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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Royal Bank of Scotland (Taxation) [2008] EUECJ C-488/07 (18 December 2008) URL: https://www.bailii.org/eu/cases/EUECJ/2008/C48807.html Cite as: ECLI:EU:C:2008:750, [2009] BVC 248, [2008] EUECJ C-488/7, [2009] BTC 5249, [2008] EUECJ C-488/07, EU:C:2008:750, [2009] STC 461, [2009] STI 89 |
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(Sixth VAT Directive Deduction of input tax Goods and services used for both taxable and exempt transactions Deductible proportion Calculation Methods laid down in the third subparagraph of Article 17(5) Obligation to apply the rounding up rule in the second subparagraph of Article 19(1))
In Case C-488/07,
REFERENCE for a preliminary ruling under Article 234 EC from the Court of Session (Scotland), made by decision of 31 October 2007, received at the Court on 5 November 2007, in the proceedings
Royal Bank of Scotland Group plc
The Commissioners for Her Majesty's Revenue and Customs,
composed of T. von Danwitz (Rapporteur), President of the Chamber, E. Juhász and G. Arestis, Judges,
Advocate General: P. Mengozzi,
Registrar: M. Ferreira, Principal Administrator,
having regard to the written procedure and further to the hearing on 8 October 2008,
after considering the observations submitted on behalf of:
Royal Bank of Scotland Group plc, by C. Tyre QC and D. Small, Advocate,
the United Kingdom Government, by Z. Bryanston-Cross and S. Ossowski, acting as Agents, and I. Hutton, Barrister,
the Commission of the European Communities, by R. Lyal and M. Afonso, acting as Agents,
having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,
gives the following
Legal context
Community law
'As regards goods and services to be used by a taxable person both for transactions covered by paragraphs 2 and 3, in respect of which value added tax is deductible, and for transactions in respect of which value added tax is not deductible, only such proportion of the value added tax shall be deductible as is attributable to the former transactions.
This proportion shall be determined, in accordance with Article 19, for all the transactions carried out by the taxable person.
However, Member States may:
(a) authorise the taxable person to determine a proportion for each sector of his business, provided that separate accounts are kept for each sector;
(b) compel the taxable person to determine a proportion for each sector of his business and to keep separate accounts for each sector;
(c) authorise or compel the taxable person to make the deduction on the basis of the use made of all or part of the goods and services;
(d) authorise or compel the taxable person to make the deduction in accordance with the rule laid down in the first subparagraph, in respect of all goods and services used for all transactions referred to therein;
(e) provide that, where the value added tax which is not deductible by the taxable person is insignificant, it shall be treated as nil.'
'The proportion deductible under the first subparagraph of Article 17(5) shall be made up of a fraction having:
as numerator, the total amount, exclusive of value added tax, of turnover per year attributable to transactions in respect of which value added tax is deductible under Article 17(2) and (3);
as denominator, the total amount, exclusive of value added tax, of turnover per year attributable to transactions included in the numerator and to transactions in respect of which value added tax is not deductible. ...
The proportion shall be determined on an annual basis, fixed as a percentage and rounded up to a figure not exceeding the next unit.'
National law
'(1) Subject to regulation 102 ... the amount of input tax which a taxable person shall be entitled to deduct ... shall be the amount which is attributable to taxable supplies in accordance with this regulation.
(2) In respect of each prescribed accounting period:
...
(d) there shall be attributed to taxable supplies such proportion of the input tax on such of those goods or services as are used or to be used by him in making both taxable and exempt supplies as bears the same ratio to the total of such input tax as the value of taxable supplies made by him bears to the value of all supplies made by him in the period.
...
(4) The ratio calculated for the purpose of paragraph 2(d) above shall be expressed as a percentage and, if that percentage is not a whole number, it shall be rounded up to the next whole number.
...'
'Subject to paragraph 2 below and regulations 103, 103A and 103B, the Commissioners may approve or direct the use by a taxable person of a method other than that specified in regulation 101 ...'
The main proceedings and the questions referred for a preliminary ruling
'1. Does the second subparagraph of Article 19(1) of the Sixth VAT Directive ... require the proportion deductible by a taxable person under Article 17(5) to be determined on an annual basis, fixed as a percentage and rounded up to a figure not exceeding the next unit where:
(a) that proportion is a proportion which has been determined for a sector of the business of the taxable person in accordance with either item (a) or (b) of the third subparagraph of Article 17(5); and/or
(b) that proportion is a proportion which has been determined on the basis of the use of all or part of goods and services by the taxable person in accordance with item (c) of the third subparagraph of Article 17(5); and/or
(c) that proportion is a proportion which has been determined in respect of all goods and services used by the taxable person for all transactions referred to in the first subparagraph of Article 17(5), in accordance with item (d) of the third subparagraph thereof?
2. Does the second subparagraph of the said Article 19(1) permit Member States to require the proportion deductible by a taxable person under Article 17(5) to be rounded up to a figure other than the next highest whole number?'
The questions
Question 1
Question 2
Costs
On those grounds, the Court (Eighth Chamber) hereby rules:
Member States are not obliged to apply the rounding up rule in the second subparagraph of Article 19(1) 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 where the proportion of input tax deductible is calculated in accordance with one of the special methods in (a), (b), (c) or (d) of the third subparagraph of Article 17(5) of that directive.
[Signatures]
* Language of the case: English.