Keywords
Summary

Keywords

1. Tax provisions - Harmonisation of laws - Turnover taxes - Common system of value added tax - Deduction of input tax - Exclusions from the right of deduction - Open to Member States to retain exclusions existing when the Sixth Directive entered into force - Exclusion after that date of the right to deduct expenditure relating to certain motor vehicles after that right had been allowed by an administrative practice - Not permitted

(Council Directive 77/388, Art. 17(6), second subpara.)

2. Tax provisions - Harmonisation of laws - Turnover taxes - Common system of value added tax - Deduction of input tax - Exclusions from the right of deduction - Option for Member States to provide for certain exclusions for cyclical economic reasons - Conditions of exercise

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

Summary

1. The second subparagraph of Article 17(6) of the Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, which provides that until the entry into force of common rules determining the expenditure which is not eligible for deduction of value added tax the Member States may retain all the exclusions provided for under their national laws at the date of entry into force of the directive, precludes a Member State from excluding, after the entry into force of the Sixth Directive, expenditure relating to certain motor vehicles from the right to deduct where, at the date of entry into force of that directive, that expenditure gave rise to the right to deduct, albeit by virtue of a consistent practice of the public authorities of that State on the basis of a ministerial circular. In this respect, the term national laws within the meaning of the second subparagraph of Article 17(6) does not refer only to legislative acts in the strict sense, but also to administrative measures and practices of the public authorities of the Member State concerned.

( see paras 49, 51 and operative part 1 )

2. The first sentence of Article 17(7) of the Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, which provides that, subject to consultation of the Advisory Committee on value added tax provided for in Article 29 of that directive, 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, must be interpreted as not authorising a Member State to exclude goods from the system of deductions without first consulting that committee, since that procedural obligation is a condition precedent to the adoption of any measure on the basis of Article 17(7). That provision also does not authorise a Member State to adopt measures excluding goods from the system of deductions which contain no indication as to their limitation in time and/or which form part of a package of structural adjustment measures whose aim is to reduce the budget deficit and allow State debt to be repaid.

( see paras 62-63, 69 and operative part 2 )