«(Sixth VAT Directive – Articles 6(2)(a) and 13B(b) – Private use by the taxable person of a dwelling in a building forming, in its entirety, part of the assets of the business – Such use not equivalent to the leasing or letting of immovable property)»

Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Deduction of input tax – Private use by the taxable person of part of a building forming, in its entirety, part of the assets of his business – Right to deduct the tax paid for all expenses and duty to pay tax on the expenses that relate to the private use – National law which deems private use to be an exempt supply – Not permissible (Council Directive 77/388, Arts 6(2)(a), 11A(1) and 13B(b)) Articles 6(2)(a) and 11A(1)(c) of the Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes must be interpreted as meaning that where a taxable person chooses to treat an entire building as forming part of the assets of his business and subsequently uses part of that building for private purposes, on the one hand, he is entitled to deduct the input value added tax paid on all construction costs relating to that building and, on the other, he is subject to the corresponding obligation to pay the tax on the amount of expenditure incurred to effect such use. However Articles 6(2)(a) and 13B(b) of the Sixth Directive preclude national legislation which treats such use as an exempt supply of services, on the basis that it constitutes a leasing or letting of immovable property within the meaning of Article 13B(b), since such use, a feature of which is not only that no rent is paid but also that there is no genuine agreement on the duration of the right of enjoyment or the right of occupation of the dwelling, or to exclude third parties, is not covered by that provision. see paras 42-43, 51-52, 56, operative part

JUDGMENT OF THE COURT (Fifth Chamber) 8 May 2003 (1)

((Sixth VAT Directive – Articles 6(2)(a) and 13B(b) – Private use by the taxable person of a dwelling in a building forming, in its entirety, part of the assets of the business – Such use not equivalent to the leasing or letting of immovable property))

In Case C-269/00,

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

and

on the interpretation of Articles 6(2)(a), 13B(b) and 17(2)(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),

THE COURT (Fifth Chamber),,

composed of: M. Wathelet, President of the Chamber, C.W.A. Timmermans, D.A.O. Edward, P. Jann and S. von Bahr (Rapporteur), Judges,

Advocate General: F.G. Jacobs,

after considering the written observations submitted on behalf of:

having regard to the Report for the Hearing,

after hearing the oral observations of Mr Seeling, represented by H.G. Zaisch, the German Government, represented by B. Muttelsee-Schön, acting as Agent, and the Commission, represented by K. Gross, assisted by A. Böhlke, at the hearing on 7 February 2002,

after hearing the Opinion of the Advocate General at the sitting on 16 May 2002,

gives the following

Community legislation

.

Member States may restrict the scope of this right of option and shall fix the details of its use.

National legislation

Observations submitted to the Court

Findings of the Court

On those grounds,

THE COURT (Fifth Chamber),

in answer to the question referred to it by the Bundesfinanzhof by order of 25 May 2000, hereby rules:

Wathelet

Timmermans

Edward

Jann

von Bahr

Delivered in open court in Luxembourg on 8 May 2003.

R. Grass

M. Wathelet

Registrar

President of the Fifth Chamber