CJEU’s National Roads Authority judgment (C-344/15) In this case CJEU rules that the National Roads Authority (NRA), which is a body governed by public law that provides access to roads on payment of a toll, does not compete with other private operators which carry the same activity on other toll roads pursuant to an agreement with the National Roads Authority.
NRA is a body governed by Irish public law that manages the national public road network. Most toll roads in Ireland have been constructed and are operated by private operators under public-private partnership agreements concluded with NRA.
The Revenue Authorities treated NRA as a taxable person for VAT in respect to its activity of making available of the two toll-roads it operates, on the grounds that its treatment as a non-taxable person would lead to significant distortions of competition. NRA however believes that it should be exempted from VAT. In this regard, the question to the CJEU is referred, whether in the circumstances at hand NRA must be regarded as competing with other private operators or not.
According to the CJEU, the aim of treating public bodies as VAT taxable persons in specific cases is to ensure that private bodies are not placed at a disadvantage because they are taxed while public bodies are not. CJEU states that a public body is treated as a VAT taxable person in case it caries out activities in competition, actual or potential, with the activities carried out by the private bodies and in case the treatment of those activities for VAT purposes leads to significant distortions of competition. This must be assessed having regard to economic circumstances. The mere presence of private bodies on a market is therefore not sufficient to demonstrate a significant distortion of competition.
Before CJEU gives its decision, it states the following. Firstly, NRA has a legal overall responsibility for the planning and construction of all national roads and for the supervision thereof. Only NRA can prepare a plan for establishing a toll scheme for access to those roads. Secondly, private operators can only enter the market of making road infrastructure available on payment of tall if NRA authorizes them to do so. Finally, even in case the management of national roads has been entrusted to a private operator, NRA always retains the ultimate responsibility for national roads. This is for instance evident from the fact that NRA terminated a contract in regard to one of the motorways, in order to fulfil NRA’s required commitment to ensure the proper functioning of the roads.
For the reasons above CJEU finally decides that there is no competition, actual or potential, between NRA and the private operators.