# C_2011055EN.01000601.xml

| 19.2.2011 | EN | Official Journal of the European Union | C 55/6 |
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19.2.2011

EN

Official Journal of the European Union

C 55/6

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Judgment of the Court (Third Chamber) of 22 December 2010 (reference for a preliminary ruling from the Court of Appeal (United Kingdom)) — The Commissioners for Her Majesty's Revenue and Customs v Weald Leasing Limited

(Case C-103/09) (1)

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(Sixth VAT Directive - Concept of ‘abusive practice’ - Leasing transactions effected by a group of undertakings to spread the payment of non-deductible VAT)

2011/C 55/08

Language of the case: English

Referring court

Referring court

Court of Appeal

Parties to the main proceedings

Parties to the main proceedings

Appellants: The Commissioners for Her Majesty's Revenue and Customs

Appellants:

Respondent: Weald Leasing Limited

Respondent:

Re:

Re:

Reference for a preliminary ruling — Court of Appeal, London — Interpretation of Directive 77/388/EEC: Sixth Council Directive 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) — Concept of transactions constituting an abusive practice — Leases and Sub-leases by a group of undertakings making mostly exempt supplies in order to defer their VAT liability

Operative part of the judgment

Operative part of the judgment

| 1. | The tax advantage accruing from an undertaking’s recourse to asset leasing transactions, such as those at issue in the main proceedings, instead of the outright purchase of those assets, does not constitute a tax advantage the grant of which would be contrary to the purpose of the relevant provisions 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, as amended by Council Directive 95/7/EC of 10 April 1995, and of the national legislation transposing it, provided that the contractual terms of those transactions, particularly those concerned with setting the level of rentals, correspond to arm’s length terms and that the involvement of an intermediate third party company in those transactions is not such as to preclude the application of those provisions, a matter which it is for the national court to determine. The fact that the undertaking does not engage in leasing transactions in the context of its normal commercial operations is irrelevant in that regard. |
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1.

The tax advantage accruing from an undertaking’s recourse to asset leasing transactions, such as those at issue in the main proceedings, instead of the outright purchase of those assets, does not constitute a tax advantage the grant of which would be contrary to the purpose of the relevant provisions 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, as amended by Council Directive 95/7/EC of 10 April 1995, and of the national legislation transposing it, provided that the contractual terms of those transactions, particularly those concerned with setting the level of rentals, correspond to arm’s length terms and that the involvement of an intermediate third party company in those transactions is not such as to preclude the application of those provisions, a matter which it is for the national court to determine. The fact that the undertaking does not engage in leasing transactions in the context of its normal commercial operations is irrelevant in that regard.

| 2. | If certain contractual terms of the leasing transactions at issue in the main proceedings, and/or the intervention of an intermediate third party company in those transactions, constituted an abusive practice, those transactions must be redefined so as to re-establish the situation that would have prevailed in the absence of the elements of those contractual terms which were abusive and/or in the absence of the intervention of that company. |
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2.

If certain contractual terms of the leasing transactions at issue in the main proceedings, and/or the intervention of an intermediate third party company in those transactions, constituted an abusive practice, those transactions must be redefined so as to re-establish the situation that would have prevailed in the absence of the elements of those contractual terms which were abusive and/or in the absence of the intervention of that company.

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(1)  OJ C 129, 06.06.2009.

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