VATcodexEU VAT case law · Court of Justice and General Court

Economic activity EU VAT case law

101 cases of the Court of Justice and the General Court of the European Union on this point of VAT law, from 1985 to 2026.

Search within this topicThe cases ↓

Provisions these cases interpret most

The 101 cases, most recent first

Under each case, what the Court decided, from its summary. The summaries are AI-generated and are not official documents: open the case for the Court’s own text.

T-575/24 Digipolis

Judgment · 25 February 2026 · Belgium

VAT status of an intermunicipal commissioning association

Such an association is a taxable person on its supplies to members, with no distinction by reference to members' VAT status, provided the supplies are for consideration and the association independently carries on an economic activity, matters for the national court. Cost-covering, pre-set lump sum contributions do not break the direct link. Article 13(1) does not shelter it. Telematics is telecommunications within Annex I and not negligible, and non-taxation could distort competition. The "emanation" theory cannot override that status. The Belgian "emanation" tolerance for commissioning associations and intermunicipal structures is incompatible with the Directive where the entity has its own legal personality, organs, staff, assets and risk.

C-796/23 Česká síť (Partners in a ‘company’)

Judgment · 11 December 2025 · Czechia

Who is the taxable person where partners in a partnership without legal personality supply services

Such national legislation is precluded. The taxable person, and so the person liable under Article 193, is whoever independently carries out the activity. Acting in its own name, on its own behalf and responsibility, and bearing the economic risk. Close cooperation does not remove independence. Departing from the civil law representation rules is irrelevant, save that the partnership itself cannot then be treated as the supplier. It remains for the national court to verify the facts, including whether the Article 11 grouping rules and abuse could apply. Relevant wherever domestic law channels VAT liability to a nominated partner or lead member of an unincorporated association or joint venture.

C-232/24 Kosmiro

Judgment · 23 October 2025 · Finland

VAT treatment of factoring fees and commissions

Both products are supplies of services for consideration and both fall within "debt collection" in Article 135(1)(d). The commission and arrangement fees are consideration for a single, indivisible taxable debt collection service. There is no separate exempt credit supply, since in trade factoring the funds are the price of the debts and in invoice factoring the financing is merely the corollary of collection. Article 135(1)(d)'s debt collection exception is unconditional and precise, so it has direct effect against the State. Factors and their advisers can no longer split factoring fees between taxable collection and exempt financing where the factor also runs the recovery.

C-726/23 Arcomet Towercranes

Judgment · 4 September 2025 · Romania

Transfer pricing adjustments as consideration for intra-group services

Contractually detailed intra-group services remunerated by reference to the margin above 2.74%, calculated on an OECD-recommended method, are consideration for a supply of services for consideration. The remuneration is variable but neither voluntary nor uncertain, being fixed in advance on precise criteria. The authority may require evidence beyond the invoice that the services were actually supplied and used for taxed output transactions, provided it is necessary and proportionate. It may not require proof that the services were necessary or economically appropriate. A group treating a year-end transfer pricing true-up as a pure profit adjustment outside VAT cannot maintain that position where the payment is tied to identified services under an intra-group agreement. Relevant to transfer pricing and indirect tax teams in multinational groups, and to advisers handling Romanian and other reverse-charge intra-group management fee audits.

C-213/24 Grzera

Judgment · 3 April 2025 · Poland

Land sales prepared by an agent, taxable person status of co-owning spouses

Article 9(1) permits treating the owner as a taxable person acting independently. The initial private character of the land is irrelevant, and the agent's acts, done in the owner's name and for the owner's account, are active property marketing using means comparable to a trader, the ultimate risk of no sale remaining with the principals. It does not preclude treating the spouses' statutory community as the single taxable person where both spouses jointly carry out the sales towards third parties and the community bears the economic risk. Landowners who outsource plot division, rezoning, servicing and marketing to a developer or agent cannot rely on the agent's involvement or margin based fee to stay outside VAT.

C-680/23 Modexel

Judgment · 5 December 2024 · Portugal

Carrying forward excess VAT after cessation and resumption of activity

Article 183 does not preclude such legislation. Cessation of economic activity ends taxable person status, so there is no "following period" to which the excess can be carried. On resumption the activity is new. Member States may therefore confine recovery to a refund claim within 12 months of cessation, provided the principles of equivalence and effectiveness are respected. The Court noted a 12 month period (and a fortiori four years) does not appear to make recovery impossible or excessively difficult. A business deregistering with a VAT credit has to claim the refund within the national time limit.

C-594/23 Lomoco Development and Others

Judgment · 7 November 2024 · Denmark

Land with only foundations in place is building land

The Court held that such a supply is a supply of building land within Article 12. Although "building" is defined broadly as any structure fixed to or in the ground, that definition is tied to the first occupation criterion in Article 12(1)(a). Foundations cannot be occupied and their casting does not end the production process. Even "parts of a building" must be capable of occupation, as where flats in a staged development are finished separately. Breitsohl does not assist, as it did not interpret that concept. Developers and their advisers can no longer rely on foundations alone to fix the VAT classification, or the timing, of a land supply.

C-87/23 Latvijas Informācijas un komunikācijas tehnoloģijas asociācija

Judgment · 4 July 2024 · Latvia

Non-profit association, EU-funded training and the taxable amount

Subcontracted training invoiced by a non-profit association, subsidised by European funds up to 70%, is a supply of services for consideration. Article 28 does not apply absent an express agency agreement showing supply in one's own name on behalf of another. Subsidies paid by a European fund for a specific supply enter the taxable amount as third-party payment. Non-profit status does not preclude taxable person status where conduct is comparable to a typical operator. The referring court must still consider the Article 132(1)(i) exemption. Relevant to associations, foundations and other non-profit bodies delivering EU or nationally co-funded training and similar programmes, and to their advisers.

C-89/23 Companhia União de Crédito Popular

Judgment · 18 April 2024 · Portugal

Auction of pledged goods as a supply separate from exempt pawnbroking

The Court held that the auction organisation services are not ancillary to the granting of pledge-secured credit and do not share its VAT treatment. They are substantively and procedurally independent, the credit could be supplied identically if a third party ran the auction, the sale is not the usual outcome of the loan but follows only from default, and it is an end in itself. Final factual assessment remains for the national court. Pawnbrokers and other lenders realising security must treat enforcement fees and sale commissions as separate taxable supplies, not as part of exempt credit, even where national law obliges the lender to conduct the sale and fixes the commission rate.

C-341/22 Feudi di San Gregorio Aziende Agricole

Judgment · 7 March 2024 · Italy

Denial of deduction to "non-operating" companies

Status as a taxable person depends solely on whether an economic activity is actually carried on. It cannot be made conditional on output transactions exceeding a pre-set income threshold. Nor may deduction be refused on the ground that output transactions are insufficient. A volume-based presumption is unconnected to the criteria for establishing fraud or abuse and goes beyond what is necessary under Article 273. Deduction may still be refused where fraud or abuse is established on objective evidence, not by assumption. Italian companies caught by the Article 30 Law No 724/1994 shell company regime can challenge refusals of VAT credits, refunds, offsets and carry-forwards based purely on turnover falling short of the asset-based threshold.

C-288/22 Administration de l’Enregistrement, des Domaines et de la TVA (VAT – Member of a board of directors)

Judgment · 21 December 2023 · Luxembourg

VAT status of a company director

There is an economic activity where services are supplied to the company for consideration, provided the activity is on a continuing basis (a term of up to six years suffices) and the method of fixing remuneration is foreseeable. Profit-linked fees require that fees can also be paid in loss-making years. However, the activity is not carried out independently where the director, though free to organise his work, receiving his own emoluments, acting in his own name and outside any employer-employee relationship, does not act on his own behalf or under his own responsibility and bears no economic risk. Independence, not economic activity, is the decisive test for directors' fees.

C-677/21 Fluvius Antwerpen

Judgment · 27 April 2023 · Belgium

VAT on electricity taken unlawfully from the distribution network

Unlawful consumption of electricity is a taxable supply of goods for consideration under Article 14(1). Consumption of electricity coincides with disposal as owner, and the legal relationship criterion is met by the applicable energy legislation and connection regulation, so Article 14(2)(a), a lex specialis, does not apply. It is an economic activity under Article 9(1) because the loss is a risk inherent in operating the network. Even for a public law body acting as a public authority, the activity is negligible only if so minimal in space or time that resulting competitive distortion is insignificant. Where a network operator or utility recovers the cost of energy theft or unmetered consumption, the energy element of the compensation is consideration for a taxable supply and not damages outside VAT. Relevant to advisers on energy, water, gas and heat recovery billing.

