Keywords
Summary

Keywords

Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Special arrangements for second-hand goods – ‘Second-hand goods’ – Live animals – Included – Horse bought from a private individual and sold on after training

(Council Directive 77/388, Art. 26a)

Summary

Article 26a of Sixth Council Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, which provides for special arrangements applicable to second-hand goods, which are defined as tangible movable property that is suitable for further use as it is or after repair, must be interpreted as meaning that live animals may be considered to be second-hand goods within the meaning of that provision.

Thus an animal bought from a private individual (other than the breeder) which is sold on after training for a specific use may be considered to be second-hand goods within the meaning of that provision. It is of little import that the increase in value of such an animal does not arise from a ‘repair’ in the strict meaning of the term, but from, for example, a biological process or the training of the animal. Furthermore, since the common system of value added tax aims in principle to tax the economic value added at different stages in the production and distribution process, until the phase of final use, by taxable persons acting as such, within the meaning of the Sixth Directive, it would run contrary to that system to tax the entire sale price asked by the taxable dealer instead of only the economic value added when the animal was in his possession.

(see paras 26-27, 29, operative part 1-2)