Eon Aset Menidjmunt OOD v Direktor na Direktsia ‘Obzhalvane I upravlenie na izpalnenieto’ — Varna pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite.
Date: 2012-02-16
33. Since the leasing of a motor vehicle does not constitute a supply of goods, it must, as a general rule, be categorised as a supply of services, according to Article 24(1) of the VAT Directive (see, to that effect, Case C‑155/01 Cookies World [2003] ECR I‑8785, paragraph 45, and Case C‑425/06 Part Service [2008] ECR I‑897, paragraph 61).
34. The lease of a motor vehicle under a financial leasing contract may, nonetheless, present features which are comparable to those of the acquisition of capital goods.
35. As the Court has stated, in the context of a provision enabling Member States to exclude capital goods from the system of VAT deductions for a transitional period, the definition of ‘capital goods’ covers goods used for the purposes of some business activity and distinguishable by their durable nature and their value and such that the acquisition costs are not normally treated as current expenditure but are written off over several years (see, to that effect, Case 51/76 Verbond van Nederlandse Ondernemingen [1977] ECR 113, paragraph 12, and Case C‑98/07 Nordania Finans and BG Factoring [2008] ECR I‑1281, paragraphs 27 and 28).
37. In the case of a financial leasing contract, there is not necessarily any acquisition of the goods since such a contract may provide that the lessee has the option of not acquiring those goods at the end of the lease period.
38. However, as is clear from the international accounting standard IAS 17 relating to leases, produced in Commission Regulation (EC) No 1126/2008 of 3 November 2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council (OJ 2008 L 320, p. 1), an operating lease must be distinguished from a finance lease, the nature of the latter being that substantially all the risks and rewards of legal ownership are transferred to the lessee. The fact that a transfer of ownership is provided for on the expiry of the contract or the fact that the present value of the lease payments is practically identical to the market value of the property constitute, separately or together, criteria which permit a determination of whether a contract can be categorised as a finance lease.
39. As the Court has previously stated, the concept of ‘supply of goods’ does not refer to the transfer of ownership in accordance with the procedures prescribed by the applicable national law but covers any transfer of tangible property by one party which empowers the other party actually to dispose of it as if the recipient were the owner of the property (see Case C‑320/88 Shipping and Forwarding Enterprise Safe [1990] ECR I‑285, paragraph 7, and Case C‑185/01 Auto Lease Holland [2003] ECR I‑1317, paragraph 32).
40. Accordingly, where a financial leasing contract relating to a motor vehicle provides either that ownership of that vehicle is to be transferred to the lessee on the expiry of that contract or that the lessee is to possess all the essential powers attaching to ownership of that vehicle and, in particular, that substantially all the rewards and risks incidental to legal ownership of that vehicle are transferred to the lessee and that the present value of the amount of the lease payments is practically identical to the market value of the property, the transaction must be treated as the acquisition of capital goods.
43. It is necessary to recall, in that regard, that the deduction system established by the VAT Directive is meant to relieve the trader entirely of the burden of the VAT payable or paid in the course of all his economic activities. The common system of VAT seeks to ensure complete neutrality of taxation of all economic activities, whatever their purpose or results, provided that they are themselves subject, in principle, to VAT (see, inter alia, Case C‑515/07 Vereniging Noordelijke Land- en Tuinbouw Organisatie [2009] ECR I‑839, paragraph 27).
44. Where goods or services acquired by a taxable person are used for purposes of transactions that are exempt or do not fall within the scope of VAT, no output tax can be collected or input tax deducted (see Case C‑184/04 Uudenkaupungin kaupunki [2006] ECR I‑3039, paragraph 24, and Vereniging Noordelijke Land- en Tuinbouw Organisatie , paragraph 28).
46. As regards a transaction consisting of the acquisition of a service, such as the leasing of a motor vehicle, the existence of a direct and immediate link between a particular input transaction and a particular output transaction or transactions giving rise to entitlement to deduct is, in principle, necessary before the taxable person is entitled to deduct input VAT and in order to determine the extent of such entitlement (Case C‑29/08 SKF [2009] ECR I‑10413, paragraph 57 and case-law cited).
48. In either of the circumstances referred to in paragraphs 46 and 47 of this judgment, whether there is a direct and immediate link will depend on whether the cost of the input services is incorporated either in the cost of particular output transactions or in the cost of goods or services supplied by the taxable person as part of his economic activities ( SKF , paragraph 60).
49. While it is for the referring court to assess whether there is a direct and immediate link between the leasing of the motor vehicle at issue in the main proceedings and the economic activity of Eon Aset, it is for the Court to provide that court with helpful guidance with regard to European Union law.
51. The Court has previously held that the fact that an employee must travel between his home and his workplace in order to be present at work and, consequently, to perform his duties, is not conclusive evidence that transport provided for an employee from his home to his workplace is not to be considered as being for the employee’s private use within the meaning of Article 26(1) of the VAT Directive. Indeed, it would be contrary to the purpose of that provision if such an indirect link were sufficient, in itself, to prevent such travel being treated as a supply for consideration (see, to that effect, Case C‑258/95 Fillibeck [1997] ECR I‑5577, paragraph 27).
52. On the other hand, in special circumstances, the requirements of the business may make it necessary for the employer to take responsibility for the provision of transport for employees between their homes and the workplace, with the result that the transport is organised by the employer for purposes which are not other than those of the business (see, to that effect, Fillibeck , paragraphs 29 and 30).
