Judgment — ECLI:EU:C:2001:338
Date: 2001-06-14
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Taxation;Value added tax
Concepts: Restrictions on the right of deduction
Procedure: Action for failure to fulfil obligations - successful
Origin: France

Summary of the Judgment 
Tax provisions — Harmonisation of laws — Turnover taxes — Common system of 
value added tax — Deduction of input tax — Exclusions from the right of deduction — 
Option for Member States to retain exclusions existing on entry into force of the Sixth 
Directive — Scope — Extension of scope of exclusions — Not permissible — Réintro­
duction of a total prohibition on the right to deduct value added tax on diesel used as fuel 
for vehicles and machines on the purchase of which no value added tax is deductible after 
having introduced a partial right to deduct 
(Council Directive 77/388, Art. 17(2) and (6), second subpara.)) 
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SUMMARY — CASE C-40/00 
National legislation does not constitute a 
derogation permitted by the second sub­
paragraph of Article 17(6) of the Sixth 
Directive 77/388 on the harmonisation of 
the laws of the Member States relating to 
turnover taxes and infringes Article 17(2) 
thereof if its effect is to increase, after the 
entry into force of the Sixth Directive, the 
extent of existing exclusions, thus diverging 
from the objective of that directive. The 
same is true of any amendment subsequent 
to the entry into force of the Sixth Directive 
which increases the extent of exclusions 
applicable immediately before that amend­
ment. 
Accordingly, a Member State which rein­
troduces from 1 January 1998 a total 
prohibition on the right to deduct value 
added tax on diesel used as fuel for vehicles 
and machines on the purchase of which no 
value added tax is deductible, after having 
introduced a partial right to deduct, has 
failed to fulfil its obligations under Arti­
cle 17(2) of the Sixth Directive. 
(see paras 17-18, 24 and operative part) 
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