Opinion of the Advocate General — ECLI:EU:C:1998:421
Date: 1998-09-17
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Belgium

Summary of the Judgment
1. Tax provisions — Harmonisation of laws— Turnover taxes— Common system of value
added tax — Exemptions provided for by the Sixth Directive -— Exemption of the leasing and
letting of immovable property — Right of option available to taxpayers — National legisla­
tion revoking the right of option and reintroducing the exemption — Whether permissible
(Council Directives 67/227, Art. 2, and 77/388, Art. 13 Band C)
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SUMMARY — CASE C-381/97
2. Community law — Principles — Protection of legitimate expectations — Legal certainty —
Whether those principles were complied with in the context of the retroactive repeal of a law
conferring a right of option on persons liable to pay value added tax — To be determined by
the national courts
1. Article 2 of the First Directive (67/227) on
the harmonisation of legislation of Member
States concerning turnover taxes does not
preclude a Member State which has availed
itself of the possibility provided for by
Article 13C of the Sixth Directive (77/388)
— and which has thus granted its tax­
payers the right to opt for taxation of cer­
tain lettings of immovable property —
from abolishing, by means of a subsequent
law, that right of option and thus reintro­
ducing the exemption.
It is for the Member States, who have a
wide discretion under Article 13B and
C of the Sixth Directive, to assess whether
or not they should introduce the right of
option, depending on what they consider
to be expedient in the situation existing in
their country at a given time. The freedom
to grant or decline to grant the right of
option is not restricted in time; nor is it
restricted by the fact that a contrary deci­
sion has been adopted in the past. Member
States may therefore, within the sphere of
their national powers, also revoke the right
of option after having introduced it and
return to the basic rule that the letting and
the leasing of immovable property are
exempt from tax.
Where a national legislature has granted
taxpayers the right of option, it cannot be
inferred from the principle of fiscal neu­
trality, which is laid down in Article 2 of
the First Directive and which is inherent
in the common system of value added tax,
that its choice is irreversible. Since the
implementation by the Sixth Directive of
the harmonised system of exemptions, it is
no longer possible to derogate from that
system on the basis of a provision of the
First Directive.
2. Although the principle of protection of
legitimate expectations and the principle
of legal certainty form part of the Com­
munity legal order and must be observed
by the Member States when they exercise
the powers conferred on them by Com­
munity directives, it is not for the Court
but for the national court to determine
whether a breach of those principles has
been committed by the retroactive repeal
of a law which introduced a right of option
in relation to the taxation of the leasing
and the letting of immovable property, but
in respect of which the implementing
decree was never adopted.
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