C-612/21 Gmina O.

Judgment · 30 March 2023 · Poland

Municipal renewable energy installations and the limits of economic activity

Such activity does not constitute a supply of goods and services subject to VAT where it is not intended to obtain income on a continuing basis and residents pay at most a quarter of the costs incurred, the balance coming from public funds. The decisive point is the absence of economic activity. No permanence, no staff, structurally loss-making pricing unlike an RES installer. Article 13(1) therefore did not need examination, and the taxable amount question fell away. Useful for advisers to local authorities running subsidised energy efficiency, insulation or renewables schemes.

C-616/21 Gmina L.

Judgment · 30 March 2023 · Poland

Municipal asbestos removal financed by public subsidy, no economic activity

The Court held that such an activity does not constitute a supply of services subject to VAT. Even if a third party subsidy can be consideration, so that a direct link may exist, the municipality does not carry out an economic activity. It employs no staff, seeks no customers, the operation is not recurrent, residents pay nothing and its organisational costs are unreimbursed, so it bears only risk of loss with no profit prospect. Article 13(1) therefore needed no consideration. Article 28 (commission agent) did not apply absent a mandate. Confirms the Gemeente Borsele line for local authorities running one off, grant funded schemes for residents.

C-519/21 DGRFP Cluj

Judgment · 16 February 2023 · Romania

Unregistered association without legal personality, who is the taxable person and who deducts

The parties to an association contract without legal personality that was not registered with the tax authorities before the activity began cannot be treated as taxable persons alongside the person liable on the taxable transaction. The sales' legal effects concerned only the registered owners. Absence of an invoice in the claimant's own name is not fatal, but deduction depends on objective evidence that the goods and services were actually supplied to her by taxable persons for her own taxed transactions, avoiding double deduction. The third question was inadmissible. Relevant to property developers and joint ventures structured as contractual associations or silent partnerships, particularly where individuals pool land and finance.

C-98/21 Finanzamt R (Deduction of VAT linked to a shareholder contribution)

Judgment · 8 September 2022 · Germany

Input VAT on services supplied as a shareholder contribution in kind

The holding company has no right to deduct that input tax. Although supplying management and accounting services for consideration makes the holding company a taxable person, the bought-in services were the very object of the shareholder contribution, which is part of share holding and not an economic activity. Their actual use was in the subsidiaries' transactions, so they had no direct and immediate link with the holding company's own supplies and were not general costs. The abuse question did not need answering. The reliance on the contribution sustaining the subsidiaries' need for management services was irrelevant. Groups using a managing holding company to buy in construction, planning or marketing services and inject them into exempt-supplying subsidiaries cannot recover that input VAT, even where the holding company also invoices genuine management fees.

C-697/20 Dyrektor Izby Skarbowej w L. (Loss of flat-rate farmer status)

Judgment · 24 March 2022 · Poland

Spouses farming jointly owned land as separate taxable persons

A blanket prohibition on treating such spouses as separate taxable persons is precluded where each independently carries out an economic activity, acting in his or her own name and bearing the economic risk. Joint ownership of the holding is irrelevant. But automatic loss of the other spouse's flat-rate status is permissible only after examination of the specific situation, where necessary to counter abuse or evasion that evidence cannot dispel, or where dual normal-scheme treatment raises no administrative difficulty. Member States cannot apply a one-holding-one-taxable-person rule as a general presumption of evasion.

C-598/20 Pilsētas zemes dienests

Order · 1 December 2021 · Latvia

Compulsory ground leases outside the exemption for the letting of immovable property

Ruling by reasoned order, the Court held that those provisions do not preclude such legislation. Article 135(2) allows Member States to apply further exclusions to the scope of the exemption in Article 135(1)(l), and the Court has consistently read that as conferring a broad discretion, exercisable by a general rule. Latvia had laid down precisely such a general rule, so the exclusion was within the discretion the directive confers. There was no need to answer the second question. A useful reminder that the letting exemption is not a floor.

C-182/20 Administraţia Judeţeană a Finanţelor Publice Suceava and Others

Judgment · 3 June 2021 · Romania

Automatic adjustment of deductions on entering insolvency

Articles 184 to 186 preclude national legislation or practice imposing automatic adjustment of pre-insolvency deductions where the initiation of the proceedings does not prevent the operator's economic activity, within the meaning of Article 9, from continuing, including for the purposes of liquidating the undertaking. Economic activity is objective and judged without regard to purpose or results. A change of purpose to realising assets does not of itself end it. Continued registration and output VAT charged on liquidation sales point to continuing activity. A later refund possibility does not cure the restriction. In Member States whose rules treat a liquidation declaration as ending taxable activity, a blanket clawback assessment on input tax recovered before the insolvency does not stand. Relevant to capital goods, stock and lease-related deductions alike.

C-846/19 Administration de l'Enregistrement, des Domaines et de la TVA

Judgment · 15 April 2021 · Luxembourg

Court-appointed guardianship services by a lawyer, economic activity and the welfare exemption

Such activity is economic where supplied for consideration, income is continuing and the overall remuneration is set on criteria intended to cover the supplier's operating costs. Lump sums, judicial appointment and third-party (State) payment are irrelevant. Protection of such adults in civil matters is closely linked to welfare work, but general legal, financial or advisory services are not. Lawyer status is not an a priori bar to recognition as devoted to social wellbeing. A court must grant it only if the Member State exceeded its discretion. Legitimate expectations do not bar assessment. Fees are treated as VAT-inclusive. Relevant to lawyers, social workers, associations and other professionals acting as court-appointed guardians, curators or deputies, and to their advisers.

C-812/19 Danske Bank

Judgment · 11 March 2021 · Sweden

Cross-border branch and a VAT group in another Member State

They are separate taxable persons. Article 11 is territorially limited, so the branch cannot belong to the Danish group. The group alone is the supplier, and the recharged services are taxable transactions. The Skandia principle applies whether it is the branch or the head office that is in the group, and whether the head office sits in a Member State or a third country. Fiscal neutrality is not breached. The position is not comparable to a head office outside any group. Financial services and insurance groups using head office cost recharges to foreign branches must check whether either establishment sits in a national VAT group.

C-604/19 Gmina Wrocław (Transformation of the right of usufruct)

Judgment · 25 February 2021 · Poland

Statutory conversion of perpetual usufruct into ownership by a municipality

The conversion is a supply of goods under Article 14(2)(a). The fee is compensation because it is directly linked to the transfer of ownership and effectively paid, regardless of its nature or amount. Because the fee is payable over 20 years, the municipality obtains income on a continuing basis, so this is economic activity. Absence of active steps is irrelevant. Subject to national verification, the municipality does not exercise public law powers, merely certifying the conversion, so Article 13(1) does not apply. Confirms that Article 14(2)(a) operates independently of Article 14(1). Relevant to municipalities and state property bodies across Member States dealing with statutory land conversions, expropriations and similar compulsory transfers.

C-655/19 AJFP Sibiu and DGRFP Braşov

Judgment · 20 January 2021 · Romania

Sale of mortgaged property acquired by a creditor on enforcement

Such a transaction does not in itself amount to an economic activity where it falls within the simple exercise of the right of ownership and the sound management of private assets, so the person is not a taxable person for that transaction. The qualification is that this depends on the referring court verifying that the aim was recovery of the debts and assets and that no active marketing steps were taken using means comparable to those of a trader. Sales forming a direct extension of a lending business were not at issue. Confirms that the number and scale of disposals are not decisive.

C-449/19 WEG Tevesstraße

Judgment · 17 December 2020 · Germany

Supply of heat by an association of property owners to its members

Article 135(1)(l) precludes such national legislation. Supplying heat generated by a cogeneration unit is the sale of tangible property resulting from exploiting immovable property, not the grant of a right to occupy immovable property and exclude others. A 1977 Council and Commission declaration permitting such an exemption has no legal significance, being unreflected in the wording. Fiscal neutrality does not assist. Single family homeowners and co-owners are distinct groups of consumers. Associations of residential property owners, and their advisers, can no longer rely on the German exemption for heat supplied to members.

