Keywords
Summary

Keywords

Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Economic activities within the meaning of Article 4 of the Sixth Directive – Taxable person – Meaning – Person having ceased an economic activity but continuing to pay rent and charges relating to premises previously used for that activity owing to the impossibility of surrendering the lease – Included – Benefit of a right to a deduction – Conditions

(Council Directive 77/388, Art. 4 (1) to (3))

Summary

Article 4(1) to (3) of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes is to be interpreted as meaning that a person who has ceased an economic activity but who, because the lease contains a non-termination clause, continues to pay the rent and the charges on the premises used for that activity, is to be regarded as a taxable person within the meaning of that article and is entitled to deduct the value added tax on the amounts thus paid, provided that there is a direct and immediate link between the payments made and the economic activity and that the absence of any fraudulent or abusive intent has been established.

Transactions such as the payments which a person continues to make during the period over which their business was wound up must be regarded as forming part of the economic activity within the meaning of Article 4 of the Sixth Directive. Moreover, there is a direct and immediate link between the obligation to continue to pay the rent and other charges after the economic activity has ceased and the carrying on of that activity, since the lease was entered into in order to have the premises available which were necessary for carrying on that activity, which was actually carried on there. The duration of the obligation to pay the rent and the charges on those premises has, in that respect, no bearing, provided that that period of time is strictly necessary to complete the winding-up of the business.

(see paras. 24, 26, 28-29, 35, operative part)