Beteiligungsgesellschaft Larentia + Minerva mbH & Co. KG v Finanzamt Nordenham and Finanzamt Hamburg-Mitte v Marenave Schiffahrts AG.
Date: 2015-07-16
18. In that regard, it should be noted, in the first place, that a holding company whose sole purpose is to acquire shares in other undertakings and which does not involve itself directly or indirectly in the management of those undertakings, without prejudice to its rights as a shareholder, does not have either the status of taxable person, within the meaning of Article 4 of the Sixth Directive, or the right to deduct tax under Article 17 of that directive (see, inter alia, judgments in Cibo Participations , C‑16/00, EU:C:2001:495, paragraph 18, and Portugal Telecom , C‑496/11, EU:C:2012:557, paragraph 31).
19. The mere acquisition and holding of shares in a company is not to be regarded as an economic activity, within the meaning of the Sixth Directive, conferring on the holder the status of a taxable person. The mere acquisition of financial holdings in other undertakings does not amount to the exploitation of property for the purpose of obtaining income therefrom on a continuing basis because any dividend yielded by that holding is merely the result of ownership of the property (see, inter alia, judgments in Cibo Participations , C‑16/00, EU:C:2001:495 paragraph 19, and Portugal Telecom , C‑496/11, EU:C:2012:557, paragraph 32).
20. It is otherwise where the holding is accompanied by direct or indirect involvement in the management of the companies in which the holding has been acquired, without prejudice to the rights held by the holding company as shareholder (see, inter alia, judgments in Cibo Participations , C‑16/00, EU:C:2001:495, paragraph 20, and Portugal Telecom , C‑496/11, EU:C:2012:557, paragraph 33).
21. The involvement of a holding company in the management of companies in which it has acquired a shareholding constitutes an economic activity within the meaning of Article 4(2) of the Sixth Directive where it entails carrying out transactions which are subject to VAT by virtue of Article 2 of that directive, such as the supply by a holding company to its subsidiaries of administrative, financial, commercial and technical services (see, inter alia, judgments in Cibo Participations , C‑16/00, EU:C:2001:495, paragraph 22, and Portugal Telecom , C‑496/11, EU:C:2012:557, paragraph 34).
22. In the second place, it should also be noted that the right to deduct provided for in Article 17 et seq. of the Sixth Directive is an integral part of the VAT scheme and in principle may not be limited. The right to deduct is exercisable immediately in respect of all the taxes charged on transactions relating to inputs. Any limitation of the right to deduct VAT affects the level of the tax burden and must be applied in a similar manner in all the Member States. Consequently, derogations are permitted only in the cases expressly provided for in the Sixth Directive (see, inter alia, judgment in Portugal Telecom , C‑496/11, EU:C:2012:557, paragraph 35).
23. For VAT to be deductible, the input transactions must have a direct and immediate link with the output transactions giving rise to a right of deduction. Thus, the right to deduct VAT charged on the acquisition of input goods or services presupposes that the expenditure incurred in acquiring them was a component of the cost of the output transactions that gave rise to the right to deduct (see, in particular, judgments in Cibo Participations , C‑16/00, EU:C:2001:495 paragraph 31, and Portugal Telecom , C‑496/11, EU:C:2012:557, paragraph 36).
24. However, a taxable person also has a right to deduct even where there is no direct and immediate link between a particular input transaction and an output transaction or transactions giving rise to the right to deduct, where the costs of the services in question are part of his general costs and are, as such, components of the price of the goods or services which he supplies. Such costs do have a direct and immediate link with the taxable person’s economic activity as a whole (see, inter alia, judgments in Cibo Participations , C‑16/00, EU:C:2001:495, paragraph 33, and Portugal Telecom , C‑496/11, EU:C:2012:557, paragraph 37).
