Keywords
Summary

Keywords

Tax provisions — Harmonisation of laws — Turnover taxes — Common system of value added tax — Deduction of input tax — Private use by the taxable person of part of a building forming, in its entirety, part of the assets of his business — Right to deduct the tax paid for all expenses and duty to pay tax on the expenses that relate to the private use — National law which deems private use to be an exempt supply — Not permissible — (Council Directive 77/388, Arts 6(2)(a), 11A(1) and 13B(b))

Summary

Articles 6(2)(a) and 11A(1)(c) of the Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes must be interpreted as meaning that where a taxable person chooses to treat an entire building as forming part of the assets of his business and subsequently uses part of that building for private purposes, on the one hand, he is entitled to deduct the input value added tax paid on all construction costs relating to that building and, on the other, he is subject to the corresponding obligation to pay the tax on the amount of expenditure incurred to effect such use.

However Articles 6(2)(a) and 13B(b) of the Sixth Directive preclude national legislation which treats such use as an exempt supply of services, on the basis that it constitutes a leasing or letting of immovable property within the meaning of Article 13B(b), since such use, a feature of which is not only that no rent is paid but also that there is no genuine agreement on the duration of the right of enjoyment or the right of occupation of the dwelling, or to exclude third parties, is not covered by that provision.

see paras 42-43, 51-52, 56, operative part