Opinion of the Advocate General — ECLI:EU:C:1999:626
Date: 1999-12-16
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Germany

Summary of the Judgment 
1. Tax provisions — Harmonisation of laws — Turnover taxes — Common system of 
value added tax — Deduction of input tax — Transactions carried out with a view to 
the realisation of a planned economic activity — Acquisition of the status of taxable 
person — Recognition by the tax authority — Not relevant — Failure of the economic 
activity envisaged — No impact on the right to deduct 
(Council Directive 77/388, Arts 4 and 17) 
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SUMMARY — CASE C-400/98 
2. Tax provisions — Harmonisation of laws — Turnover taxes — Common system of 
value added tax — Supply of buildings and the land on which they stand — 
Authorisation to Member States to retain on a transitional basis the exemption and the 
right of option relating to those supplies — Scope — Impossible to dissociate buildings 
from the land on which they stand 
(Council Directive 77/388, Arts 4(3)(a), 28(3)(b) and (c), and Annexes F, point 16, and 
G, point 1 (b)) 
1. Articles 4 and 17 of the Sixth Directive 
77/388 on the harmonisation of the 
laws of the Member States relating to 
turnover taxes are to be interpreted as 
meaning that the right to deduct the 
value added tax paid on transactions 
carried out with a view to the realisa­
tion of a planned economic activity still 
exists even where the tax authority is 
aware, from the time of the first tax 
assessment, that the economic activity 
envisaged, which was to give rise to 
taxable transactions, will not be taken 
up. 
The arising of the right to deduct the 
VAT paid on the first investment 
expenditure is in no way dependent 
upon formal recognition of the status 
of taxable person by the tax authority. 
The only effect of that recognition is 
that such status, once recognised, can­
not, save in situations of fraud or 
abuse, be withdrawn from the taxpayer 
with retrospective effect, without 
infringing the principles of the protec­
tion of legitimate expectations and 
legal certainty. A person who has the 
intention, confirmed by objective evi­
dence, to commence independently an 
economic activity within the meaning 
of Article 4 of the Sixth Directive and 
who incurs the first investment expen­
diture for those purposes must be 
regarded as a taxable person. Acting 
in that capacity, he has therefore, in 
accordance with Article 17 et seq. of 
the Sixth Directive, the right immedi­
ately to deduct the VAT payable or paid 
on the investment expenditure incurred 
for the purposes of the transactions 
which he intends to carry out and 
which give rise to the right to deduct, 
without having to wait for the actual 
exploitation of his business to begin. 
(see paras 34, 38, 42, 
operative part 1) 
2. It follows from the distinction in Arti­
cle 4(3) of the Sixth Directive 77/388 
between, on the one hand, the supply 
of building land, described as 'any 
unimproved or improved land defined 
as such by the Member States', and, on 
the other, the supply before first occu­
pation of buildings or parts of build­
ings and the land on which they stand, 
any structure fixed to or in the ground 
being regarded as a building within the 
meaning of that provision, and from 
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BREITSOHL 
the wording of Article 4(3)(a) of the 
directive, which refers to 'the supply... 
of buildings or parts of buildings and 
the land on which they stand', that, for 
the purposes of value added tax, build­
ings or parts of buildings and the land 
on which they stand cannot be disso­
ciated from each other. 
In those circumstances, the exemption 
and the right of option referred to in 
Article 28(3)(b) and (c) of the Sixth 
Directive, read in combination with 
Annex F, point 16, and Annex G, 
point 1(b), which authorise Member 
States during the transitional period to 
continue to exempt the supply before 
first occupation of a building or part of 
a building and land on which it stands 
and to grant taxable persons the right 
to opt for taxation of such a supply, 
must relate inseparably to buildings or 
parts of buildings and the land on 
which they stand. 
(see paras 47, 49-51) 
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