Date plus intro
Context: Sixth VAT Directive – Motor vehicle made available under a leasing contract – Taxable transactions – Own consumption – Article 17(6) and (7) – Exclusions provided for under national law at the date of entry into force of the directive
Article in the EU VAT Directive
Article 17(6) and (7) of the Sixth VAT Directive
Article 17(6) and (7)
6. Before a period of four years at the latest has elapsed from the date of entry into force of this Directive, the Council, acting unanimously on a proposal from the Commission, shall decide what expenditure shall not be eligible for a deduction of value added tax. Value added tax shall in no circumstances be deductible on expenditure which is not strictly business expenditure, such as that on luxuries, amusements or entertainment.
Until the above rules come into force, Member States may retain all the exclusions provided for under their national laws when this Directive comes into force.
7. Subject to the consultation provided for in Article 29, each Member State may, for cyclical economic reasons, totally or partly exclude all or some capital goods or other goods from the system of deductions. To maintain identical conditions of competition, Member States may, instead of refusing deduction, tax the goods manufactured by the taxable person himself or which he has purchased in the country or imported, in such a way that the tax does not exceed the value added tax which would have been charged on the acquisition of similar goods.
Facts
- Cookies World VertriebsgmbH iL. (hereinafter: Cookies World), the claimant in the main proceedings, is a private limited company established in Austria which carries on a trading business. In the capacity of lessee, it leased a car from a German undertaking which it used in Austria for the purposes of its business.
- By notice of 15 June 1999 the Finanzamt (Tax Office) Schwaz assessed the turnover tax of Cookies World in respect of 1997. The rent for the lease car was added to the taxable transactions. That addition was made under Paragraph 1(1) of the UStG 1994.
- Cookies World lodged an appeal, applying for its turnover tax to be assessed without regard to the abovementioned provision. It claims that the transfer of use of vehicles is a service which in the context of turnover tax is supplied at the place from which the trader operates his business. In the case of the leasing of vehicles, the place in which the service is provided is in principle the State in which the lessor has established his business, which in the present case is therefore Germany. It is there that the event is taxable. Further chargeable events are not envisaged by Community law. However, Paragraph 1(1) of the UStG 1994 has created a second chargeable event for turnover tax in respect of the same transaction (in addition to the taxation, in conformity with the Sixth Directive, in the State in which the lessor has established his business). As a result the same transaction is taxed twice. In the view of Cookies World, there is no possible justification for this under Article 17(6) of the Sixth Directive because that provision relates only to the exclusion of the right to deduct VAT. Furthermore, it merely allows existing laws to be retained. However, the chargeable event in Paragraph 1(1) of the UStG 1994 has been part of Austrian law only since 6 January 1995.
- By decision of 20 July 2000 the Finanzlandesdirektion für Tirol (Tyrol Regional Tax Authority) dismissed the appeal brought by Cookies World. It considered that the Member States could – pending any amendment of the Sixth Directive – retain national exclusions from the right to deduct input tax. This power of the Member States also covered taxation of own consumption, as provided for in Austrian law. In the view of the Finanzlandesdirektion, this serves primarily, for reasons of competition neutrality, to cancel out the effect of deduction of VAT claimed abroad.
- Cookies World appealed against that decision to the Verwaltungsgerichtshof. It claims the assessment of 1997 turnover tax was made under a national provision that is contrary to Community law.
- By order of the Verwaltungsgerichtshof (Austria) of 29 March 2001, received at the Court Registry on 11 April 2001, a reference was then made to the Court of Justice for a preliminary ruling on the following question:
- Is it compatible with the Sixth Directive, in particular Articles 5 and 6 thereof, for a Member State to treat the following event as a taxable transaction: the incurring of expenditure relating to services supplied abroad that, if they had been supplied within the national territory to the trader, would not entitle the trader to a deduction of input tax?
Questions
Is it compatible with the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, in particular Articles 5 and 6 thereof, for a Member State to treat the following event as a taxable transaction: the incurring of expenditure relating to services supplied abroad that, if they had been supplied within the national territory to the trader, would not entitle the trader to a deduction of input tax?
AG Opinion
Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment precludes national legislation which contains an exclusion from the right to deduct value added tax for its own nationals in respect of a transaction which is carried out in another Member State and is regarded as a taxable transaction in that other Member State in accordance with the directive.
Decision
The provisions of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment preclude a measure of a Member State which provides that payment for services supplied in other Member States to a person in the first Member State is subject to VAT whereas, had the services in question been supplied within the territory of the country, the person to whom they were supplied would not have been entitled to deduction of input tax.
Summary
The Sixth Directive precludes a provision of a Member State according to which services supplied in other Member States to a recipient in the first Member State are subject to VAT, whereas, if the services in question had been supplied domestically to the same recipient, they would not have been able to deduct input tax.
Source BTW jurisprudentie in Dutch
Source
Similar ECJ cases
Newsletters
