Opinion of the Advocate General — ECLI:EU:C:2000:186
Date: 2000-04-04
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: Belgium

Summary of the Judgment 
Tax provisions — Harmonisation of laws — Turnover taxes — Common system of 
value added tax — Deduction of input tax — Undertaking subject to tax on only one 
part of its operations — Deductible proportion — Calculation — Receipt by holding 
company involved in the management of its subsidiaries of share dividends from those 
subsidiaries — Excluded from denominator — Receipt of loan interest — Excluded 
from denominator — Condition 
(Council Directive 77/388, Arts 4(2) and 19) 
I - 9567 
SUMMARY — CASE C-142/99 
Under Article 19 of the Sixth Directive 
77/388 on the harmonisation of the laws of 
the Member States relating to turnover 
taxes, an undertaking which is not subject 
to value added tax in respect of all its 
operations may deduct from the tax for 
which it is liable the tax which it has paid 
not exceeding a deductible proportion, 
which is made up of a fraction having as 
denominator the total amount of turnover 
attributable to transactions in respect of 
which value added tax is deductible and to 
transactions in respect of which it is not 
deductible. That provision must be inter­
preted as meaning that the following must 
be excluded from the denominator: first, 
share dividends paid by its subsidiaries to a 
holding company which is a taxable person 
in respect of other activities and which 
supplies management services to those 
subsidiaries, since, as the receipt of divi­
dends is not the consideration for any 
economic activity, it does not fall within 
the scope of value added tax; second, 
interest paid by the subsidiaries to the 
holding company on loans it has made to 
them, where the loan transactions do not 
constitute, for the purposes of Article 4(2) 
of the Sixth Directive, an economic activity 
of the holding company. 
(see paras 21, 32 and operative part) 
I - 9568