage using the [CN] in accordance with Article98(3) of [the VAT Directive]?

(3)If the answer to Question2 is in the affirmative: May a Member State exercise the power conferred on it by Article122 of [the VAT Directive] and Article98(3) of [the VAT Directive] to establish the coverage of the reduced rate for supplies of wood for use as firewood using the [CN] in keeping with the principle of tax neutrality, in such a way that supplies of various forms of wood for use as firewood, which differ in terms of their objective characteristics and properties but which, from the point of view of the average consumer, address the same need (in this case, heating), on the basis of the criterion of comparability in terms of use, and are thus in competition with each other, are subject to different rates of taxation?’