25. In those circumstances, as the Advocate General stated in point 39 of his Opinion, the expenditure connected with the acquisition of shareholdings in subsidiaries incurred by a holding company which involves itself in their management and which, on that basis, carries out an economic activity, as was noted in paragraph 21 of the present judgment, must be regarded as attributed to that company’s economic activity and the VAT paid on that expenditure gives rise to the right to full deduction, pursuant to Article 17(2) of the Sixth Directive.
26. The deduction system provided for in Article 17(5) of the Sixth Directive covers only cases in which the goods and services are used by a taxable person to carry out both economic transactions which give rise to a right to deduct and those which do not, that is to say, goods and services for mixed use. Member States may use one of the methods of deduction referred to in the third subparagraph of Article 17(5) only for those goods and services (judgment in Portugal Telecom , C‑496/11, EU:C:2012:557, paragraph 40).
27. The rules in Article 17(5) of the Sixth Directive concern the input tax chargeable on expenses relating exclusively to economic transactions. The determination of the methods and criteria for apportioning input VAT between economic and non-economic activities within the meaning of the Sixth Directive is in the discretion of the Member States which, when exercising that discretion, must have regard to the aims and broad logic of the directive and, on that basis, provide for a method of calculation which objectively reflects the part of the input expenditure actually to be attributed, respectively, to those two types of activity (judgments in Securenta , C‑437/06, EU:C:2008:166, paragraphs 33 and 39, and Portugal Telecom , C‑496/11, EU:C:2012:557, paragraph 42).
28. In this case, it is apparent from the information provided by the referring court that, in the main proceedings, the holding companies are subject to VAT in respect of the economic activity consisting of the supplies which they provide for remuneration to their subsidiaries. Therefore, the VAT paid on the costs of acquiring those services should be fully deducted, unless the output economic transactions are exempt from VAT under the Sixth Directive, in which case the right to deduct will be based on the method laid down by Article 17(5) of that directive.
29. It is therefore only in the event that the referring court finds that the shareholdings resulting from the capital transactions carried out by the holding companies at issue in the main proceedings were attributed in part to other subsidiaries in the management of which those holding companies were not involved that, as is envisaged in the referring court’s first question, the VAT paid on the costs of those operations could be deducted only in part. In that case, the mere holding of their shares in those subsidiaries could not be considered to be an economic activity of those holding companies and it would be necessary therefore to apportion the input VAT between that which relates to economic activities and that which relates to the non-economic activities of those holding companies.
30. In that context, the Member States have the right to apply, where appropriate, an investment formula or a transaction formula or any other appropriate formula, without being required to restrict themselves to only one of those methods (judgment in Securenta , C‑437/06, EU:C:2008:166, paragraph 38).
31. Therefore, it is solely for the national authorities, under the supervision of the courts, to determine the criteria for the distinction between economic and non-economic activities reflecting the part of the input expenditure actually to be attributed, respectively, to those two types of activity, having regard to the aims and broad logic of the Sixth Directive (judgment in Securenta , C‑437/06, EU:C:2008:166, paragraph 39).
33. In view of all the foregoing considerations, the answer to the first question is that Article 17(2) and (5) of the Sixth Directive must be interpreted as meaning that:
– the expenditure connected with the acquisition of shareholdings in subsidiaries incurred by a holding company which involves itself in their management and which, on that basis, carries out an economic activity must be regarded as belonging to its general expenditure and the VAT paid on that expenditure must, in principle, be deducted in full, unless certain output economic transactions are exempt from VAT under the Sixth Directive, in which case the right to deduct should have effect only in accordance with the procedures laid down in Article 17(5) of that directive;
– the expenditure connected with the acquisition of shareholdings in subsidiaries incurred by a holding company which involves itself in the management only of some of those subsidiaries and which, with regard to the others, does not, by contrast, carry out an economic activity must be regarded as only partially belonging to its general expenditure, so that the VAT paid on that expenditure may be deducted only in proportion to that which is inherent to the economic activity, according to the criteria for apportioning defined by the Member States, which when exercising that power, must have regard to the aims and broad logic of the Sixth Directive and, on that basis, provide for a method of calculation which objectively reflects the part of the input expenditure actually to be attributed, respectively, to economic and to non-economic activity, which it is for the national courts to establish.
