Opinion of the Advocate General — ECLI:EU:C:2015:254
Date: 2015-04-22
Language of the case: Lithuanian
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Lithuania

Summary — Judgment of the Court (Fifth Chamber), 22 October 2015 1. Harmonisation of fiscal legislation — Common system of value added tax — Deduction of input tax — Origin and scope of right of deduction — Acquisition of goods by a taxable person for the purposes of his economic activities — Criteria for assessment (Council Directive 2006/112, Arts 9(1), second subpara., and 168) 2. Harmonisation of fiscal legislation — Common system of value added tax — Deduction of input tax — Origin and scope of right of deduction — 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 — Criteria for assessment (Council Directive 2006/112, Art. 168) 3. Harmonisation of fiscal legislation — Common system of value added tax — Deduction of input tax — Origin and scope of right of deduction — Acquisition or production of capital goods as part of the construction work on a recreational path made available to the public at no cost — Use of the recreational path as a means of carrying out taxed transactions — Right to deduction — Conditions (Council Directive 2006/112, Art. 168) 1. It follows from Article 168 of the Directive 2006/112 on the common system of value added tax that, in so far as the taxable person, acting as such at the time when he acquires goods, uses the goods for the purposes of his taxed transactions, he is entitled to deduct the value added tax paid or payable in respect of the goods. In that regard, goods and services may be acquired, by a taxable person, for the purposes of an economic transaction, within the meaning of the second subparagraph of Article 9(1) of Directive 2006/112, even if the goods are not used immediately for that economic activity. Whether a taxable person acts as such for the purposes of an economic activity is a question of fact which must be assessed in the light of all the circumstances of the case, including the nature of the asset concerned and the period between the acquisition of the asset and its use for the purposes of the taxable person’s economic activity. It is for the national court to make that assessment. (see paras 18, 19, 21) 2. The existence of a direct and immediate link between a particular input transaction and a particular output transaction or transactions giving rise to the right to deduct is necessary, in principle, before the taxable person is entitled to deduct input value added tax and in order to determine the extent of such entitlement. The right to deduct value added tax charged on the acquisition of input goods or services presupposes that the expenditure incurred in acquiring them was a component of the cost of the output transactions that gave rise to the right to deduct. It is, however, also accepted that a taxable person has a right to deduct even where there is no direct and immediate link between a particular input transaction and an output transaction or transactions giving rise to the right to deduct, where the costs of the services in question are part of his general costs and are, as such, components of the price of the goods or services which he supplies. According to settled case-law, the existence of a direct and immediate link between a particular input transaction and a particular output transaction or transactions giving rise to entitlement to deduct is, in principle, necessary before the taxable person is entitled to deduct input value added tax and in order to determine the extent of such entitlement. The right to deduct value added tax charged on the acquisition of input goods or services presupposes that the expenditure incurred in acquiring them was a component of the cost of the output transactions that gave rise to the right to deduct. Nevertheless, even where there is no direct and immediate link between a particular input transaction and an output transaction or transactions giving rise to the right to deduct, there is a right to deduct where the expenditure incurred is part of his general costs and are, as such, components of the price of the goods or services which he supplies. Such expenditure does have a direct and immediate link with the taxable person’s economic activity as a whole. In that regard, in the context of the direct-link test that is to be applied by the tax authorities and national courts, they should consider all the circumstances surrounding the transactions concerned and take account only of the transactions which are objectively linked to the taxable person’s taxable activity. The existence of such a link must thus be assessed in the light of the objective content of the transaction in question. (see paras 27-29) 3. Article 168 of Directive 2006/112 on the common system of value added tax must be interpreted as granting a taxable person the right to deduct the input value added tax paid for the acquisition or production of capital goods, for the purposes of a planned economic activity related to rural and recreational tourism, which are (i) directly intended for use by the public free of charge, and may (ii) enable taxed transactions to be carried out, provided that a direct and immediate link is established between the expenses associated with the input transactions and an output transaction or transactions giving rise to the right to deduct or with the taxable person’s economic activity as a whole, which is a matter for the national court to determine on the basis of objective evidence. In that respect, immediate use of capital goods free of charge does not affect the existence of the direct and immediate link, in so far as, first, the making available of the recreational path to the public is not covered by any exemption under Directive 2006/112 and, second, the expenditure incurred by the taxable person in creating that path can be linked to his economic activity, since that expenditure does not relate to activities that are outside the scope of value added tax. (see paras 33, 34, 37, operative part)