Judgment — ECLI:EU:C:2013:99
Date: 2013-02-21
Language of the case: German
Court formation: First Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Germany

Summary — Judgment of the Court (First Chamber), 21 February 2013 Harmonisation of fiscal legislation — Common system of value added tax — Deduction of input tax — Goods and services used for the purposes of the taxable person's taxable transactions — Need for a direct and immediate link between the input transaction and the taxable person’s activity — Criterion for appraisal — Tax chargeable on supplies of lawyers’ services in the context of criminal proceedings brought in a personal capacity against natural person, managers of a taxable undertaking — Right to deduction — No such right (Council Directive 77/388, as amended by Directive 2001/115, Art. 17(2)(a)) The existence of a direct and immediate link between a given transaction and the taxable person’s activity as a whole for the purposes of determining whether the goods and services were used by the latter ‘for the purposes of taxable transactions’ within the meaning of Article 17(2)(a) of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, as amended by Directive 2001/115, depends on the objective content of the goods or services acquired by that taxable person. The fact that the existence of such a direct and immediate link between a supply of services and the overall taxable economic activity must be determined in the light of the objective content of that supply of services does not preclude that the exclusive reason for the transaction at issue can also be taken into account, since that reason must be considered as a criterion for determining the objective content. Where it is clear that a transaction has not been performed for the purposes of the taxable activities of a taxable person, that transaction cannot be considered as having a direct and immediate link with those activities, even if that transaction would, in the light of its objective content, be subject to value added tax. With regard to the supplies of lawyers’ services, whose purpose is to avoid criminal penalties against natural persons, managing directors of a taxable undertaking, such supplies do not give that undertaking the right to deduct as input tax the value added tax due on the services supplied where, in the first place, those supplies seek directly and immediately to protect the private interests of managers who are charged with offences relating to their personal behaviour and, in the second place, there is no legal link between the criminal proceedings and the taxable undertaking, so that those services must therefore be considered to have been performed entirely outside that undertaking’s taxable activities. (see paras 29-31, 33, operative part)