Case C-255/02: Judgment of the Court (Grand Chamber) of  21 February 2006  (reference for a preliminary ruling from the VAT and Duties Tribunal, London) — Halifax plc, Leeds Permanent Development Services Ltd, County Wide Property Investments Ltd v Commissioners of Customs & Excise (Sixth VAT Directive — Article 2(1), Article 4(1) and (2), Article 5(1) and Article 6(1) — Economic activity — Supplies of goods — Supplies of services — Abusive practice — Transactions designed solely to obtain a tax advantage)
Date: 2006-06-03
Institutions: Court of Justice
Subjects: VAT, delivery, interpretation of the law, provision of services, self-employed person, tax relief

3.6.2006

EN

Official Journal of the European Union

C 131/1

I

(Information)

COURT OF JUSTICE

COURT OF JUSTICE

Judgment of the Court (Grand Chamber) of 21 February
2006 (reference for a preliminary ruling from the VAT
and Duties Tribunal, London) — Halifax plc, Leeds Perma-
nent Development Services Ltd, County Wide Property
Investments Ltd v Commissioners of Customs & Excise

(Case C-255/02) (1)

(Sixth VAT Directive — Article 2(1), Article 4(1) and (2),
Article 5(1) and Article 6(1) — Economic activity —
Supplies of goods — Supplies of services — Abusive practice
— Transactions designed solely to obtain a tax advantage)

(2006/C 131/01)

Language of the case: English

Referring court

VAT and Duties Tribunal, London

Parties to the main proceedings

Applicants: Halifax plc, Leeds Permanent Development Services
Ltd, County Wide Property Investments Ltd

Defendant: Commissioners of Customs & Excise

Re:

Reference for a preliminary ruling — VAT and Duties Tribunal,
London — Interpretation of Directive 77/388/EEC: Sixth
Council Directive of 17 May 1977 on the harmonisation of the
laws of
taxes —
the Member States relating to turnover
Common system of value added tax: uniform basis of assess-
ment (OJ 1977 L 145, p. 1) — Transactions carried out with
the sole intention of obtaining a tax advantage — Transactions
without an independent economic purpose

Operative part of the judgment

1. Transactions of the kind at issue in the main proceedings consti-
tute supplies of goods or services and an economic activity within
the meaning of Article 2(1), Article 4(1) and (2), Article 5(1)
and Article 6(1) of 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 assessment, as amended by Council
Directive 95/7/EC of 10 April 1995, provided that they satisfy
the objective criteria on which those concepts are based, even if
they are carried out with the sole aim of obtaining a tax advan-
tage, without any other economic objective.

2. The Sixth Directive must be interpreted as precluding any right of
a taxable person to deduct input VAT where the transactions from
which that right derives constitute an abusive practice.

that

the transactions

For it to be found that an abusive practice exists, it is necessary,
first,
concerned, notwithstanding formal
application of the conditions laid down by the relevant provisions
of the Sixth Directive and of national legislation transposing it,
result in the accrual of a tax advantage the grant of which would
be contrary to the purpose of those provisions. Second, it must
also be apparent from a number of objective factors that the essen-
tial aim of the transactions concerned is to obtain a tax advan-
tage.

3. Where an abusive practice has been found to exist, the transactions
involved must be redefined so as to re-establish the situation that
would have prevailed in the absence of the transactions consti-
tuting that abusive practice.

(1) OJ C 233, 28.09.2002.