Joined Cases C-487/01 and C-7/02

Gemeente Leusden and Holin Groep BV cs

v

Staatssecretaris van Financiën

(Reference for a preliminary ruling from the Hoge Raad der Nederlanden)

(Turnover taxes – Common system of value added tax – Article 17 of Sixth Directive 77/388/EEC – Deduction of input tax – Amendment of national legislation withdrawing the right to opt for taxation of lettings of immovable property – Adjustment of deductions – Application to current leases)

Summary of the Judgment

1. Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Deduction of input tax – Deductions made under a right to opt for taxation granted by the Member State concerned in respect of lettings of immovable property acquired as capital goods – Withdrawal of the option and reintroduction of the exemption entailing the adjustment of deductions previously made – Whether permissible – Condition – Account to be taken of the legitimate expectation of taxpayers

(Council Directive 77/388, Arts 13(B) and (C), 17 and 20)

2. Tax provisions – Harmonisation of laws – Turnover taxes – Common system of value added tax – Taxable transactions – Application of goods for the purposes of a business – Scope – Legislative amendment withdrawing the right to opt for taxation of a financial transaction which is generally exempt – Not included

(Council Directive 77/388, Art. 5(7)(a))

1. Articles 17 and 20 of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, interpreted in accordance with the principles of the protection of legitimate expectations and legal certainty, do not preclude the withdrawal by a Member State of the right to opt for taxation of lettings of immovable property which it has granted to its taxpayers under Article 13(C) of the Sixth Directive and the consequent reintroduction of the exemption for such lettings under Article 13(B)(b) which results in the adjustment of deductions made in respect of the immovable property acquired as capital goods which is let pursuant to Article 20 of that Directive.

In such circumstances, the Member State concerned must take account of the legitimate expectation of its taxable persons when determining the arrangements for implementing the legislative amendment. The repeal of legislation from which a person liable to pay value added tax has derived an advantage in paying less tax, without there being any abuse, cannot however, as such, breach a legitimate expectation based on Community law.

(see paras 48, 82, operative part 1)

2. A legislative amendment by which a Member State withdraws the right to opt for taxation of lettings of immovable property entailing payment of amounts equivalent to deductions made previously does not constitute a situation which falls within the terms of Article 5(7)(a) of the Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes. That provision is intended to cover the application of goods, by a taxable person, for the purposes of his business, and not a legislative amendment withdrawing the right to opt for taxation of a financial transaction which is generally exempt.

(see paras 92, 95, operative part 2)