Wolfgang Seeling v Finanzamt Starnberg.
Date: 2003-05-08
20.  After observing that it is the Court's case-law (Case C-258/95   Fillibeck   [1997] ECR I-5577, paragraph 25) that Article 6(2)(a) of the Sixth Directive is designed to ensure equal treatment as between taxable persons and final consumers, the Bundesgerichtshof questioned the scope of that equivalence of treatment.  It queried in particular whether the partial use of goods forming part of the assets of a business for the private use of the taxable person may be regarded as an exempt   "leasing or letting of immovable property"  , within the meaning of Article 13B(b) of the Sixth Directive.  According to it, that question was not conclusively settled by the judgment in Case C-291/92   Armbrecht   [1995] ECR I-2775.
40.  It must first of all be pointed out that it is settled case-law that a taxable person may 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 (see   Armbrecht  , paragraph 20, and Case C-415/98   Bakcsi   [2001] ECR I-1831, paragraph 25).
41.  If the taxable person chooses to treat capital goods used both for business and private purposes as business goods, the VAT due as input tax on the acquisition of those goods is in principle wholly and immediately deductible (see,   inter alia  , Case C-97/90   Lennartz   [1991] ECR I-3795, paragraph 26, and   Bakcsi  , cited above, paragraph 25).
42.  It follows from Article 6(2)(a) and from Article 11A(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 input VAT paid 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, and   Bakcsi  , paragraph 30).
43.  Accordingly, where a taxable person chooses to treat an entire building as forming part of the assets of his business and subsequently uses part of that building for private purposes, on the one hand, he is entitled to deduct the input VAT paid on all construction costs relating to that building and, on the other, he is subject to the corresponding obligation to pay VAT on the amount of expenditure incurred to effect such use.
44.  Next, as regards Article 13B(b) of the Sixth Directive, the Court has repeatedly stated that the terms used to specify the exemptions provided for by Article 13 of the Sixth Directive are to be interpreted strictly, since they constitute exceptions to the general principle that VAT is to be levied on all services supplied for consideration by a taxable person (see, in particular,   Stichting Uitvoering Financiële Acties  , paragraph 13, and Case C-287/00   Commission   v   Germany   [2002] ECR I-5811, paragraph 43).
45.  Accordingly, contrary to what the German Government contends, Article 13B(b) of the Sixth Directive cannot be applied by analogy.
46.  Moreover, it is settled case-law that the exemptions in Article 13 of the Sixth Directive constitute independent concepts of Community law whose purpose is to avoid divergences in the application of the VAT system from one Member State to another (see, in particular, Case C-349/96   CPP   [1999] ECR I-973, paragraph 15, and   Commission   v   Germany  , paragraph 44).
48.  None the less, leaving aside the specific cases expressly mentioned in Article 13B(b), the concepts   "leasing"   and   "letting of immovable property"  , which, as pointed out in paragraph 44 of this judgment, constitute an exception to the general VAT rules contained in the Sixth Directive, must be construed strictly (see   Commission   v   Ireland  , paragraph 55, and   Commission   v   United Kingdom  , paragraph 67).
49.  The letting of immovable property for the purposes of Article 13B(b) of the Sixth Directive essentially involves the landlord of property assigning to the tenant, in return for rent and for an agreed period, the right to occupy his property and to exclude other persons from it (see Case C-409/98   Mirror Group   [2001] ECR I-7175, paragraph 31, and Case C-108/99   Cantor Fitzgerald International   [2001] ECR I-7257, paragraph 21).
50.  The private use by the taxable person of a dwelling in a building which he has treated as forming, in its entirety, part of the assets of his business does not satisfy those conditions.
51.  It is a feature of such use not only that no rent is paid but also that there is no genuine agreement on the duration of the right of enjoyment or the right of occupation of the dwelling, or to exclude third parties.
52.  It follows that the private use by the taxable person of a dwelling in a building which he has treated as forming, in its entirety, part of the assets of his business does not fall within Article 13B(b) of the Sixth Directive.
54.  While authorising a taxable person to treat a building as forming, in its entirety, part of the assets of his business, and thus to deduct input VAT on all the construction costs, by taxing the private use by the taxable person of a dwelling in that building may have the result, as the German Government maintains, that there will be untaxed end use, because the adjustment period provided for in Article 20(2) of the Sixth Directive is likely to correct to a limited extent only the deduction of input tax made when the building was constructed, that is a consequence of a deliberate choice on the part of the Community legislature and cannot have the effect of requiring that another article of the directive be given a broad interpretation.
56.  The reply to the question referred for a preliminary ruling must therefore be that Articles 6(2)(a) and 13B(b) of the Sixth Directive must be interpreted as precluding national legislation which treats as an exempt supply of services, on the basis that it constitutes a leasing or letting of immovable property within the meaning of Article 13B(b), the private use by a taxable person of part of a building which is treated as forming, in its entirety, part of the assets of his business.