Article 173 of the EU VAT Directive mentions that in the case of goods or services used by a taxable person both for transactions in respect of which VAT is deductible and for transactions in respect of which VAT is not deductible, only such proportion of the VAT as is attributable to the former transactions shall be deductible.
The deductible proportion shall be determined, in accordance with Articles 174 and 175, for all the transactions carried out by the taxable person. This calculation method looks at the types of turnover that the taxable person realized.
However, article 173 (2) c also mentions
Member States may take the following measures: .. authorise or require the taxable person to make the deduction on the basis of the use made of all or part of the goods and services.
According to the Dutch State Secretary, article 173 (2) c VAT Directive does not obliges Member States (that have chosen to make use of this provision) to implement that provision in full, but (also) have the choice to apply the actual use method to
(i) all goods or services or
(ii) any part thereof.
The Netherlands has not made use of the option to apply the deduction on the basis of the use of part of the goods and services. He further argues that a deduction calculation that takes place partly on the basis of the pro rata and partly on the basis of actual use is not possible on the basis of the Dutch rules.
AG Ettema examines whether Article 173 (2) c of the VAT Directive allows the Netherlands to limit the actual use method in the sense that it is only applied to all mixed-use goods or services (and not also to part thereof).
The AG concludes that under the Dutch scheme it is not possible to determine the deduction for part of the goods and services on the basis of the method of the actual use of the goods and services and for the remainder on the basis of the turnover ratio . This regulation is in accordance with article 173 (2) c of the VAT Directive . That provision does not compel Member States to apply the actual use method to all goods and services as well as to part thereof.
Source:
- btwjurisprudentie.nl Dutch)
- Deloitte (in Dutch)
