Opinion of the Advocate General — ECLI:EU:C:2005:146
Date: 2005-03-10
Language of the case: Spanish
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Taxation;Value added tax
Procedure: Action for failure to fulfil obligations - successful
Origin: Spain

Summary of the Judgment Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Deduction of input tax – Limitations on the right to deduct – Subsidies – National legislation providing for a deductible proportion of tax for taxable persons who carry out only taxable transactions, and limiting the right to deduct tax on the purchase of goods and services which are subsidised – Not permissible (Council Directive 77/388, Arts 17(2) and (5), and 19) A Member State which, in the context of subsidised activities, provides for a deductible proportion of value added tax for taxable persons who carry out only taxable transactions, and which lays down a special rule which limits the right to deduct value added tax on the purchase of goods and services which are subsidised, fails to fulfil its obligations under Community law, and, in particular, Articles 17(2) and (5) and 19 of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes. (see para. 31, operative part)