C-801/19 Franck

Judgment · 17 December 2020 · Croatia

Exempt credit granted by a non-financial trader through bills of exchange

The Court held the exemptions in Article 135(1)(b) and (d) apply. Making funds obtained from a factoring company available to another taxable person for remuneration, following transfer of a bill of exchange issued by that person and with a guarantee of repayment at maturity, is exempt. The provision of funds is the principal supply. The rest is ancillary. Non-financial status, the contractual labels and repayment to the factor rather than the lender are irrelevant, subject to national court verification. Confirms that industrial and retail groups providing intra-group or third party finance can rely on the credit exemption, and that the 135(1)(b) and (d) exemptions do not depend on regulated status or on funds being repaid to the provider.

C-42/19 Sonaecom

Judgment · 12 November 2020 · Portugal

Deduction on abortive acquisition costs, but not on a bond loan that was on-lent

The Court answers yes to the first and no to the second. The consultancy costs are deductible even though the acquisition never happened, since the intention to carry out taxable transactions is what counts. The loan commission is not deductible, because the capital was in fact used for a different purpose, an exempt on-lending to the parent, which broke the link with the intended taxable activity. The judgment draws the line by reference to what actually happened to the resources.

C-405/19 Vos Aannemingen

Judgment · 1 October 2020 · Belgium

Deduction where costs also benefit a third party

An ancillary benefit to a third party, flowing from services acquired in the taxable person's own interest, does not restrict deduction. That holds equally where the costs attach to particular output transactions rather than overheads, but only in so far as a direct and immediate link with the taxable person's own taxable transactions is maintained. No deduction arises for the part of the expenditure linked to transactions carried out by the third party. The unexercised ability to on-charge is one relevant factor, not decisive. Relevant to property developers building on third party land, and more widely to any business bearing marketing, agency or administrative costs from which a counterparty also profits.

C-312/19 Valstybinė mokesčių inspekcija (Joint activity agreement)

Judgment · 16 September 2020 · Lithuania

Which partner is the taxable person under a joint activity agreement

The individual who participates alone and in his own name in dealings with third parties, notwithstanding a contractual power to act in the name of all partners, carries out the economic activity independently. He is the taxable person under Article 9(1) and solely liable under Article 193, whether acting on his own behalf or on behalf of another as a commission agent under Articles 14(2)(c) and 28. The remaining questions on allocation between partners and the Article 287 threshold did not require an answer. Relevant to advisers on unincorporated joint ventures, property development consortia and silent partnership structures, particularly in Member States where partnerships lack legal personality.

C-528/19 Mitteldeutsche Hartstein-Industrie

Judgment · 16 September 2020 · Germany

Input tax on infrastructure works carried out for a municipality

Deduction is available where the road serves both the taxable person's economic activity and the public, provided the works did not exceed what was objectively necessary for that activity and their cost is reflected in the price of the taxable output transactions. Excess works break the link in part. A unilateral operating authorisation is not consideration but a condition sine qua non, so the works are not made for consideration. Nor are they a deemed supply under Article 5(6), given the actual end-use benefits the taxable person.

C-424/19 UR (Liability of lawyers to VAT)

Judgment · 16 July 2020 · Romania

Lawyers as taxable persons and the limits of res judicata

A person practising the profession of lawyer carries on an economic activity as a liberal profession and is a taxable person under Article 9(1). EU law precludes applying res judicata where the later dispute concerns a different tax period and a different subject matter and where applying the principle would stop the national court giving effect to the EU VAT rules. Finality is otherwise respected because EU law does not generally require a court to reopen definitive judgments. Confirms that lawyers and other liberal professions are within the VAT net.

C-692/17 Paulo Nascimento Consulting

Judgment · 17 October 2019 · Portugal

Assignment of a position in enforcement proceedings and the credit exemption

The Court held the transaction taxable. An occasional transaction in direct extension of the taxable person's main activity is carried out as a taxable person. It is a single indivisible supply, either a supply of goods (if the taxable person could already dispose of the awarded property as owner, a matter for the national court) or a supply of services assigning intangible property. Neither Article 135(1)(b) nor Article 135(1)(d) applies. There is no capital made available remunerated by interest, and the transaction does not concern debts. Confirms that one-off disposals arising out of a business's litigation, including sales of enforcement positions and rights over attached property, are within scope where they extend the taxable person's activity. Relevant to property agents, distressed debt purchasers and insolvency or enforcement practitioners.

C-420/18 IO (VAT – Activities of a member of a supervisory board)

Judgment · 13 June 2019 · Netherlands

Whether a supervisory board member acts independently

The activity is economic (permanent, remunerated, continuing), and a flat annual fee or a single term of office does not alter that. But it is not carried out independently. Although there is no employer-employee relationship under Article 10, the member does not act in his own name, on his own behalf or under his own responsibility, acting instead on behalf of and under the responsibility of the board, and bears no economic risk because his fixed fee is unaffected by meetings attended or hours worked. Relevant to non-executive and supervisory board members of foundations, associations and companies, and to the bodies paying them.

C-185/18 Oro Efectivo

Judgment · 12 June 2019 · Spain

Non-harmonised transfer duty on purchases of gold from private individuals

The Directive does not preclude such a tax. The duty is not a turnover tax within Article 401. It does not apply generally to all transactions in goods or services and is not charged at each stage of production and distribution with deduction of tax paid at earlier stages. EU law permits concurrent systems of taxation, even where this results in double taxation of the same transaction. Fiscal neutrality does not extend beyond the harmonised VAT system, so a non-harmonised duty of this kind cannot undermine it. Confirms that businesses cannot use fiscal neutrality to attack national transfer or registration duties charged on inputs bought from private individuals. Relevant to gold, scrap, second-hand goods and jewellery dealers, and to auction and antiques traders, in Member States levying stamp or asset transfer duty on such acquisitions.

C-214/18 PSM K

Judgment · 10 April 2019 · Poland

Whether statutory fees are treated as VAT inclusive

Those provisions and principles do not preclude such a practice. The Directive contains no rule on whether such fees include VAT, so it is for Member States to decide. Where national law does not permit VAT to be added to the statutory fee, the fee must be regarded as VAT inclusive. That respects neutrality and ensures the taxable amount does not exceed the consideration actually paid. Macikowski, which concerned an officer liable for another person's tax, is distinguished. The answer assumes the officer is a taxable person outside Article 13 and cannot gross up. Confirms that where a regulated tariff is silent on VAT, the taxable person, not the customer, absorbs the tax.

C-165/17 Morgan Stanley & Co International

Judgment · 24 January 2019 · France

Deductible proportion of a branch serving its foreign principal establishment

Branch and principal establishment are one taxable person, so internal flows are disregarded. For expenditure used exclusively for the principal establishment's transactions, the fraction's denominator is the turnover of those transactions alone. The numerator only its taxed transactions which would also give a right to deduct in the branch's Member State, including where deduction arises from an option exercised there. For the branch's general costs, the denominator covers the transactions of both establishments, the numerator the branch's taxed transactions plus those of the principal establishment meeting the same double test. Directly relevant to banks, insurers and other partly exempt groups operating through cross-border branches, and to anyone computing branch recovery rates.

C-249/17 Ryanair

Judgment · 17 October 2018 · Ireland

Deduction of deal costs on an abortive takeover

Preparatory acts count as economic activity, so a company intending to acquire shares in order to supply the target with management services subject to VAT acts as a taxable person when it incurs the bid costs. The input VAT is deductible in full even though the intended activity never materialised and produced no taxable output. The qualification is that the exclusive reason for the expenditure must lie in the intended economic activity. If it is partly attributable to exempt or non-economic activity, deduction is only partial. Confirms that failed or partial acquisitions do not of themselves destroy recovery on deal fees, for corporate acquirers, holding companies and their M&A and VAT advisers.

C-320/17 Marle Participations

Judgment · 5 July 2018 · France

Letting of a building as involvement in a subsidiary's management

Yes, letting a building to a subsidiary is "involvement in the management" and an economic activity, provided the letting is continuous, for consideration, taxed (not exempt), and there is a direct link between service and consideration. Acquisition costs are then general expenditure, deductible in full. Where the holding company involves itself in only some subsidiaries, the costs are only partly general expenditure and deduction must be apportioned. Turnover from the lettings and dividend income are irrelevant to the extent of deduction. Confirms the list of qualifying management services is not exhaustive.

C-374/16 Geissel

Judgment · 15 November 2017 · Germany

Meaning of "address" on an invoice for input tax deduction

Articles 168(a) and 178(a), read with Article 226(5), preclude national legislation conditioning deduction on the invoice stating the address where the issuer carries out its economic activity. "Address" bears its ordinary broad meaning and covers any address, including a letterbox address, at which the issuer can be contacted. Identification of the issuer, principally via name and VAT identification number, is the purpose. The good faith questions were not answered. Member States cannot add invoice content requirements beyond Article 226, and cannot refuse deduction merely because the supplier's stated address is a postal or registered office address with no activity there. Relevant to any business trading with suppliers operating remotely, online or without business premises, and to German taxpayers whose deductions were denied on this basis.

