TAX INFRINGEMENT PROCEEDINGS FOR GREEK OUZO AND FRENCH VEHICLES USED FOR INSTRUCTION.

Tax regimes applying to Ouzo in Greece and vehicles used for instruction in France have come into the European Commission's firing line this Summer. The EU executive has decided to take France to the European Court of Justice because of its requirement that vehicles used for instruction must be devoted exclusively to driving lessons if they are to benefit from the right to deduct VAT. French legislation requires vehicles, aircraft and boats used for the instruction of drivers, pilots, seafarers etc. to be assigned exclusively to that purpose if they are to qualify for deduction. The Commission argues that such a condition of exclusive use is not laid down in the Sixth VAT Directive and therefore restricts the right to deduct, which is one of the fundamental principles of the VAT system. A reasoned opinion was sent to the French authorities on March 10, but French legislation has not yet been amended to comply with Community law.The Commission has also sent a reasoned opinion (the second...