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The claimant contracted with another company to make available space on the claimant's ships for the transportation of the other company's containers between ports in Spain and the Canary Islands. The claimant did not charge VAT on its invoice to the other company, on the basis that the transaction was a chartering one and therefore exempt from VAT. However, the Spanish revenue authority said that VAT should be included since only full chartering of ships was exempt.
The matter was referred to the European Court of Justice.
The European Court of Justice ruled that article 15(5) covered both partial and full chartering of vessels used for navigation on the high seas. This precluded national legislation from allowing exemption only on full chartering.