C-132/16 Iberdrola Inmobiliaria Real Estate Investments

Judgment · 14 September 2017 · Bulgaria

Deduction on works to infrastructure owned by a third party

Deduction is available where there is a direct and immediate link with the taxable person's taxed output transactions, and the free benefit to the third party does not defeat it. Two qualifications: the works must not exceed what is necessary to enable the taxable person's taxable output transactions, and their cost must be included in the price of those transactions. If the works go further, the link is partially broken and deduction is limited to the objectively necessary part. Article 26 was not engaged. Confirms that a blanket national denial of deduction because a supply is free of charge, or because the improved asset belongs to someone else, cannot stand.

C-28/16 MVM

Order · 12 January 2017 · Hungary

Deduction by a holding company managing subsidiaries free of charge

Ruling by reasoned order under Article 99, the Court held that involvement in managing subsidiaries without any remuneration is not an economic activity, so no deduction arises for services relating to transactions outside the Directive. Deduction as general overheads was not excluded in principle, but the referring court must verify the direct and immediate link with the leasing activity, which the Court thought difficult to envisage. Later charging of a margin (from 2015) cannot revive deduction for 2008 to 2010 costs. Confirms that active holding status depends on actually supplying services for consideration, not on de facto management.

C-340/15 Nigl and Others

Judgment · 12 October 2016 · Austria

Independence of associated partnerships and access to the flat-rate scheme for farmers

Each partnership is an independent taxable person. Acting in its own name, on its own behalf and at its own risk is decisive, and cooperation through a shared marketing company or trade mark, or the leading role of one partner, does not defeat that. The flat-rate scheme may nonetheless be refused, even absent an excluded category, if the links with that company or association make the partnerships materially capable of bearing the administrative burden of the normal or simplified arrangements. Refusal may cover earlier periods within the limitation period, but not before the facts relied on arose. Relevant to family and group structures in agriculture, wine and food production where separate partnerships share branding, bottling, central purchasing and a common sales vehicle.

C-11/15 Český rozhlas

Judgment · 22 June 2016 · Czechia

Public broadcasting funded by a statutory licence fee is outside the scope of VAT

Such broadcasting is not a supply for consideration and falls outside the Directive. There is no legal relationship involving reciprocal performance and no direct link. Liability for the fee follows mere possession of a receiver, whatever its use, and access to the broadcasts is free and not conditional on payment. A statutory triangular arrangement between the State, the broadcaster and fee payers does not change that, and Article 13A(1)(q) cannot widen the scope set by Article 2. Public broadcasters and other bodies funded by statutory levies must treat that funding as outside the scope rather than exempt, which affects how the deduction fraction is built and can restrict input tax on non-economic activity, the opposite of what the broadcaster sought here. Relevant to broadcasting, cultural and other publicly financed entities with mixed commercial income.

C-229/15 Mateusiak

Judgment · 16 June 2016 · Poland

Taxation of business assets retained on cessation of activity

A Member State may treat the retained goods as a supply for consideration even after the adjustment period has expired. Article 18(c) imposes no time condition and does not cross-refer to the adjustment rules in Articles 184 to 192. It creates a new taxable transaction on cessation rather than a retroactive correction. Taxation therefore applies whatever the interval since acquisition, provided the goods still have a residual value at cessation, the taxable amount under Article 74 being the value determined at that time. Relevant to sole traders, professional practices and small companies in Member States that have implemented Article 18(c), and to advisers planning cessations, retirements and deregistrations.

C-263/15 Lajvér

Judgment · 2 June 2016 · Hungary

Economic activity of a non-profit company charging modest operating fees

It is an economic activity because neither non-profit status, the ancillary character of the activity, nor public funding matters, provided the fee is charged over a period long enough to constitute income on a continuing basis (eight years suffices). The operation is a supply of services for consideration despite the statutory maintenance obligation and the modest, below cost level of the fee. The national court must still verify the direct link, in particular that the fee is not only partial remuneration and that the arrangement is not wholly artificial. Confirms that non-profit and publicly subsidised entities operating infrastructure for fees are taxable persons with input tax rights, and that below cost or regulated pricing does not itself break the direct link. Relevant to municipal and quasi-public vehicles, water, drainage and road maintenance bodies, and to advisers on EU funded projects where authorities challenge deduction.

C-520/14 Gemeente Borsele and Staatssecretaris van Financiën

Judgment · 12 May 2016 · Netherlands

Municipal school transport and the meaning of economic activity

There were supplies for consideration, since the contributions need not reflect cost price and a direct link can exist even where the price is below cost. But that is not enough because economic activity requires examination of all the circumstances. Recovering only 3% of costs from a third of users showed an asymmetry ruling out a genuine link, and the municipality was not offering services on the general passenger transport market but acting as final consumer of the operators' services. No economic activity, no taxable person. Relevant to public bodies and their advisers dealing with heavily subsidised services supplied for a token or means tested user charge.

C-174/14 Saudaçor

Judgment · 29 October 2015 · Portugal

When a regional health services company counts as a body governed by public law

The Court holds that the activity may fall within Article 13(1) where it is an economic activity, provided the referring court finds that the company is to be classified as a body governed by public law, that it carries out the activity as a public authority, and that exemption would not lead to significant distortions of competition. The concept must not be interpreted by reference to the procurement definition in Directive 2004/18. The judgment is the standard reference for public sector bodies operating through corporate vehicles.

C-185/14 EasyPay and Finance Engineering

Judgment · 22 October 2015 · Bulgaria

Exclusive right to pay pensions by postal money order

Money order services are outside Directive 97/67. Article 2 lists postal services exhaustively and covers no financial services, even those provided as an add-on by postal operators. As to Article 107(1) TFEU, if the money order activity is separable from the national pensions system it is an economic activity, but the exclusive right is not caught where the service is a service of general economic interest and the remuneration is Altmark compliant compensation. The national court must verify separability and the Altmark conditions. Confirms that postal financial services, money orders included, sit outside the postal Directive and are governed by the general Treaty rules, so postal operators and their competitors cannot rely on Directive 97/67 liberalisation arguments here.

C-126/14 Sveda

Judgment · 22 October 2015 · Lithuania

Deduction on assets provided free to the public as a means of attracting customers

The input VAT on those capital goods is deductible. A person incurring investment expenditure with an intention, confirmed by objective evidence, of carrying out economic activity acts as a taxable person, and the immediate provision of the assets to the public free of charge neither exempts nor takes the transaction outside VAT. The link may be with a particular output transaction or with the economic activity as a whole. Establishing that link on objective evidence is for the national court. The subsidy condition and adjustment periods do not affect the origin of the right. Useful for any business that constructs infrastructure open to the public without charge as a customer draw.

C-424/14 Balogh

Order · 30 September 2015 · Hungary

Declaring the start of an activity below the small-business threshold, and the fine for not doing so

Ruling by reasoned order, the Court held that Article 213(1) does not preclude such an obligation. The duty to declare the start of an activity is an administrative requirement that Member States may impose on persons within the scope of the tax even where the exemption for small enterprises applies. Nor does EU law preclude a fine for failing to comply. It is for the national court to assess whether the penalty actually imposed complies with the principle of proportionality. A reminder that the small-business exemption relieves the charge, not the registration duties that let an administration monitor who is trading.

C-276/14 Gmina Wrocław

Judgment · 29 September 2015 · Poland

Independence of municipal budgetary entities as taxable persons

Bodies governed by public law cannot be taxable persons unless they independently carry out economic activity within Article 9(1). The test is the same for public and private persons. Whether the entity acts in its own name, on its own behalf and under its own responsibility, and bears the economic risk. Entities acting in the municipality's name, with no liability for damage, no own property and all revenue and costs falling on the municipal budget, form a single taxable person with the municipality. No temporal limitation was granted. Public sector bodies operating through unincorporated arms must test each arm against the employer-employee style independence criteria rather than assume separate registration. Relevant to advisers to local government, schools, cultural and inspection bodies.

