Opinion of the Advocate General — ECLI:EU:C:1996:479
Date: 1996-12-10
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Taxation;Value added tax
Procedure: Action for failure to fulfil obligations - successful
Origin: Italy

Summary of the Judgment 
Tax provisions — Harmonization of Uws — Turnover taxes — Common system of value added 
tax — Exemptions provided for by the Sixth Directive — Exemption of supplies of goods used 
wholly for an exempted activity or excluded from the right of deduction — Absence — Not per­
missible 
(Counal Directive 77/388, Art. 13B(c)) 
A Member State which enacts and maintains 
in force legislation which does not exempt 
from VAT supplies of goods used wholly for 
an exempted activity when those goods have 
not given rise to the right of deduction fails 
to fulfil its obligations under Article 13B(c) 
I - 3605 
SUMMARY — CASE C-45/95 
of the Sixth Directive 77/388/EEC on the 
harmonization of the laws of the Member 
States relating to turnover taxes. Even if the 
amount of VAT due in the event of double 
taxation may in fact be insignificant, that 
cannot absolve the Member State from prop­
erly implementing Article 13B(c) of the Sixth 
Directive whose very purpose is to avoid 
double taxation contrary to the principle of 
fiscal neutrality inherent in the common sys­
tem of VAT. 
A Member State whose legislation does not 
exempt from VAT supplies of goods 
excluded from the right of deduction in 
accordance with Article 17(6) of the Sixth 
Directive likewise fails to fulfil its obliga­
tions under Article 13B(c) thereof, even if 
that legislation treats a transaction which is 
to be exempted as one which falls outside the 
scope of VAT. The correct and straightfor­
ward application of exemptions required by 
Article 13B(c) precludes a transposition of 
the Sixth Directive which does not have the 
same effects as an exemption, in particular 
when the calculation of the deductible pro­
portion and, therefore, the amount of VAT 
which a taxable person may deduct differ 
according tó whether the supplies of goods 
in issue are rightly exempted or fall outside 
the sphere of application of VAT. 
I - 3606