Laszlo Bakcsi v Finanzamt Fürstenfeldbruck.
Date: 2001-03-08
24 In paragraph 16 of its judgment in Armbrecht, the Court held that it is clear from the wording of Article 2(1) of the Sixth Directive that a taxable person must act as such in order for a transaction to be subject to VAT. According to paragraph 17 of that judgment, a taxable person carrying out a transaction in a private capacity does not act as a taxable person. Consequently, as paragraph 18 of Armbrecht makes clear, a transaction carried out by a taxable person in a private capacity is not subject to VAT.
25 The Court also pointed out, in paragraph 19 of Armbrecht, that there is no provision in the Sixth Directive which precludes a taxable person who wishes to retain part of an item of property amongst his private assets from excluding it from the VAT system. According to paragraph 20 of that judgment, this interpretation makes it possible for a taxable person to choose whether or not to integrate into his business, for the purposes of applying the Sixth Directive, part of an asset which is given over to his private use. The Court went on in that paragraph to point out that the availability of that option does not impede the application of the rule that capital goods used for both business and private purposes may none the less be treated as business goods the VAT on which is in principle wholly deductible.
26 Nor, it should be observed, does the Sixth Directive contain any provision which would preclude a taxable person who acquires a capital item in order to use it for both business and private purposes from retaining it wholly within his private assets and thereby excluding it in full from the system of VAT.
27 When a taxable person thus decides to retain a capital item entirely within his private assets, whether or not he uses it for both business and private purposes, no portion of the input VAT due or paid on the acquisition of the item is therefore deductible.
28 In that respect, the choice, for a taxable person, between assigning goods to his private assets and assigning them, in whole or in part, to his business assets may be based on a variety of considerations, including the fact that he is not, in any event, authorised to deduct the residual VAT on a business asset purchased second-hand from a non-taxable person.
29 It is also necessary to point out that the use, for business or private purposes, to which a taxable person actually puts a capital item need be taken into account for the purpose of determining how that item has been assigned only if the taxable person requests the right to deduct, wholly or in part, the input VAT paid in respect of the acquisition. In such a case, it is necessary to determine whether the goods have been acquired by the taxable person acting, at least in part, as such, that is to say, for the purposes of his economic activities within the meaning of Article 4 of the Sixth Directive. This is a question of fact to be determined in the light of all the circumstances of the case, including the nature of the goods concerned and the period between the acquisition of the goods and their use for the purposes of the taxable person's economic activities (see, to this effect, Lennartz, paragraphs 21 and 35).
30 Moreover, it follows from heading (a) of the first subparagraph of Article 6(2) and from Article 11.A(1)(c) of the Sixth Directive that the use of capital goods for the private use of a taxable person or of his staff or for purposes other than those of his business, where the VAT on such goods is wholly or partly deductible, is treated as a supply of services for consideration and is taxed on the basis of the cost of providing the services (see Lennartz, paragraph 26).
31 In contrast, if the taxable person has chosen to retain a capital item wholly within his private assets and was therefore not entitled to deduct the input VAT paid on the acquisition, the use of the item for his business purposes cannot be subject to VAT.
32 In the light of the foregoing, the Commission's argument that a taxable person demonstrates his decision to assign an item by using it wholly or partly for the purpose of his business activities and is therefore precluded from assigning a mixed-use item wholly to his private assets must be rejected.
33 It is also necessary to reject the argument put forward by the German and Greek Governments to the effect that the taxable person's choice to integrate into his business assets an item of property purchased from a private individual, the acquisition of which does not create a right to deduct VAT, results from the fact that he exercises the right to deduct the VAT levied on the expenses connected to the item, such as repairs. The purpose to which a particular capital item is assigned determines the application of the VAT system to the item itself and not to the goods and services employed for its use and maintenance. The right to deduct the VAT levied on those goods and services is a separate matter coming under the application of Article 17 of the Sixth Directive. That right depends, in particular, on the connection between those goods and services and the taxed transactions of the taxable person. It follows that the tax arrangements applicable to the supply of capital items must be dissociated from those concerning the taxable expenses incurred for their use and maintenance.
34 The answer to the first question must therefore be that a taxable person who acquires a capital item in order to use it for both business and private purposes may retain it wholly within his private assets and thereby exclude it entirely from the system of VAT.
The second question
Arguments of the parties
39 Where a taxable person assigns to his business assets only the part of the item used for business purposes, the sale of that part alone is subject to VAT (see, to this effect, Armbrecht, paragraph 24).
42 In this regard, it should be noted that the purpose of Article 5(6) of the Sixth Directive is, in particular, to ensure equal treatment as between a taxable person who withdraws goods from his business and an ordinary consumer who buys goods of the same type. In pursuit of that objective, Article 5(6) prevents a taxable person who has been able to deduct VAT on the purchase of goods used for his business from escaping payment of VAT when he transfers those goods from his business for private purposes and from thereby enjoying advantages to which he is not entitled by comparison with an ordinary consumer who buys goods and pays VAT on them (see Case C-20/91 De Jong [1992] ECR I-2847, paragraph 15, and Case C-48/97 Kuwait Petroleum [1999] ECR I-2323, paragraph 21, as well as, with regard to heading (a) of the first subparagraph of Article 6(2) of the Sixth Directive, which is based on the same principle, Case C-230/94 Enkler [1996] ECR I-4517, paragraph 33).
44 It follows that, since the taxable person has not been authorised to deduct the residual VAT on capital goods purchased second-hand from a non-taxable person, the VAT on such goods must be considered not to be deductible for the purposes of Article 5(6) of the Sixth Directive and no tax may therefore be levied on that withdrawal under that provision (see, with regard to heading (a) of the first subparagraph of Article 6(2), Case 50/88 Kühne [1989] ECR 1925, paragraph 9). If the taxable person subsequently sells the goods, he will be carrying out that transaction in a private capacity, and not as a taxable person. That transaction will therefore be excluded from the system of VAT.
46 Taxation of the item in such a situation, where it does not create an entitlement to deduction of residual tax, would lead to double taxation contrary to the principle of fiscal neutrality inherent in the common system of VAT, of which the Sixth Directive forms part (see, with regard to heading (a) of the second subparagraph of Article 6(2) of the Sixth Directive, Kühne, cited above, paragraph 10, and Case C-193/91 Mohsche [1993] ECR I-2615, paragraph 9).