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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Commission v Pays-Bas (Taxation) [2001] EUECJ C-338/98 (08 November 2001) URL: https://www.bailii.org/eu/cases/EUECJ/2001/C33898.html Cite as: Case C-338/98, [2003] BTC 5543, [2001] STI 1418, [2004] WLR 35, [2004] 1 WLR 35, ECLI:EU:C:2001:596, [2003] STC 1506, EU:C:2001:596, [2001] EUECJ C-338/98, [2001] ECR I-8265, [2003] BVC 598 |
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JUDGMENT OF THE COURT (Fifth Chamber)
8 November 2001 (1)
(Failure of a Member State to fulfil its obligations - Articles 17(2)(a) and 18(1)(a) of the Sixth VAT Directive - National legislation allowing an employer to deduct, as input tax, a certain percentage of an allowance paid to an employee for business use of a private vehicle)
In Case C-338/98,
Commission of the European Communities, represented initially by E. Mennens and E. Traversa, and subsequently by E. Traversa and H.M.H. Speyart, acting as Agents, with an address for service in Luxembourg,
applicant,
v
Kingdom of the Netherlands, represented by M.A. Fierstra, C. Wissels and J. van Bakel, acting as Agents,
defendant,
supported by
United Kingdom of Great Britain and Northern Ireland, represented by M. Ewing, acting as Agent, and N. Pleming QC, with an address for service in Luxembourg,
intervener,
APPLICATION for a declaration that by providing, in breach of Articles 17(2)(a) and 18(1)(a) 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), in the version resulting from Council Directive 95/7/EC of 10 April 1995 amending Directive 77/388 and introducing new simplification measures with regard to value added tax - scope of certain exemptions and practical arrangements for implementing them (OJ 1995 L 102, p. 18), that an employer who is a taxable person for the purposes of value added tax may deduct part of an allowance paid to an employee for business use of a private car, the Kingdom of the Netherlands has failed to fulfil its obligations under the EC Treaty,
THE COURT (Fifth Chamber),
composed of: S. von Bahr, President of the Fourth Chamber, acting for the President of the Fifth Chamber, D.A.O. Edward, A. La Pergola (Rapporteur), M. Wathelet and C.W.A. Timmermans, Judges,
Advocate General: C. Stix-Hackl,
Registrar: H.A. Rühl, Principal Administrator,
having regard to the Report for the Hearing,
after hearing oral argument from the parties at the hearing on 5 April 2001, at which the Commission was represented by H.M.H. Speyart, the Kingdom of the Netherlands by J. van Bakel and the United Kingdom of Great Britain and Northern Ireland by G. Amodeo, acting as Agent, and N. Pleming,
after hearing the Opinion of the Advocate General at the sitting on 31 May 2001,
gives the following
Community legislation
1. Taxable person shall mean any person who independently carries out in any place any economic activity specified in paragraph 2, whatever the purpose or results of that activity.
...
4. The use of the word independently in paragraph 1 shall exclude employed and other persons from the tax in so far as they are bound to an employer by a contract of employment or by any other legal ties creating the relationship of employer and employee as regards working conditions, remuneration and the employer's liability.
...
In 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:
(a) value added tax due or paid within the territory of the country in respect of goods or services supplied or to be supplied to him by another taxable person.
1. To exercise his right of deduction, a taxable person must:
(a) in respect of deductions pursuant to Article 17(2)(a), hold an invoice drawn up in accordance with Article 22(3);
...
3. Member States shall determine the conditions and procedures whereby a taxable person may be authorised to make a deduction which he has not made in accordance with the provisions of paragraphs 1 and 2.
...
Every taxable person shall issue an invoice, or other document serving as invoice, in respect of goods and services which he has supplied or rendered to another taxable person or to a non-taxable legal person. ...
Every taxable person shall likewise issue an invoice in respect of any payment to account made to him before any supplies of goods referred to in the first subparagraph and in respect of any payment to account made to him by another taxable person or by a non-taxable legal person before the provision of services is completed.
Member States shall lay down the criteria that shall determine whether a document may be considered an invoice.
National legislation
Without prejudice to Article 15(2) and (5) of the Law, where an employee uses a car belonging to him in connection with his employer's business and receives an allowance from his employer for that purpose, a percentage of the allowance, fixed by the Minister, may be deducted by the employer in so far as the allowance does not fall within income for income tax purposes.
Pre-litigation procedure
The present action
The first complaint, alleging infringement of Article 17(2)(a) of the Sixth Directive
Arguments of the parties
Findings of the Court
The second complaint, alleging infringement of Article 18(1)(a) of the Sixth Directive
Arguments of the parties
Findings of the Court
Costs
78. Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the Commission has applied for costs and the Kingdom of the Netherlands has been unsuccessful, the latter must be ordered to pay the costs. Furthermore, as provided in Article 69(4) of the Rules of Procedure, Member States and institutions which intervene in proceedings are to bear their own costs.
On those grounds,
THE COURT (Fifth Chamber)
hereby:
1. Declares that by providing, in breach of Articles 17(2)(a) and 18(1)(a) 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, in the version resulting from Council Directive 95/7/EC of 10 April 1995 amending Directive 77/388 and introducing new simplification measures with regard to value added tax - scope of certain exemptions and practical arrangements for implementing them, that an employer who is a taxable person for the purposes of value added tax may deduct part of an allowance paid to an employee for business use of a private car, the Kingdom of the Netherlands has failed to fulfil its obligations under the EC Treaty;
2. Orders the Kingdom of the Netherlands to pay the costs;
3. Orders the United Kingdom of Great Britain and Northern Ireland to bear its own costs.
von Bahr Edward La Pergola
Wathelet Timmermans
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Delivered in open court in Luxembourg on 8 November 2001.
R. Grass P. Jann
Registrar President of the Fifth Chamber
1: Language of the case: Dutch.