Opinion of the Advocate General — ECLI:EU:C:2000:162
Date: 2000-03-23
Language of the case: French
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: France

Summary of the Judgment 
1. Tax provisions — Harmonisation of laws — Turnover taxes — Common system of 
value added tax — Deduction of input tax — Introduction of special derogating 
measures — Measures to combat tax evasion or avoidance — Decision 89/487 — 
Exclusion of the right to deduct tax on certain expenditure in respect of accommoda­
tion, food, hospitality and entertainment — Breach of the principle of proportion­
ality — Unlawful 
(Council Directive 77/388, Art. 27; Council Decision 89/487) 
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SUMMARY — JOINED CASES C-177/99 AND C-181/99 
2. Community law — Principle of the protection of legitimate expectations — Reliance 
on the principle by a Member State to avoid the consequences of a decision of the Court 
declaring a Community measure invalid — Not permissible 
1. Council Decision 89/487, adopted on 
the basis of Article 27 of Sixth Direc­
tive 77/388 on the harmonisation of 
the laws of the Member States relating 
to turnover taxes, which provides that 
a Member State may be authorised to 
introduce special measures for deroga­
tion from the Sixth Directive in order 
to simplify the procedure for charging 
the tax or to prevent certain types of 
tax evasion or avoidance, and author­
ising the French Republic to apply a 
measure derogating from the second 
subparagraph of Article 17(6) of the 
Sixth Directive, is invalid under the 
general principle of proportionality, in 
so far as it authorises that State to deny 
traders the right to deduct the value 
added tax on expenditure which they 
are able to show to be of a strictly 
business nature. 
Since the measure excludes as a matter 
of principle all expenditure in respect 
of accommodation, hospitality, food 
and entertainment from the right to 
deduct value added tax, which is a 
fundamental principle of the value 
added tax system established by the 
Sixth Directive, although appropriate 
means less detrimental to that principle 
than the exclusion of the right of 
deduction in the case of certain expen­
diture can be contemplated or already 
exist in the national legal order, it is not 
a means proportionate to that objective 
and has a disproportionate effect on 
the objectives and principles of the 
Sixth Directive. 
(see paras 35, 57, 61-62 
and operative part) 
2. The principle of the protection of 
legitimate expectations, which is the 
corollary of the principle of legal 
certainty and which is generally relied 
upon by individuals (traders) in a 
situation where they have legitimate 
expectations created by the public 
authorities, cannot be relied on by a 
Member State in order to avoid the 
consequences of a decision of the Court 
declaring a Community provision inva­
lid, since it would jeopardise the pos­
sibility for individuals to be protected 
against conduct of the public authori­
ties based on unlawful rules. 
(see para. 67) 
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