Opinion of the Advocate General — ECLI:EU:C:2000:207
Date: 2000-04-13
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: United Kingdom

Summary of the Judgment 
Tax provisions — Harmonisation of laws — Turnover taxes — Common system of 
value added tax — Deduction of input tax — Taxable person carrying out both taxable 
and exempt transactions — Tax on services acquired in order to effect a transfer of a 
totality of assets or part thereof — Member State not regarding such a transfer as a supply 
of goods — Right to deduct — Conditions 
(Council Directive 77/388, Arts 5(8) and 17(5)) 
I - 1361 
SUMMARY — CASE C-408/98 
Where a Member State has made use of the 
option in Article 5(8) of the Sixth Directive 
77/388 on the harmonisation of the laws of 
the Member States relating to turnover 
taxes, so that the transfer of a totality of 
assets or part thereof is regarded as not 
being a supply of goods, the costs incurred 
by the transferor for services acquired in 
order to effect that transfer form part of 
that taxable person's overheads and thus in 
principle have a direct and immediate link 
with the whole of his economic activity. If, 
therefore, the transferor effects both trans­
actions in respect of which value added tax 
is deductible and transactions in respect of 
which it is not, it follows from Arti­
cle 17(5) of the Sixth Directive 77/388 that 
he may deduct only that proportion of the 
value added tax which is attributable to the 
former transactions. However, if the var­
ious services acquired by the transferor in 
order to effect the transfer have a direct and 
immediate link with a clearly defined part 
of his economic activities, so that the costs 
of those services form part of the overheads 
of that part of the business, and all the 
transactions relating to that part of the 
business are subject to value added tax, he 
may deduct all the value added tax charged 
on his costs of acquiring those services. 
(see para. 42 and operative part) 
I - 1362