Keywords
Summary

Keywords

1. Tax provisions - Harmonisation of laws - Turnover taxes - Common system of value added tax - Taxable transactions - Allocation of business goods acquired without any entitlement to deduct for the taxpayer's private purposes - Work carried out on the goods following their acquisition which gave rise to the deduction of input tax - Tax on component parts - Definition

(Council Directive 77/388, Art. 5)

2. Tax provisions - Harmonisation of laws - Turnover taxes - Common system of value added tax - Taxable amount - Allocation of business goods acquired without any entitlement to deduct for the taxpayer's private purposes - Work carried out on the goods following their acquisition which gave rise to the deduction of input tax - Determined by reference to the price, at the time of the allocation, of the goods incorporated which constitute component parts of the goods

(Council Directive 77/388, Arts 5(6) and 11A(1)(b))

3. Tax provisions - Harmonisation of laws - Turnover taxes - Common system of value added tax - Deduction of input tax - Allocation of business goods acquired without any entitlement to deduct for the taxpayer's private purposes - Work carried out on the goods following their acquisition which gave rise to the deduction of input tax not giving rise to liability to VAT under Article 5(6) of the Sixth Directive - Adjustment of the original deduction - Conditions

(Council Directive 77/388, Arts 5(6) and 20(1)(b))

Summary

1. Where a taxable person allocates for purposes other than those of the business goods (in this case a motor vehicle) on the acquisition of which value added tax was not deductible and which, after being acquired, had value-added-tax-deductible work done on them, the value added tax payable under Article 5(6) of the Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes applies solely to the component parts of the goods in respect of which there was entitlement to deduct, namely the components which definitively lost their physical and economic distinctiveness when they were incorporated in the vehicle, after its purchase, following transactions involving supplies of goods which led to a lasting increase in the value of the vehicle which has not been entirely consumed at the time of the allocation.

( see para. 78 and operative part 1 )

2. In the case of an allocation which is taxable under Article 5(6) of the Sixth Directive 77/388, in particular the allocation of goods (in this case a motor vehicle)

- which were acquired without any entitlement to deduct,

- on which work giving entitlement to deduct has been carried out, resulting in the incorporation of component parts in the goods,

the taxable amount for the purposes of Article 11(A)(1)(b) of the Sixth Directive 77/388 must be determined with reference to the price, at the time of the allocation, of the goods incorporated in the vehicle which constitute component parts of the goods allocated, within the meaning of Article 5(6) of that directive.

( see para. 84 and operative part 2 )

3. Where work which is carried out on goods (in this case a motor vehicle) after their purchase and on which input value added tax was deducted does not give rise to liability for value added tax pursuant to Article 5(6) of Sixth Directive 77/388 when the vehicle is allocated, the value added tax deducted in respect of that work must be adjusted in accordance with Article 20(1)(b) of that directive if the value of the work in question has not been entirely consumed in the context of the business activity of the taxable person before the vehicle is allocated to his private assets.

( see para. 95 and operative part 3 )