C-108/14 Larentia + Minerva and Marenave Schiffahrt

Judgment · 16 July 2015 · Germany

Holding company input tax and the scope of VAT grouping

Where the holding company involves itself in the management of the subsidiaries, the acquisition costs are general overheads and VAT is in principle fully deductible, subject to Article 17(5) if there are exempt outputs. Where it manages only some subsidiaries, deduction is proportionate, on apportionment criteria set by Member States. Restricting grouping to subordinated legal persons is precluded unless necessary and appropriate to counter abuse or evasion, a matter for the national court. Article 4(4) has no direct effect. Confirms full deduction for genuine management holding companies, including on share issue and financing costs, and confines partial restriction to cases where some shareholdings are purely passive. Relevant to shipping, private equity and group holding structures.

C-183/14 Salomie and Oltean

Judgment · 9 July 2015 · Romania

Retrospective taxation of property sales and deduction before VAT registration

Retrospective assessment within the limitation period is permissible provided the national rules were clear and precise and the authority's practice gave no precise assurances creating a reasonable expectation of non-taxation. A mere non-systematic practice of not taxing such sales is not enough, especially for property professionals dealing on this scale. Surcharges must be proportionate, a matter for the national court. Deduction cannot be refused or deferred merely because the taxable person was not registered when the transactions were carried out. Relevant to property developers, joint ventures and unincorporated partnerships facing reclassification as taxable persons, and to advisers arguing legitimate expectations.

C-72/13 Gmina Wrocław

Order · 26 February 2015 · Poland

A municipality sales and contributions in kind may be subject to VAT

The Court holds that the directive does not preclude those transactions being taxed, provided the referring court finds that they constitute an economic activity under Article 9(1) and are not carried out by the municipality acting as a public authority under the first subparagraph of Article 13(1). Even if the municipality is found to act as a public authority, the transactions may still be taxed if exempting them would cause significant distortions of competition. The order sets out the two stage test that every public body disposal has to pass.

C-219/12 Finanzamt Freistadt Rohrbach Urfahr

Judgment · 20 June 2013 · Austria

Domestic solar panels as an economic activity

The operation of such an installation is an economic activity. Electricity fed into the grid for remuneration under a contract of indefinite duration is the exploitation of property for income on a continuing basis, and profit motive is irrelevant. The supply to the grid is a separate activity from taking electricity back for household needs, so the ratio of production to private consumption is immaterial. The operator is a taxable person and, the installation being used exclusively for taxed outputs, input tax is deductible. Confirms that private individuals with grid-connected solar installations are taxable persons where all output is sold on a continuing basis, opening full input VAT recovery on the installation and requiring output VAT on feed-in supplies, subject to national small-business thresholds.

C-62/12 Kostov

Judgment · 13 June 2013 · Bulgaria

Occasional transactions by an already registered taxable person

He is a taxable person. Someone already taxable for VAT in respect of his main activity acts as a taxable person for any other economic activity carried out occasionally, provided that activity falls within the second subparagraph of Article 9(1). Article 12(1) concerns only persons not already taxable in respect of their main economic activity, so no separate Member State option is needed here. The Court proceeded on the referring court's classification of the arrangement as an agency contract, that is, a supply of services. Registered taxable persons cannot ring-fence their VAT status by reference to the activity for which they registered.

C-142/12 Marinov

Judgment · 8 May 2013 · Bulgaria

Taxable amount on retention of goods after deregistration

Article 18(c) covers cessation whatever its cause, including removal from the register by the authorities, subject only to the Article 19 cases. The taxable amount is governed by Article 74, not Article 80 (whose conditions are exhaustive and not met here). It is the residual value of the goods at cessation. An open market value rule is precluded unless in practice it produces that residual value, reflecting the change in value since acquisition. Article 74 has direct effect. Relevant wherever a business is struck off the VAT register while holding assets on which input tax was recovered, in particular vehicle fleets and other depreciating equipment.

C-527/11 Ablessio

Judgment · 14 March 2013 · Latvia

Refusal to assign a VAT identification number

A number may not be refused solely because the applicant lacks the material, technical and financial resources for the declared activity, or because its shareholder has repeatedly obtained numbers for companies that never traded and were then transferred. Such refusal requires objective factors amounting to sound evidence that the number will probably be used fraudulently, assessed overall. Those circumstances may feed into that assessment. Whether the evidence was sufficient is for the national court. Relevant to advisers handling start-up and pre-trading registrations, holding structures and businesses whose promoters have incorporated multiple entities.

C-257/11 Gran Via Moineşti

Judgment · 29 November 2012 · Romania

Deduction on buildings acquired for demolition

The purchaser has the right to deduct the VAT on the buildings. The acquisition is a preparatory act in its property development activity, and the land continues to be used for taxed transactions, so replacing dilapidated structures with modern ones does not break the direct link. Demolition is not a change in the factors determining the deduction under Article 185(1), because it was intended from the outset. No adjustment is therefore due, absent fraud or abuse. Confirms for developers and their advisers that VAT on a demolition purchase (land plus existing buildings) is fully deductible where the intended taxed use of the site is evidenced objectively, here by the transferred demolition permit, the actual demolition works and the planning certificate.

C-263/11 Rēdlihs

Judgment · 19 July 2012 · Latvia

Timber sales after a storm, economic activity and penalties for late VAT registration

Such supplies are exploitation of tangible property and so economic activity, provided they are made for the purpose of obtaining income on a continuing basis. The force majeure motive and the private acquisition of the forest are irrelevant, and the national court must weigh all circumstances, including active forestry management, duration, number of customers and earnings. A fine fixed at the VAT rate on the value supplied, where the person was not liable for the tax, may breach proportionality. The national court must assess the sum actually imposed and any fraud or circumvention. Confirms that one-off sounding disposals of natural produce can still be continuous exploitation, so advisers to landowners, farmers and forestry clients cannot rely on external causes or original private intent to stay outside Article 9(1).

C-280/10 Polski Trawertyn

Judgment · 1 March 2012 · Poland

Deduction of pre-incorporation investment costs and invoices in the partners' names

Both national rules are precluded. Preparatory investment by future partners is economic activity, so where national law prevents the partners themselves from recovering the tax (here because the contribution in kind is exempt), the partnership must be able to deduct it. The invoice being in the partners' names is a purely formal defect that cannot defeat deduction where the substantive conditions are met, the payers and the partnership are in substance the same legal entity, and the authorities have the data needed for reliable collection. Fraud or abuse remains recoverable retrospectively. Confirms that start-up and pre-incorporation expenditure is not stranded VAT. Relevant to Polish practice and to any similar exemption of contributions in kind.

C-118/11 Eon Aset Menidjmunt

Judgment · 16 February 2012 · Bulgaria

Deduction on leased and finance-leased cars used for home to work travel

For an ordinary lease (a supply of services), deduction requires a direct and immediate link with the economic activity, assessed at the expiry of the period to which each payment relates. Where a finance lease transfers substantially all risks and rewards, or ownership at the end, it is the acquisition of capital goods. If allocated wholly to business assets, input VAT is fully and immediately deductible, with private or staff use taxed under Article 26(1). Such national exclusions are permissible, but not where capital goods are allocated to the business. Relevant to fleet operators, leasing companies and advisers handling company car deductions.

C-93/10 GFKL Financial Services

Judgment · 27 October 2011 · Germany

Purchase of defaulted debts below face value, no supply for consideration

No supply of services for consideration and no economic activity, where the difference between face value and purchase price reflects the actual economic value of the debts at the time of assignment. The purchaser receives no consideration from the assignor. The discount reflects the doubtful nature of the debts and increased default risk, not remuneration. That distinguishes the case from true factoring, where the factor retains a factoring commission and a del credere fee. The exemption and taxable amount questions did not need answering. Confirms that outright purchases of distressed loan portfolios priced at market value fall outside VAT altogether, so no output tax on a notional recovery service and no debate about exemption. Relevant to banks disposing of non-performing loans, debt purchasers and securitisation vehicles, and to their advisers structuring pricing documentation.

C-504/10 Tanoarch

Judgment · 27 October 2011 · Slovakia

Deduction on assignment of a co-ownership share in an unpatented invention

A taxable person may in principle deduct input VAT on such an assignment, provided national law permits a co-inventor to assign his share. That question of national law is for the referring court. Lack of patent registration does not prevent the transaction being an economic activity, and the parties' intention to obtain a tax advantage is irrelevant to that classification. Whether the arrangement amounts to abuse of rights is a factual assessment for the national court on all the circumstances. Confirms that intangible rights transactions are judged objectively. Relevant to IP holding structures, research consortia and advisers handling deals in patent rights before grant.

