Renate Enkler v Finanzamt Homburg.
Date: 1996-09-26
20 First, a comparison of Article 4(2) with Article 4(3) of the Sixth Directive shows that the concept of economic activity referred to in both the first and second sentences of Article 4(2) does not include activities carried out on an occasional basis.
22 Accordingly, the answer to the first question must be that the hiring out of tangible property constitutes exploitation of such property which must be classified as an "economic activity" within the meaning of Article 4(2) of the Sixth Directive if it is done for the purpose of obtaining income therefrom on a continuing basis.
The second and third questions
24 As far as this point is concerned, it must be remembered that it is for the person seeking deduction of VAT to establish that he meets the conditions for eligibility and, in particular, to prove that he satisfies the criteria for being considered to be a taxable person. Therefore Article 4 of the Sixth Directive does not preclude the revenue authorities from requiring the declared intention to be supported by objective evidence (see Case 268/83 Rompelman, cited above, paragraph 24). It follows that the administrative or judicial authorities called upon to give a decision on this question must evaluate all the specific circumstances of a given case in order to determine whether the purpose of the activity in question, in the present case the exploitation of property in the form of hiring it out, is to obtain income on a continuing basis.
26 In Case C-97/90 Lennartz v Finanzamt Muenchen III [1991] ECR I-3795, the Court ruled that one of the factors on the basis of which the tax authorities must consider whether a taxable person has acquired goods for the purposes of his economic activities is the nature of the goods concerned.
27 That criterion must also make it possible to determine whether an individual has used property in such a way that his activity is to be regarded as "economic activity" within the meaning of the Sixth Directive. The fact that property is suitable only for economic exploitation will normally be sufficient to find that its owner is exploiting it for the purposes of his economic activities and, consequently, for the purpose of obtaining income on a continuing basis. On the other hand, if, by reason of its nature, property is capable of being used for both economic and private purposes, all the circumstances in which it is used will have to be examined in order to determine whether it is actually used for the purpose of obtaining income on a regular basis.
28 In the latter case, comparing the circumstances in which the person concerned actually uses the property with the circumstances in which the corresponding economic activity is usually carried out may be one way of ascertaining whether the activity concerned is carried on for the purpose of obtaining income on a continuing basis.
29 Although criteria based on the results of the activity in question cannot in themselves make it possible to determine whether the activity is carried on for the purpose of obtaining income on a continuing basis, the actual length of the period for which the property is hired, the number of customers and the amount of earnings are also factors which, forming part of the circumstances of the case as a whole, may be taken into account with others when that question is under consideration.
33 Second, in order to prevent 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 takes those goods away from his business for private purposes and from thereby enjoying undue advantages over an ordinary consumer who buys the goods and pays VAT on them, Article 6(2) of the Sixth Directive provides that "the use of goods forming part of the assets of a business for the private use of the taxable person or of his staff or more generally for purposes other than those of his business where the value added tax on such goods is wholly or partly deductible" is to be treated as a supply of services for consideration (see Case C-20/91 De Jong v Staatssecretaris van Financiën [1992] ECR I-2847, paragraph 15, concerning Article 5(6) of the Sixth Directive, which is based on the same principle).
34 In Case C-193/91 Mohsche [1993] ECR I-2615, paragraphs 13 and 14, the Court held that private use of goods is taxable only exceptionally and that, consequently, the words "use of goods" in Article 6(2)(a) are to be interpreted strictly, as meaning only the use of the goods themselves. Accordingly, services supplied by third parties for the purpose of maintaining or using goods where the taxable person is unable to deduct the input tax paid are not covered by that provision.
35 As already pointed out in paragraph 33 above, the purpose of Article 6(2) of the Sixth Directive is to ensure equal treatment as between taxable persons and final consumers. Final consumers can use goods whenever they wish; so, in determining, in accordance with Article 11A(1)(c), the taxable amount for a transaction treated as a supply of services pursuant to Article 6(2), the periods in which goods are at the taxable person' s disposal in a way that he can actually use them at any time for private purposes must be taken into account.
36 First, the extent to which those periods are to be taken into account when the taxable amount for VAT purposes is determined is limited by the requirement that only expenses which relate to the goods themselves, such as the writing-off of depreciation, or expenses incurred by the taxable person which entitle him to deduct VAT, may be taken into account.
38 Consequently, the answer to the fourth question must be that Article 11A(1)(c) of the Sixth Directive is to be interpreted as meaning that the taxable amount for turnover tax on transactions treated as supplies of services under Article 6(2)(a) of the directive must include expenses which are incurred during a period in which the goods are at the taxable person' s disposal in a way that he can actually use them at any time for non-business purposes and which relate to the goods themselves or which the taxable person is entitled to deduct for VAT purposes. The portion of the expenses to be included must be proportionate to the ratio between the total duration of actual use of the goods and the duration of actual use for non-business purposes.