Metropol Treuhand WirtschaftsstreuhandgmbH v Finanzlandesdirektion für Steiermark and Michael Stadler v Finanzlandesdirektion für Vorarlberg.

• Jurisdiction: European Union
• Celex Number: 61999CJ0409
• ECLI: ECLI:EU:C:2002:2
• Docket Number: C-409/99
• Court: Court of Justice (European Union)
• Procedure Type: Reference for a preliminary ruling
• Date: 08 January 2002

Avis juridique important

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61999J0409

Judgment of the Court (Fifth Chamber) of 8 January 2002. - Metropol Treuhand WirtschaftsstreuhandgmbH v Finanzlandesdirektion für Steiermark et Michael Stadler v Finanzlandesdirektion für Vorarlberg. - Reference for a preliminary ruling: Verwaltungsgerichtshof - Austria. - Sixth VAT Directive - Article 17(6) and (7) - Right to deduct input VAT - Exclusions provided for under national laws at the date of entry into force of the directive - Exclusions for cyclical economic reasons - Consultation of the Advisory Committee on value added tax. - Case C-409/99.

European Court reports 2002 Page I-00081

Summary
Parties
Grounds
Decision on costs
Operative part

Keywords

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

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

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

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

Summary

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

( see paras 49, 51 and operative part 1 )

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

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

Parties

In Case C-409/99,

REFERENCE to the Court under Article 234 EC by the Verwaltungsgerichtshof (Austria) for a preliminary ruling in the proceedings pending before that court between

Metropol Treuhand WirtschaftstreuhandgmbH

and

Finanzlandesdirektion für Steiermark

and between

Michael Stadler

and

Finanzlandesdirektion für Vorarlberg,

on the interpretation of Article 17(6) and (7) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1),

THE COURT (Fifth Chamber),

composed of: P. Jann, President of the Chamber, A. La Pergola, L. Sevón (Rapporteur), M. Wathelet and C.W.A. Timmermans, Judges,

Advocate General: L.A. Geelhoed,

Registrar: D. Louterman-Hubeau, Head of Division,

after considering the written observations submitted on behalf of:

- the Austrian Government, by A. Längle, acting as Agent,

- the Commission of the European Communities, by E. Traversa and K. Gross, acting as Agents,

having regard to the Report for the Hearing,

after hearing the oral observations of the Austrian Government, represented by H. Dossi, acting as Agent, and A. Längle, and the Commission, represented by K. Gross, at the hearing on 5 July 2001,

after hearing the Opinion of the Advocate General at the sitting on 4 October 2001,

gives the following

Judgment

Grounds

1 By order of 22 September 1999, received at the Court on 26 October 1999, the Verwaltungsgerichtshof (Administrative Court) referred to the Court for a preliminary ruling under Article 234 EC two questions on the interpretation of Article 17(6) and (7) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1, the Sixth Directive).

2 The questions were raised in proceedings between Metropol Treuhand WirtschaftstreuhandgmbH (Metropol) and the Finanzlandesdirektion für Steiermark, and in proceedings between Michael Stadler and the Finanzlandesdirektion für Vorarlberg, concerning the right to deduct input value added tax (VAT) paid for the use of a Pontiac TransSport vehicle and a Fiat Ulysse vehicle respectively.

Community legislation

3 The second paragraph of Article 2 of First Council Directive 67/227/EEC of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes (OJ, English Special Edition 1967, p. 14, the First Directive) prescribes that [o]n each transaction, value added tax, calculated on the price of the goods or services at the rate applicable to such goods or services, shall be chargeable after deduction of the amount of value added tax borne directly by the various cost components.

4 Article 2(1) of the Sixth Directive prescribes that the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such is to be subject to VAT.

5 Article 17 of the Sixth Directive, headed Origin and scope of the right to deduct, provides, in paragraph 2(a), that [i]n so far as the goods and services are used for the purposes of his taxable transactions, the taxable person shall be entitled to deduct from the tax which he is liable to pay ... value added tax due or paid in respect of goods or services supplied or to be supplied to him by another taxable person.

6 Article 17(6) of the Sixth Directive provides:

Before a period of four years at the latest has elapsed from the date of entry into force of this Directive, the Council, acting unanimously on a proposal from the Commission, shall decide what expenditure shall not be eligible for a deduction of value added tax. Value added tax shall in no circumstances be deductible on expenditure which is not strictly business expenditure, such as that on luxuries, amusements or entertainment.

Until the above rules come into force, Member States may retain all the exclusions provided for under their national laws when this Directive comes into force.

7 Under Article 17(7) of the Sixth Directive:

Subject to the consultation provided for in Article 29, each Member State may, for cyclical economic reasons, totally or partly exclude all or some capital goods or other goods from the system of deductions. To maintain identical conditions of competition, Member States may, instead of refusing deduction, tax the goods manufactured by the taxable person himself or which he has purchased in the country or imported, in such a way that the tax does not exceed the value added tax which would have...