C-421/10 Stoppelkamp

Judgment · 6 October 2011 · Germany

Meaning of a taxable person not established in the territory of the country

It is sufficient that the seat of the economic activity is established outside the country. Personal residence, domicile or normal place of residence are secondary connecting factors, relevant only where there is no information on the seat or a fixed establishment from which transactions are effected. That applies where the seat is known and genuine, not fictitious or a mere letter-box presence, in which case other factors may be examined. Confirms that customers applying the reverse charge need not investigate where their supplier personally lives once the supplier's business seat is demonstrably in another Member State.

C-180/10 Słaby and Others

Judgment · 15 September 2011 · Poland

Sales of building land by private landowners and the boundary of economic activity

Mere management of private property remains outside VAT. The number and scale of sales, division into plots, the period involved and the income earned are not decisive. The seller becomes a taxable person only if he takes active steps to market the land by mobilising resources similar to a trader, for example preparatory development works or proven marketing measures. Article 12(1) applies only if the Member State has actually exercised the option, which the national court must verify. Article 16 does not apply where no input VAT was deductible. Flat-rate farmer status is irrelevant. The reference point for land disposals by individuals and farmers is qualitative, not quantitative. Relevant to landowners, farmers and property developers.

C-154/08 Commission v Spain

Judgment · 12 November 2009 · Spain

Land registrars acting as tax settlement agents as taxable persons

The Court declared that Spain had infringed Article 2 and Article 4(1) and (2) of the Sixth Directive by treating those services as not subject to VAT. The registrars act on their own account and at their own risk, remunerated out of the sums collected, and are therefore independent taxable persons. They are not integrated into the public administration so as to fall outside the scope of the tax. The Court also confirmed that an infringement of Community law attributable to a national court engages the Member State's responsibility. Confirms that VAT liability turns on the substance of how a professional is engaged and remunerated, not on the public-law label of the function performed or the public character of the recipient.

C-29/08 SKF

Judgment · 29 October 2009 · Sweden

Deduction on costs of selling shares in a subsidiary

The disposal is an economic activity within scope, unless it can be equated to a transfer of a going concern and the Member State has exercised the Article 19 option, in which case it falls outside VAT. Where in scope, it is exempt under Article 135(1)(f). Input VAT on the related services is deductible only if the costs have a direct and immediate link with the taxable person's economic activity as a whole rather than with the exempt sale itself. The national court must decide whether the costs are built into the share price. Staged disposals are treated identically. Holding companies that intervene in the management of subsidiaries can no longer be told that exemption of the share sale automatically blocks deduction.

C-246/08 Commission v Finland

Judgment · 29 October 2009 · Finland

Direct link between service and consideration, publicly funded legal aid

The Court dismissed the action. Payment fixed by reference to the recipient's income and assets rather than the hours worked or difficulty of the case depends only partly on the real value of the service. With contributions of EUR 1.9 million against gross running costs of EUR 24.5 million, the payment resembles a fee whose collection does not by itself make an activity economic. The Commission failed to prove a direct link. Article 4(5) therefore did not fall to be examined. Confirms that means tested part payments to publicly funded bodies may lack the direct link needed for a supply for consideration, so no VAT arises and the public body exemption in Article 4(5) is never reached. Relevant to advisers on state funded legal, welfare, health and educational services where users pay a subsidised charge calculated on income rather than on the service.

C-267/08 SPÖ Landesorganisation Kärnten

Judgment · 6 October 2009 · Austria

Political party publicity is not an economic activity

The Court held that such external publicity activity is not an economic activity. The exploitation involved did not generate income on a continuing basis. The only continuing income came from public funding and members' contributions, which served to cover the losses. In carrying out this communication work to shape political opinion and take part in political power, the party did not participate in any market. Relevant to political parties, and by analogy to bodies whose activities are essentially funded by subsidies, membership dues and donations with only partial, discretionary cost recharges to affiliated entities.

C-554/07 Commission v Ireland

Judgment · 16 July 2009 · Ireland

Ireland's blanket exclusion of public bodies from VAT

The Court upheld the action on all three limbs. Ireland had failed to lay down a general requirement that public bodies be taxable on activities carried on otherwise than as public authorities. A general requirement that they be taxable where non-taxation causes significant distortions of competition, together with criteria framing the exercise of the Minister's discretion, and a general requirement that they be taxable on the Annex I activities save where carried out on a negligible scale. Ireland had therefore failed to fulfil its obligations under Articles 2, 9 and 13 and was ordered to pay the costs. The judgment defines what correct transposition of Article 13 looks like.

C-437/06 Securenta

Judgment · 13 March 2008 · Germany

Input VAT on share issue costs where economic and non-economic activities are mixed

Input VAT on capital-raising costs is deductible only to the extent the costs are attributable to the taxable person's economic activity. VAT on costs linked to activities falling outside the Directive because they are non-economic gives no right of deduction. Articles 17(5) and 19 govern only the split within economic activity. The choice of method and criteria for apportioning between economic and non-economic activity is for Member States, which must adopt a calculation objectively reflecting the actual attribution to each. An investment-based, transaction-based or other suitable criterion may be used. Confirms a two-stage apportionment for holding and investment vehicles, funds and any business with genuinely non-economic activity: first strip out the non-economic share of general costs, only then apply the Article 17(5) pro rata. Relevant to advisers on IPO, share issue and fundraising costs, where full deduction cannot be claimed simply because capital strengthens the business generally.

C-355/06 van der Steen

Judgment · 18 October 2007 · Netherlands

Sole shareholder-director as a taxable person

He is not a taxable person. Where the individual works in the name and on behalf of the company under a contract of employment, an employer and employee relationship exists. The company sets his remuneration, he does not act in his own name or under his own responsibility, and he bears no economic risk. Heerma is distinguished because there the partner let property in his own name. Asscher, concerning free movement, does not apply to the VAT concept of taxable person. The Dutch practice of grouping an owner-manager with his own company collapses.

C-284/04 T-Mobile Austria and Others

Judgment · 26 June 2007 · Austria

Auctioning of mobile telephony spectrum rights by a regulator

Allocation by auction of spectrum use rights by the regulator is not an economic activity under Article 4(2) and falls outside the Directive. Issuing such authorisations is a precondition for market access, exclusively within State competence, not participation in the market. Only the licensees exploit the rights for continuing income. The subsequent transferability of the rights, itself subject to regulatory control, and the existence of a payment do not alter this. Article 4(5) presupposes an economic activity, so the remaining questions fell away. No input VAT arises on spectrum auction proceeds and regulators cannot be required to issue VAT invoices for them, closing off recovery claims by mobile operators across the Member States.

C-369/04 Hutchison 3G and Others

Judgment · 26 June 2007 · United Kingdom

Auction of radio spectrum licences by a regulator is not an economic activity

The Grand Chamber held that the issue by auction, by the national regulatory authority responsible for spectrum assignment, of rights to use telecommunications equipment is not an economic activity and falls outside the Directive. The authority does not participate in the market. It performs a delegated control and regulation function that is a precondition of market access and cannot by its nature be carried out by traders. Neither the payment received nor operators' later ability to transfer the rights alters this. The remaining questions, including Article 4(5), were not answered. Licence fees paid to spectrum regulators carry no input tax, so a telecoms operator recovers no VAT from the auction proceeds and the bid amounts are not VAT inclusive. Relevant to advisers on regulated sectors and to public bodies levying fees for licensing and permit activity.

C-435/05 Investrand

Judgment · 8 February 2007 · Netherlands

Deduction of advisory costs on a pre-taxable-person share sale claim

The input tax on those advisory services is not deductible. Neither the share sale nor steps taken by a person on his own behalf to recover or quantify his own claim is an economic activity. Any gain flows from holding the claim, not from exploitation of property. Nor were the costs general overheads. The company would have taken the advice regardless of its later taxable activity, so the exclusive reason for the cost lay outside that activity. Deduction would follow only on evidence that the economic activity was the exclusive reason for the services. Confirms that holding a claim in the business's assets does not by itself make related professional fees deductible overheads.

C-255/02 Halifax and Others

Judgment · 21 February 2006 · United Kingdom

Abuse of rights in VAT and the redefinition of transactions

Such transactions are supplies and an economic activity if they meet the objective criteria, regardless of purpose. Intention is irrelevant at that stage. But the Sixth Directive precludes deduction where the transactions are an abusive practice. The tax advantage must be contrary to the purpose of the provisions despite their formal application, and objective factors must show that obtaining that advantage is the essential aim. Abuse is excluded where the activity has some other explanation. The transactions are then redefined, not penalised. The foundational VAT abuse authority. Relevant to banks, insurers, and property development advisers.

