Keywords
Summary

Keywords

1 Tax provisions - Harmonisation of laws - Turnover taxes - Common system of value added tax - Deduction of input tax - Expenditure which is strictly business expenditure - Exclusions provided for under national legislation predating the Sixth Directive - Exclusion from the right to deduct the VAT payable on motor vehicles constituting tools essential to the taxable person's business - Whether permissible

(Council Directives 67/228, Art. 11(4), and 77/388, Art. 17(6))

2 Tax provisions - Harmonisation of laws - Turnover taxes - Common system of value added tax - Deduction of input tax - Exclusions from the right of deduction - Time allowed under Article 17(6) of the Sixth Directive for the adoption of Community rules - Where the deadline expires before those rules have been implemented - Open to Member States to retain exclusions existing when the Sixth Directive entered into force

Summary

1 Article 11(4) of Second Directive 67/228 on the harmonisation of legislation of Member States concerning turnover taxes authorised Member States to introduce or retain - and Article 17(6) of Sixth Directive 77/388 authorises them to retain - general exclusions from the right to deduct the VAT payable on the purchase of motor cars used by a taxable person for the purposes of his taxable transactions, even where those cars were tools essential to the person's business or where they could not, in specific cases, be used for private purposes by that person.

2 On a proper construction of Article 17(6) of Sixth Directive 77/388 on the harmonisation of legislation of Member States concerning turnover taxes, which provides that before a period of four years at the latest has elapsed from the date of entry into force of that Directive, the Council is to decide what expenditure is not to be eligible for deduction of VAT and that until rules to that effect come into force, Member States may retain all the exclusions provided for under their national legislation as at the time when the Directive enters into force, Member States may retain the exclusions from the right to deduct VAT, even if the Council has not, before expiry of the deadline referred to, identified the expenditure which is not to be eligible for deduction of VAT.