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The European Commission claimed that Ireland, by subjecting commercial operators of off-street parking facilities to VAT but not local authorities, was failing to fulfil its obligations under article 9 of Council Directive EC 2006/112 (on the common system of VAT).
According to article 13 of that directive, public bodies were to be treated as taxable persons in respect of economic activities other than in their capacity as public authorities.
Furthermore, they had to be treated as taxable where to treat them otherwise would distort competition.
The European Court of Justice found that Irish law did not correctly transpose the requirements of the directive into domestic law and had failed to fulfil its obligations under EU law.
Public bodies engaged in certain activities listed in annex 1 to the directive were to be treated as taxable persons.