C-419/02 BUPA Hospitals and Goldsborough Developments

Judgment · 21 February 2006 · United Kingdom

VAT on prepayments for goods not yet identified

Prepayments of lump sums for goods described only in general terms in a list alterable at any time by agreement, from which the buyer may possibly select items, under a contract the buyer may terminate unilaterally and recover the unused balance, do not fall within the second subparagraph of Article 10(2). That derogation is to be construed strictly. All information concerning the future supply must already be known, so the goods or services must be precisely identified when the payment is made. The remaining questions, including abuse, were not answered.

C-223/03 University of Huddersfield

Judgment · 21 February 2006 · United Kingdom

Whether transactions carried out solely for a tax advantage are economic activities

Such transactions are supplies and an economic activity for the purposes of the Sixth Directive. The concepts of supply of goods, supply of services and economic activity are objective in nature and apply without regard to the purpose or results of the transaction, so the sole aim of obtaining a tax advantage is irrelevant, provided the objective criteria are met. The Court added, referring to Halifax delivered the same day, that the Directive nonetheless denies deduction where the transactions concerned constitute an abusive practice. The tax authority cannot deny that a transaction exists, or recharacterise it as outside the scope of VAT, merely because its only motive was tax saving, nor may it inquire into subjective intention at the taxable transaction stage.

C-354/03 Optigen and Others

Judgment · 12 January 2006 · United Kingdom

Deduction where an unconnected party in the supply chain commits carousel fraud

Such transactions are supplies of goods and an economic activity where they meet the objective criteria of those definitions, irrespective of the intention of another trader in the chain or the fraudulent nature of another transaction of which the taxable person had no knowledge and no means of knowledge. The right to deduct cannot be affected in those circumstances. The qualification is knowledge. The protection turns on the trader neither knowing nor having any means of knowing of the fraud. Tax authorities cannot deny recovery by treating an entire carousel chain as outside the scope of VAT.

C-452/03 RAL (Channel Islands) and Others

Judgment · 12 May 2005 · United Kingdom

Place of supply of slot gaming machine services as entertainment

Enabling the public to use slot gaming machines for consideration in amusement arcades in a Member State is an entertainment or similar activity under the first indent of Article 9(2)(c), so the place of supply is where the machines are physically operated. Artistic input is not required, and the provision is not confined to supplies between taxable persons. Supplies to final consumers are covered. Having answered on that basis, the Court did not address fixed establishment or abuse of right. Operators of gaming and amusement machines, and their advisers, cannot relocate the place of supply by placing the operating company outside the Community.

C-25/03 HE

Judgment · 21 April 2005 · Germany

Deduction for a home office in a jointly owned house

He acts as a taxable person and may deduct under Article 17 to the extent he allocates the office to his business. Where the marital community has no legal personality and carries out no economic activity, the co-owners are the recipients. He may deduct all input VAT attributable to the part used exclusively for business, capped by his interest in the co-ownership (here 25%). A joint invoice without apportionment suffices. National extra invoicing particulars cannot defeat deduction where there is no fraud risk. Confirms that co-ownership under national civil law does not dictate who is the recipient of a supply or the extent of deduction.

C-32/03 Fini H

Judgment · 3 March 2005 · Denmark

Deduction on costs incurred after cessation of business

Such a person remains a taxable person and may deduct the VAT on the rent and charges, because the continuing obligation is a direct consequence of the business actually carried on in those premises and expenditure on terminating a business cannot be distinguished from expenditure on starting or running it. Two conditions: a direct and immediate link between the payments and the former economic activity, and no fraud or abuse, for example continued private use of the premises. The second question was not answered. Confirms that winding-up costs sit inside the deduction system, mirroring the treatment of preparatory acts.

C-8/03 BBL

Judgment · 21 October 2004 · Belgium

Taxable person status of open-ended investment companies and the place of supply

Such SICAVs are taxable persons. Assembling and managing portfolios of transferable securities on behalf of subscribers for a fee goes beyond the mere acquisition and sale of securities, which alone is not an economic activity, and aims to produce income on a continuing basis. Services falling within Article 9(2)(e) supplied to SICAVs established in another Member State are therefore supplied where the SICAV has established its business. Both consultancy and banking and financial services are covered, including services involving decision-making powers. The exemption question fell away. Suppliers of advisory, information and financial services to cross-border funds can rely on the customer-location rule regardless of how the fund's own Member State treats it. Relevant to banks, asset managers and fund administrators supplying UCITS-type vehicles, and to any adviser facing assessments premised on the customer's non-taxable status abroad.

C-305/01 MKG-Kraftfahrzeuge-Factoring

Judgment · 26 June 2003 · Germany

VAT treatment of true factoring

A business purchasing debts, assuming the debtors' default risk and invoicing commission in return supplies a service for consideration. It is a taxable person with a right to deduct under Article 17. Such activity constitutes "debt collection and factoring" within the final clause of Article 13B(d)(3) and is therefore outside the exemption. True and quasi-factoring cannot be treated differently. In the other language versions "debt collection" covers all forms of factoring. Factoring companies are fully taxable persons with full input tax recovery, and their commission and del credere fees are taxable, not exempt financial services.

C-16/00 Cibo Participations

Judgment · 27 September 2001 · France

Deduction of acquisition costs by a holding company involved in managing its subsidiaries

Involvement in management is an economic activity where it entails carrying out transactions subject to VAT under Article 2, such as supplying administrative, financial, commercial and technical services to subsidiaries. Acquisition service costs have no direct and immediate link with a particular output transaction. They are general costs linked to the business as a whole, so where the holding company makes both deductible and non-deductible transactions only the proportion under Article 17(5) is recoverable. Dividends fall outside the scope of VAT altogether. The foundation for treating share acquisition costs of active holding companies as general overheads rather than costs of an out-of-scope share purchase.

C-102/00 Welthgrove

Order · 12 July 2001 · Netherlands

Holding company involvement in subsidiary management as an economic activity

By reasoned order, the answer being clear from existing case law, the Court held that involvement of a holding company in the management of its subsidiaries is an economic activity within Article 4(2) only in so far as it entails carrying out transactions subject to VAT under Article 2. Mere involvement in management without such transactions is not an economic activity. The exemption question therefore did not need answering. Confirms that active management of subsidiaries, of itself, does not confer taxable person status or a deduction right.

C-142/99 Floridienne and Berginvest

Judgment · 14 November 2000 · Belgium

Dividends and intra-group loan interest in the deductible proportion of a holding company

Both must be excluded from the denominator. Dividends are never consideration for the management services. Their amount depends on year-end results and attaches to the class of shares, not the shareholder's identity, so the necessary direct link is absent. Interest is excluded unless the lending is itself an economic activity, meaning continuous, not merely occasional or portfolio management, and pursued with a commercial concern to maximise returns. Lending to managed subsidiaries is not a direct, permanent and necessary extension of the services. Mere reinvestment of dividends is not taxable. The national court must verify this. Confirms that active holding companies cannot be forced to dilute their recovery rate by dividends received, however extensive their management involvement, which matters for group service companies and intermediate holdings across partial exemption calculations. Relevant to anyone reviewing group financing structures and holding company VAT registrations.

C-276/97 Commission v France

Judgment · 12 September 2000 · France

VAT on motorway tolls and the public bodies exclusion

Providing road access for a toll is an economic activity and a supply for consideration, there being a direct link between the toll and the use of the road. France infringed Articles 2 and 4 only where the service is not supplied by a body governed by public law. The Commission failed to show that public bodies were not operating under a special legal regime, and its distortion of competition argument was inadmissible. Own resources plus interest are due, but recovery is limited by analogy with Article 9(2) of Regulation No 1553/89 to the 1993 budgetary year onwards. Tolling and infrastructure concessions are within the scope of VAT where the operator is a private or quasi-public entity, even if its functions are conferred by law and exercised under public law prerogatives. Relevant to road, tunnel and bridge concessionaires and their advisers.

C-358/97 Commission v Ireland

Judgment · 12 September 2000 · Ireland

VAT on road and bridge tolls charged by private operators

Providing road access for a toll is an economic activity and a supply for consideration. There is a direct link between the road use and the toll. Article 4(5) requires both action as a public authority and a body governed by public law. The Irish operators were private-law traders, so it did not apply. Article 13B(b) did not cover the tolls because the parties agreed no duration of enjoyment, an essential element of letting. Own resources recoverable only from the 1994 budgetary year, by analogy with the four-year correction rule. Confirms that infrastructure charges levied by concessionaires and other private operators are taxable, whatever the statutory framework or public interest character of the activity.

