- The VAT advantage consisting of the benefit of deduction at the standard VAT rate, while output VAT is due at the reduced rate, plus the financing advantage .. is not in itself contrary to the objectives of the provisions of the VAT Directive..
- However, the Court considers that the manner in which the abovementioned advantages are realised, namely by means of an artificial construction designed solely for that purpose, is such that the advantage does not correspond to the objectives of those provisions.
- Input VAT deduction is not intended for the plaintiff because her essential activities are not economic activities. The VAT in respect of costs relating to the movable and immovable property used for those activities should not, according to the intention of the VAT Directive, be allowed to be deducted.
- This would provide advantages which other comparable educational establishments do not enjoy. This is only different if they set up a similar artificial structure, which would lead to a distortion of the real market.
- Finally, the structure lacks any economic reality other than the purpose of the tax advantage, which is contrary to the purpose of the exemption.
- The foregoing constitutes an abuse of law. In the light of settled ECJ case law, this means that the transactions carried out in this context must be redefined so as to restore the situation as it would have been without the transactions constituting this abuse. In so far as relevant, this leads to the result that the claimant is not entitled to deduct the VAT charged to her in respect of the construction of the sports hall.
Source: rechtspraak.nl