The second question
36. As regards the answer to be given to the second question, it should be noted that the Court, when considering the interpretation of the first paragraph of Article 11 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1), the wording of which reproduces that of the second subparagraph of Article 4(4) of the Sixth Directive, has held that those provisions, which allow each Member State to treat as a single taxable person persons established in the territory of the country who, while legally independent, are closely bound to one another by financial, economic and organisational links, do not make the application thereof subject to other conditions (see, to that effect, judgment in Commission  v Ireland , C‑85/11, EU:C:2013:217, paragraph 36).
38. Nor does the second subparagraph of Article 4(4) of the Sixth Directive expressly provide for the possibility for Member States to impose other conditions on economic operators in order to form a VAT group (see, to that effect, judgment in Commission  v Sweden , C‑480/10, EU:C:2013:263, paragraph 35), and, in particular, the possibility for Member States to insist that only entities having legal personality may be members of a VAT group.
40. It is apparent from the Commission Proposal (COM(73) 950 final) which resulted in the adoption of the Sixth Directive that the EU legislature, by adopting the second subparagraph of Article 4(4) of that directive, intended, either in the interests of simplifying administration or with a view to combating abuses such as, for example, the splitting-up of one undertaking among several taxable persons so that each might benefit from a special scheme, to ensure that Member States would not be obliged to treat as taxable persons those whose ‘independence’ is purely a legal technicality (see, to that effect, judgment in Commission  v Sweden , C‑480/10, EU:C:2013:263, paragraph 37).
41. In that regard, the Court has already held that, for the application of the first paragraph of Article 11 of Directive 2006/112, the Member States, in the context of their margin of discretion, were entitled to make the application of the VAT group scheme subject to certain restrictions provided that they fall within the objectives of that directive to prevent abusive practices and behaviour or to combat tax evasion or tax avoidance (see, to that effect, inter alia, judgment in Commission  v Sweden , C‑480/10, EU:C:2013:263, paragraphs 38 and 39).
42. However, although the Sixth Directive did not contain, before the entry into force of the third subparagraph of Article 4(4), inserted by Directive 2006/69, express provisions similar to the second paragraph of Article 11 of Directive 2006/112, that fact does not deprive the Member States of the possibility of adopting, before the entry into force thereof, equivalent effective measures, since the prevention, by the Member States, of tax evasion and tax avoidance is an objective recognised and encouraged by the Sixth Directive, even in the absence of express powers granted by the EU legislature (see, to that effect, inter alia, judgment in Halifax and Others , C‑255/02, EU:C:2006:121, paragraphs 70 and 71).
48. In that regard, it should be noted that, whenever the provisions of a directive appear, so far as their subject-matter is concerned, to be unconditional and sufficiently precise, they may be relied upon before the national courts by individuals against the State where the latter has failed to implement the directive in domestic law by the end of the period prescribed or where it has failed to implement the directive correctly (see, inter alia, judgment in GMAC UK , C‑589/12, EU:C:2014:2131, paragraph 29).
49. A provision of EU law is unconditional where it sets forth an obligation which is not qualified by any condition, or subject, in its implementation or effects, to the taking of any measure either by the institutions of the European Union or by the Member States (see, inter alia, judgment in GMAC UK , C‑589/12, EU:C:2014:2131, paragraph 30).
51. As a consequence, Article 4(4) of the Sixth Directive does not satisfy the conditions necessary for it to produce direct effect.
52. Therefore, the answer to the third question is that Article 4(4) of the Sixth Directive may not be considered to have direct effect allowing taxable persons to claim the benefit thereof against their Member State in the event that that State’s legislation is not compatible with that provision and cannot be interpreted in a way compatible with it.
Costs