Keywords
Summary

Keywords

1. Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Deduction of input tax

(Council Directive 77/388, Art. 17(7), first sentence)

2. Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Deduction of input tax

(Council Directive 77/388, Art. 17(7), first sentence)

3. Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Deduction of input tax

(Council Directive 77/388, Art. 17(1)(2) and (7))

Summary

1. The first sentence of Article 17(7) of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes requires the Member States, in order to respect the procedural obligation of consultation laid down by Article 29 of that directive, to inform the Advisory Committee on value added tax established by that article that they intend to adopt a national measure derogating from the general system of deducting value added tax and to provide that committee with sufficient information to enable it to examine the measure in full knowledge of the facts.

The obligation to consult the Advisory Committee would be deprived of its meaning if the Member States merely notified it of the national derogating measure which they envisaged adopting without including any explanation as to the nature and scope of the measure. The Advisory Committee must be in a position to deliberate properly on the measure submitted to it.

(see paras 30, 32, operative part 1)

2. The first sentence of Article 17(7) of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes must be interpreted as not authorising a Member State to exclude goods from the system of deducting value added tax without first consulting the Advisory Committee on value added tax established by Article 29 of that directive. Nor does that provision authorise a Member State to adopt measures excluding goods from the system of deducting that tax which contain no indication as to their limitation in time and/or which form part of a body of structural adjustment measures whose aim is to reduce the budget deficit and allow State debt to be repaid. It authorises a Member State to adopt measures of a temporary nature which are intended to deal with the consequences of the situation of its economy at a given time.

(see paras 53-55, operative part 2)

3. In so far as an exception from the system of deductions has not been established in accordance with Article 17(7) of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, the national tax authorities may not rely as against a taxable person on a provision derogating from the principle of the right to deduct value added tax set out in Article 17(1) of that directive. A taxable person which has been subject to that derogating provision must be able to recalculate its value added tax debt in accordance with Article 17(2) of the directive, in so far as the goods and services have been used for the purposes of taxable transactions.

(see paras 69, operative part 3)