Source: All England Reporter
Publisher Citation: [2002] All ER (D) 15 (Jan)
Court: Court of Justice of the European Communities (Fifth Chamber)
Judge:

Judges Jann (President of the Chamber), La Pergola, Sevón (Rapporteur) Wathelet and Timmermans

Judgment Dates: 8 January 2002

Catchwords

European Community - Value added tax ||Input tax - Deductibility of tax - Input tax in respect of motor vehicles - Right temporarily to retain existing exclusions from the right to deduct - Concept of 'national law' - Preconditions for exercising the right to exclude, wholly or in part, certain investment or other goods from the system of deductions for cyclical economic reasons - Whether member state precluded from excluding right to deduct input tax in respect of certain vehicles - Whether member state entitled to extend exclusions from the right to deduct input tax for an indefinite period in order to consolidate its budget - Directive (EEC) 77/388 arts 17(6), 17(7) and 29 - Art 249 EC.

The Case

On a reference to the Court of Justice of the European Communities for a preliminary ruling on questions on the proper construction of arts17(6) and (7) of Directive 77-338 EEC, the court ruled: (i) After the date of entry of the directive, a member state was precluded by art17(6) from excluding expenditure relating to certain motor vehicles from the right to deduct VAT where, at the date of entry of the directive, it was a consistent practice of the public authorities of the that member state to deduct VAT; (ii) A member state was not authorised by art17(7) to exclude goods from the system of deducting VAT without first consulting the VAT Committee established in art29; and (iii) A member state was not authorised by art17(7) to adopt measures which excluded goods from the system of deducting VAT where there was no indication as to their limitation in time and-or which formed part of a package of structural adjustment measures whose aim was to reduce the budget deficit.

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