Facts
The municipality of Blonay has adopted regulations on the collection, treatment or disposal of waste as well as on sewers and wastewater treatment. These activities are carried out on the basis of public law and the municipality has certain coercive powers vis-à-vis the users of its services.
As of January 1, 1995, the municipality is registered with the Federal Tax Administration as a taxable person for value added tax (VAT) for its activities in the field of household waste disposal and wastewater treatment. The Administration considered that the municipality had to tax these activities at the rate of 6.5% in accordance with Art. 17 para. 4 of the VAT Ordinance and item 15 of the Annex to this Ordinance.
The municipality contested this decision, arguing that its services in the field of household waste disposal and wastewater treatment are not taxable commercial or professional activities, but services provided in the exercise of public authority, and that consequently, it should not be subject to VAT.
Considerations
The Federal Tribunal dismissed the municipality's appeal. It considered that the Federal Council, in enacting Art. 17 para. 4 of the VAT Ordinance and item 15 of the Annex to this Ordinance, did not exceed the margin of discretion it had.
Although the services in question have a public law character, insofar as they are provided against payment of fees intended to cover…