53. As regards the leasing of a motor vehicle under a financial leasing contract which can be treated as a transaction consisting of the acquisition of capital goods intended in part for private use and in part for business use, the taxable person has a choice. The taxable person may, for the purposes of VAT, either (i) allocate those goods wholly to the assets of his business, (ii) retain them wholly within his private assets, thereby excluding them entirely from the system of VAT, or (iii) integrate them into his business only to the extent to which they are actually used for business purposes (see, to that effect, Case C‑291/92 Armbrecht [1995] ECR I‑2775, paragraph 20, and Case C‑434/03 Charles and Charles‑Tijmens [2005] ECR I‑7037, paragraph 23 and case-law cited).
54. Should the taxable person choose to treat capital goods used for both business and private purposes as business assets, the input VAT due on the acquisition of those goods is, in principle, fully and immediately deductible. In those circumstances, where goods allocated to the business have created an entitlement to full or partial deduction of input VAT paid, their use for the private purposes of the taxable person or of his staff or for purposes other than those of his business is treated as a supply of services for consideration, pursuant to Article 26(1) of the VAT Directive (see, to that effect, Charles and Charles‑Tijmens , paragraphs 24 and 25 and case-law cited, and Vereniging Noordelijke Land- en Tuinbouw Organisatie , paragraph 37).
55. Should the taxable person decide to retain capital goods entirely within his private assets, whether or not he uses them for both business and private purposes, no portion of the input VAT due or paid on the acquisition of the goods is deductible (Case C‑415/98 Bakcsi [2001] ECR I‑1831, paragraph 27). In that case, the use of those goods for the purposes of the business cannot be subject to VAT (see, to that effect, Bakcsi , paragraph 31).
56. Lastly, should the taxable person choose to allocate the goods to the business assets of his undertaking only to the extent to which they are actually used for the business, the part of the goods excluded from those business assets is not part of the assets of the undertaking and, consequently, does not fall within the scope of the VAT system (see, to that effect, Armbrecht , paragraph 28).
57. It must also be stated that it is the acquisition of the goods by a taxable person acting as such that determines the application of the VAT system and therefore of the deduction mechanism. The use to which the goods are put, or intended to be put, merely determines the extent of the initial deduction to which the taxable person is entitled (see, to that effect, Case C‑97/90 Lennartz [1991] ECR I‑3795, paragraph 15).
58. The question whether a taxable person has acquired goods acting as such, that is, for the purposes of his economic activity within the meaning of Article 9 of the VAT Directive, is a question of fact which must 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 activity (see, to that effect, Bakcsi , paragraph 29).
63. As regards capital goods, the taxable person who allocates those goods in their entirety to the assets of his undertaking has an immediate right to deduct VAT (see, to that effect, Charles and Charles‑Tijmens , paragraph 24 and case‑law cited).
66. It must initially be borne in mind that, in the context of proceedings brought under Article 267 TFEU, the Court has no jurisdiction to rule either on the interpretation of provisions of national laws or regulations or on their conformity with European Union law. It may, however, supply the national court with an interpretation of European Union law that will enable that court to resolve the legal problem before it (see, inter alia, Case C‑124/99 Borawitz [2000] ECR I‑7293, paragraph 17, and Case C‑385/09 Nidera Handelscompagnie [2010] ECR I‑10385, paragraph 32).
68. In that regard, it should be recalled that the right to deduct is an integral part of the VAT scheme which in principle may not be limited and which must be exercised immediately in respect of all the taxes charged on transactions relating to inputs (see Case C‑62/93 BP Soupergas  [1995] ECR I‑1883, paragraph 18, and Case C‑437/06 Securenta  [2008] ECR I‑1597, paragraph 24).
69. It is clear from Article 168(a) of the VAT Directive and the case-law cited in paragraph 43 et seq. of this judgment that the question of whether there is a right to deduct presupposes that a taxable person acting as such acquires goods or services and uses them for the purposes of his economic activity.
71. Such legislation amounts to excluding the right to deduct VAT where the prerequisites for the existence of that right are not satisfied.
72. Article 70(1) of the ZDDS therefore does not restrict the right to deduct within the meaning of Article 176 of the VAT Directive.
73. It must however be made clear that a Member State cannot refuse to allow taxable persons who have chosen to treat capital goods used both for business and private purposes as business assets to deduct immediately and in full the input VAT payable on the acquisition of those goods, which they are entitled to do in accordance with the settled case‑law cited in paragraph 63 of this judgment (see, to that effect, Charles and Charles‑Tijmens , paragraph 28).
74. Consequently, the answer to questions 2 and 3 is that Articles 168 and 176 of the VAT Directive must be interpreted as not precluding national legislation which provides for the exclusion from the right to deduct of goods and services intended to be supplied free of charge or for activities outside the scope of the taxable person’s economic activity, provided that goods categorised as capital goods are not allocated to the assets of the undertaking.
Questions 5 and 6
Admissibility
76. In that regard, it must be observed that, in proceedings under Article 267 TFEU, which is based on a clear separation of functions between the national courts and the Court of Justice, any assessment of the facts in the case is a matter for the national court. Similarly, it is solely for the national court before which the dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine in the light of the particular circumstances of the case both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions submitted by the national court concern the interpretation of European Union law, the Court of Justice is, in principle, bound to give a ruling (see, inter alia, Case C‑415/93 Bosman [1995] ECR I‑4921, paragraph 59, and Case C‑450/06 Varec [2008] ECR I‑581, paragraph 23 and case‑law cited).
77. Nevertheless, the Court has also held that, in exceptional circumstances, it can examine the conditions in which the case was referred to it by the national court, in order to assess whether it has jurisdiction. The Court may refuse to rule on a question referred for a preliminary ruling by a national court only where it is quite obvious that the interpretation of European Union law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (see, inter alia, Bosman , paragraph 61, and Varec , paragraph 24 and case‑law cited).