(French Administrative Supreme Court, Jun. 24, 2015, no. 365849, SCP France)  

"Ancillary operations follows the main one l" is a rule of interpretation which is not only ancient, but also regularly used in practice in both national and European courts.

This being said, applying this rule does raise practical problems.  The issue of whether two transactions are independent, or, on the contrary, whether they are interdependent, can quite easily be based on a very subjective viewpoint, which can vary greatly in space and in time.  Hence, in the hotel industry, where it was traditionally accepted that any service not within the strict framework of providing accommodations was subject to the normal VAT rate, regardless of how it was invoiced, implementation of this theory had until now led only to decisions which were either of limited practical scope (Lyons Administrative Court of Appeal, Apr. 1, 2004, no. 8-53, 2nd Ch., Plagnat:  RJF 7/05, no. 676.) or disappointing (Versailles Administrative Court of Appeal, Apr. 5, 2011, no. 09VE04193, 3rd Ch., Sté Club Méditerranée).

In this context and despite the opposition of the tax authorities, lower courts and courts of appeal, the company SCP, has been successful before the French Administrative Supreme Court, in arguing that given the context and consumers' expectations, access to aquatic facilities located in the vacation resorts it operated  was indeed a service that was ancillary to accommodations and, because of this, that it was entitled to apply the reduced VAT rate to the entire price of their customers' package vacation

What is of interest in this decision handed down by the French Administrative Supreme Court is not only that it reaffirms the principle that a single transaction must not be arbitrarily broken down when each item is not an end in and of itself for the average consumer, even if the various components could have been taxed separately in other circumstances.  The decision is also interesting since, and perhaps above all, all the facts are provided in the decision to justify the Court's conclusion.  These facts can then be used as practical guidelines for other companies.

Indeed, in order to justify its decision, the Administrative Supreme Court performed an analysis by taking into account how the sites were laid out, the activities that took place on the sites, the business and pricing conditions and consumers' behavior on the sites, as well as their motivations.  Furthermore, it is interesting to note that the originality of certain facilities is a factor the importance of which is not necessarily key.  Similarly, the fact that the facilities' cost price represented only around 10% of the cost price of the package vacation was not found to be an obstacle to applying the reduced rate.