C-359/97 Commission v United Kingdom

Judgment · 12 September 2000 · United Kingdom

VAT treatment of road and bridge tolls

Tolling is an economic activity and a supply of services for consideration, there being a direct link between access and the toll. The Article 4(5) exclusion cannot apply where the operator is a private law trader, and the Commission had not shown that public bodies operated on the same terms as private traders. No letting exemption: the parties agree no duration of enjoyment, an essential element of a letting. Own resources recoverable only from the 1994 budgetary year, by analogy with the four year correction rule. Confirms that toll charges for road and bridge access are taxable supplies unless made by a body governed by public law under a special legal regime, so concession structures matter.

C-408/97 Commission v Netherlands

Judgment · 12 September 2000 · Netherlands

Road tolls charged by public bodies and the public authority exclusion

The Court confirmed that providing road access for a toll is an economic activity and a supply of services for consideration, there being a direct link between access and the toll. However, it rejected the Commission's narrow reading of Article 4(5). Activities pursued "as public authorities" are those carried out under the special legal regime applicable to public bodies, not those carried out under the same legal conditions as private traders. As the Commission had not shown the toll operators were subject to private trader conditions, the action was dismissed. Confirms that tolls are consideration for a taxable service, so private and non-public operators of roads, bridges and tunnels are within the scope of VAT.

C-260/98 Commission v Greece

Judgment · 12 September 2000 · Greece

VAT on road tolls collected by a public body

The Court confirmed that providing road access against a toll is an economic activity and a supply of services for consideration, there being a direct link between the toll and the use of the road. However, it rejected the Commission's reading of Article 4(5), that only core, non delegable public functions qualify. What matters is whether the body operates under a special legal regime rather than under the same conditions as a private trader. The Commission had not shown this, so the action, including the own resources claim, was dismissed. Tolling is squarely an economic activity, so private and mixed sector concessionaires charge VAT.

C-23/98 Heerma

Judgment · 27 January 2000 · Netherlands

Letting of property by a partner to his own partnership, independence

Such a letting is an independent economic activity. There is no employer and employee relationship of the kind in the first subparagraph of Article 4(4). The partner acts in his own name, on his own behalf and under his own responsibility, even if he manages the lessee partnership, and the lease was not granted by its management. That his activity is confined to that one letting is irrelevant to independence. The Court did not examine the VAT grouping option in the second subparagraph of Article 4(4), which had not been invoked. Confirms that partners, members and directors letting property or other assets to their own vehicle are separate taxable persons, so rent is a taxable supply between them and the option to tax the letting (and the associated input tax recovery on construction) is available. Relevant to farming and family partnerships, professional practices and owner managed structures where a building is held privately and let to the operating entity.

C-80/95 Harnas & Helm

Judgment · 6 February 1997 · Netherlands

Whether holding bonds is an economic activity

Mere acquisition of ownership in and holding of bonds, where not subservient to any other business activity, and receipt of the income from them are not economic activities and confer no taxable person status. Interest derives from mere ownership, not from any transaction by the bondholder, so bonds are treated no differently from shares. Transactions in securities can fall within the scope of VAT where carried out as a commercial dealing activity, to secure involvement in management, or as a direct, permanent and necessary extension of a taxable activity. The remaining questions were not answered. Confirms that passive bond portfolios sit outside VAT on the same footing as passive shareholdings, so associated custody and management costs generate no deduction and no Article 17(3)(c) style refund route.

C-230/94 Enkler

Judgment · 26 September 1996 · Germany

Hiring out a motor caravan, economic activity and private use

Hiring out tangible property is exploitation of that property and is an economic activity only where done to obtain income on a continuing basis. Occasional activity is excluded. Where goods are by nature capable of both business and private use, the national court must weigh all the circumstances, including comparison with how the activity is normally carried on commercially, and duration, customer numbers and earnings. The taxable amount for deemed private use includes expenses relating to the goods themselves or on which VAT was deductible, for availability periods, apportioned by reference to actual non-business use over total actual use. Confirms that registration and a declared intention are not enough.

C-155/94 Wellcome Trust

Judgment · 20 June 1996 · United Kingdom

Share sales by a charitable trustee and the scope of economic activity

It is not an economic activity. Mere exercise of ownership rights, including the sale of holdings, falls outside Article 4(2), and this trustee, forbidden to trade and from taking majority holdings, confined itself to managing a portfolio like a private investor. Neither the size of the sale nor the use of professional advisers is a distinguishing criterion. Classification cannot turn on the investor's skill. Transactions in securities do fall within VAT where effected as part of commercial share dealing or to secure involvement in managing the investee companies. Charities, trusts, endowments and comparable passive investors in the United Kingdom and elsewhere cannot register or recover input VAT on transaction costs of disposing of investments, however large the deal or elaborate the execution.

C-110/94 INZO

Judgment · 29 February 1996 · Belgium

Preparatory acts and retroactive withdrawal of taxable person status

Where the authority has accepted taxable person status on the basis of a declared intention to carry out taxable transactions, commissioning a technical and economic viability study is itself an economic activity, even though its purpose is to test profitability, and the input VAT is in principle deductible. Except in cases of fraud or abuse, for example a false declaration of intention masking acquisition of private assets, that status and the deductions cannot be withdrawn retroactively merely because the operational phase was never reached. Confirms that feasibility and profitability studies for aborted projects carry a right of deduction, and that authorities cannot claw back refunds simply because the venture failed. Relevant to start-ups, project vehicles, infrastructure and energy joint ventures, and any special purpose company liquidated before trading.

C-60/90 Polysar Investments Netherlands

Judgment · 20 June 1991 · Netherlands

Pure holding company as a taxable person and the right to deduct

A holding company whose sole purpose is to acquire holdings in other undertakings, without direct or indirect involvement in their management (its rights as shareholder aside), is not a taxable person and has no right to deduct. Dividends are merely the result of ownership, not exploitation of property for income on a continuing basis. Membership of a worldwide group under a single name is irrelevant. Single taxable person treatment requires establishment in the same Member State. Establishes the baseline for holding company VAT recovery. Relevant to private equity and corporate holding structures, and to management charge arrangements.

C-186/89 Van Tiem

Judgment · 4 December 1990 · Netherlands

Grant of building rights as an economic activity

Granting building rights for a specified period against consideration (here 18 years for an annual sum) is exploitation of tangible property for income on a continuing basis, and so an economic activity. "Exploitation" covers all transactions, whatever their legal form, seeking continuing income from the property. Where the Article 5(3)(b) option has been exercised, "transfer" in Article 5(1) includes the creation of such a right in rem. Taxable person status depends solely on Article 4, irrespective of whether that option was taken. Confirms that owners granting long leasehold-type rights in rem over land are carrying on an economic activity and can therefore be taxable persons with deduction rights, even where the grant is a one-off arrangement with a related company. Relevant to property developers, landowners and their advisers in Member States using the Article 5(3)(b) option, where such grants are treated as supplies of goods.

C-235/85 Commission v Netherlands

Judgment · 26 March 1987 · Netherlands

VAT status of notaries and bailiffs performing statutory functions

The Court declared an infringement. "Economic activity" is wide and objective, covering the professions without reservation for statutorily regulated ones. Duties conferred by law in the public interest are still economic. Disciplinary supervision and statutory fee scales do not create an employment relationship under Article 4(4). Article 4(5) requires two conditions: a body governed by public law, acting as a public authority. Notaries and bailiffs are not part of the public administration, so exercising public powers alone does not exempt them. Confirms that private practitioners exercising delegated public powers are taxable persons.

C-268/83 Rompelman

Judgment · 14 February 1985 · Netherlands

Preparatory acts and the start of economic activity

Such an acquisition may be regarded as an economic activity. Preparatory acts, including the acquisition of assets, are themselves economic activity, and fiscal neutrality requires that first investment expenditure be treated as such rather than awaiting the point at which the property yields taxable income. The legal form of the preparatory act is irrelevant. However, the burden of proof lies with the claimant, and the authorities may require the declared intention to be supported by objective evidence, for instance that the planned premises are specifically suited to commercial exploitation. The foundational authority on pre-trading input tax.

Related topics

Right of deduction · Taxable person · Origin and scope of right of deduction · Supply of services · Bodies governed by public law · Supply of goods · Exemptions · Fiscal neutrality · Persons liable for payment of VAT · Direct effect