Finanzamt Hildesheim v BLC Baumarkt GmbH & Co. KG.
Date: 2012-11-08
13. In answering that question, it needs to be remembered that Article 17(5) of the Sixth Directive lays down the rules applicable to the right to deduct VAT where the VAT relates to goods or services used by the taxable person ‘both for transactions covered by paragraphs 2 and 3, in respect of which value added tax is deductible, and for transactions in respect of which value added tax is not deductible’. In such a case, the first subparagraph of Article 17(5) of the Sixth Directive provides that only such proportion of the VAT is deductible as is attributable to the former taxable transactions (Case C‑488/07 Royal Bank of Scotland  [2008] ECR I‑10409, paragraph 17).
14. Under the second subparagraph of Article 17(5) of the Sixth Directive, the deductible amount is calculated according to a proportion fixed in accordance with Article 19 of that directive ( Royal Bank of Scotland , paragraph 18).
15. However, as is apparent from paragraph 19 of the judgment in Royal Bank of Scotland , the third subparagraph of Article 17(5) of the Sixth Directive, which begins with the word ‘however’, allows derogation from the rule set out in the first and second subparagraphs of Article 17(5) by permitting Member States to employ one of the other methods for determining the deductible amount listed in the third subparagraph of Article 17(5), namely determination of a separate proportion for each sector of business or deduction on the basis of the use made of all or part of the goods and services for a specific activity, or they may even exclude the right of deduction in certain circumstances.
18. That interpretation is, moreover, in accordance with the purpose of the third subparagraph of Article 17(5) of the Sixth Directive, the provisions of which are suitable for application to given situations since they have the aim, in particular, by taking into account the specific characteristics of the taxable person’s activities, to permit Member States to achieve greater accuracy in calculating the deductible proportion (see, to that effect, Royal Bank of Scotland , paragraph 24).
20. Concerning the rules for calculating the deductible proportion to be applied in that type of situation, it should be noted that, apart from those which must be used in case of application of Article 17(5)(d) of the Sixth Directive, which refers expressly to the calculation rule referred to in the first subparagraph of Article 17(5) of that directive, the rules laid down in Article 19(1) of the latter do not apply in so far as a given situation is subject to one of the other special regimes provided for in the third subparagraph of Article 17(5) of the directive (see, to that effect, Royal Bank of Scotland , paragraph 21).
21. As is quite clear from the wording of Articles 17(5) and 19(1) of the Sixth Directive, the latter provision refers only to the proportion deductible under the first subparagraph of Article 17(5) of the directive, and therefore lays down a detailed rule for calculating the proportion referred to in the first of those two provisions only ( Royal Bank of Scotland , paragraph 22) and, by extension, for the deduction to be made pursuant to Article 17(5)(d) of the said directive.
22. In the absence of indications in the Sixth Directive, it is for the Member States to establish, within the limits of compliance with EU law and the principles on which the common system of VAT is based, methods and rules governing the calculation of the deductible proportion of input VAT. In exercising that power, the Member States are obliged to take account of the purpose and general system of that directive (see, to that effect, Case C‑437/06 Securenta  [2008] ECR I‑1597, paragraphs 34 and 35).
23. In this case, it must be held that, having regard, first, to the purpose of the third subparagraph of Article 17(5) of the Sixth Directive, which, as has been recalled in paragraph 18 of this judgment, is designed to allow Member States to reach more precise results in calculating the deductible proportion, second, to the general system of Article 17(5) of that directive, and, third, to the principle of fiscal neutrality, on which the common system of VAT is based and of which the third subparagraph of Article 17(5) may be regarded as constituting an application, the Member States must ensure, when exercising the prerogatives recognised by that latter provision, that the calculation of the deductible proportion of input VAT is as precise as possible (see, by analogy, as regards determination of the proportion between economic and non-economic activities, Securenta , paragraph 37).
24. The Sixth Directive does not therefore preclude Member States, when exercising that power, from applying, for a given transaction, a method or allocation key other than the turnover-based method, such as, in particular, that based on the floor area at issue in the main proceedings, on condition that the method used guarantees a more precise determination of the deductible proportion of the input V AT than that arising from application of the turnover-based method.
25. In the case at issue in the main proceedings, it is for the national court to verify whether those conditions are complied with.
26. Therefore, the answer to the question is that the third subparagraph of Article 17(5) of the Sixth Directive must be interpreted as allowing Member States, for the purposes of calculating the proportion of input VAT deductible for a given operation, such as the construction of a mixed-use building, to give precedence, as the key to allocation, to an allocation key other than that based on turnover appearing in Article 19(1) of that directive, on condition that the method used guarantees a more precise determination of the said deductible proportion.
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