Judgment of the Court (Second Chamber) of 21 April 2005 in Case C-25/03 Reference for a preliminary ruling from the Bundesfinanzhof (Germany) Finanzamt Bergisch Gladbach v HE (Sixth VAT Directive — Construction of a dwelling by two spouses forming a community which does not itself perform an economic activity — Use of one room by one of the co-owners for business purposes — Status of taxable person — Right to deduct — Rules governing exercise of that right — Invoicing requirements)
Date: 2005-06-11
Institutions: Court of Justice
Subjects: VAT, housing, interpretation of the law, joint ownership, multi-storey dwelling, tax relief, tax system, taxpayer

11.6.2005

EN

Official Journal of the European Union

C 143/7

The principles of the protection of legitimate expectations and legal
certainty do not preclude a Member State, on an exceptional basis
and in order
to avoid the large-scale use, during the legislative
process, of contrived financial arrangements intended to minimise the
burden of value added tax that an amending law is specifically
designed to combat, from giving that law retroactive effect when, in
circumstances such as those in the main proceedings, economic opera-
tors carrying out economic transactions such as those referred to by
the law were warned of the impending adoption of that law and of
the retroactive effect envisaged in a way that enabled them to under-
stand the consequences of the legislative amendment planned for the
transactions they carry out.

When that law exempts an economic transaction in respect of immo-
vable property previously subject to value added tax, it may have the
effect of revoking a value added tax adjustment made on account of
the exercise, when immovable property was used for a transaction
regarded at that time as taxable, of a right to deduct value added tax
paid in respect of the supply of that immovable property.

(1) OJ C 7 of 11.01.2003.

JUDGMENT OF THE COURT

(Second Chamber)

of 21 April 2005

in Case C-25/03 Reference for a preliminary ruling from
the Bundesfinanzhof (Germany) Finanzamt Bergisch Glad-
bach v HE (1)

(Sixth VAT Directive — Construction of a dwelling by two
spouses forming a community which does not itself perform
an economic activity — Use of one room by one of the co-
owners for business purposes — Status of taxable person —
Right to deduct — Rules governing exercise of that right —
Invoicing requirements)

(2005/C 143/06)

(Language of the case: German)

the Chamber, R. Silva de Lapuerta, R. Schintgen
dent of
(Rapporteur), G. Arestis and J. Klučka,
Judges; A. Tizzano,
Advocate General, K. Sztranc, for the Registrar, gave a judg-
ment on 21 April 2005, the operative part of which is as
follows:

Sixth Council Directive 77/388/EEC of 17 May 1977 on the
harmonisation of the laws of the Member States relating to turnover
taxes — Common system of value added tax: uniform basis of assess-
ment, both in its original
version and following amendment
by Council Directive 91/680/EEC of 16 December 1991 supple-
menting the common system of value added tax and amending Direc-
tive 77/388/EEC with a view to the abolition of fiscal frontiers, is to
be interpreted as follows:

— where a person purchases a house, or has a house built, in order
to live in it with his family he is acting as a taxable person, and
is thus entitled to make deductions under Article 17 of the Sixth
Directive in so far as he uses one room in that building as an
office for the purposes of carrying out an economic activity, albeit
an ancillary one, within the meaning of Articles 2 and 4 of the
directive and allocates that part of the building to the assets of his
business;

— where a marital community which does not have legal personality
and does not itself carry out an economic activity within the
meaning of the Sixth Directive places an order for a capital item,
the co-owners forming that community are to be regarded as reci-
pients of the transaction for the purposes of the directive;

— where spouses forming a community by marriage purchase a
item, part of which is used exclusively for business
capital
purposes by one of the co-owning spouses, that spouse is entitled
to deduct in respect of all the input value added tax attributable
to the share of the item which he uses for the purposes of his busi-
ness, in so far as the amount deducted does not exceed the limits
of the taxable person's interest in the co-ownership of the item;

in circumstances such as those at

— Articles 18(1)(a) and 22(3) of the Sixth Directive do not require
the taxable person, in order to be able to exercise the right to
deduct
issue in the main
proceedings, to hold an invoice issued in his name and stating the
proportions of the payments and value added tax corresponding to
in the property held in co-ownership. An invoice
his interest
issued to the co-owning spouses without distinguishing between
them and without reference to such apportionment is sufficient for
that purpose.

In Case C-25/03: reference for a preliminary ruling under
Article 234 EC from the Bundesfinanzhof (Germany) made by
decision of 29 August 2002, received at the Court on 23
January 2003,
in the proceedings pending before that court
between Finanzamt Bergisch Gladbach and HE — the Court
(Second Chamber), composed of C.W.A. Timmermans, Presi-

(1) OJ C 70 of 22.3.2003.