Nordania Finans A/S and BG Factoring A/S v Skatteministeriet.
Date: 2008-03-06
17. It should be borne in mind at the outset that, in determining the scope of a provision of Community law, its wording, context and objectives must all be taken into account (Case C-162/91 Tenuta il Bosco  [1992] ECR I‑5279, paragraph 11; Case C-315/00 Maierhofer  [2003] ECR I-563, paragraph 27; and Case C-280/04 Jyske Finans  [2005] ECR I-10683, paragraph 34). Furthermore, it follows from the need for uniform application of Community law and from the principle of equality that the terms of a provision of Community law which makes no express reference to the law of the Member States for the purpose of determining its meaning and scope must normally be given an autonomous and uniform interpretation throughout the Community, having regard to the context of the provision and the objective pursued by the legislation in question (see, inter alia, Case C-321/02 Harbs [2004] ECR I-7101, paragraph 28, and Case C-195/06 Österreichischer Rundfunk  [2007] ECR I-0000, paragraph 24).
19. As regards its context, Article 19 of the Sixth Directive is part of Title XI thereof, which sets out the rules governing deduction. The right to deduct, which is laid down in Article 17(2) of that directive, and relates to the input tax on the goods and services used by the taxable person for the purposes of his taxable transactions, 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 consequently ensures complete neutrality of taxation of all economic activities, provided that they are themselves subject in principle to VAT (see to that effect, inter alia, Case C-435/05 Investrand  [2007] ECR I-1315, paragraph 22 and the case-law cited).
23. In that regard, the Court has already held that the purpose of excluding incidental financial transactions from the denominator of the fraction used to calculate the deductible proportion in accordance with Article 19 of the Sixth Directive is to comply with the objective of complete neutrality guaranteed by the common system of VAT. If all receipts from a taxable person’s financial transactions linked to a taxable activity were to be included in that denominator, even where the creation of such receipts did not entail the use of goods or services subject to VAT or, at least, entailed only their very limited use, calculation of the deduction would be distorted (Case C-306/94 Régie dauphinoise  [1996] ECR I-3695, paragraph 21).
24. By adopting the provisions of Article 19(2) of the Sixth Directive, the Community legislature thus intended to exclude from the calculation of the proportion the turnover attributable to a sale of goods where that sale is of an unusual nature in relation to the normal activities of the taxable person concerned and does not therefore require the use of goods or services for mixed use in a way that is proportionate to the turnover which it generates. As the Advocate General stated in point 68 of his Opinion, the inclusion of that turnover in the calculation of the deductible proportion would distort the resultant figure in the sense that it would no longer reflect the division of use of goods or services for mixed use as between taxable and exempt activities respectively.
27. That finding cannot be called into question by the fact that, in the context of Second Council Directive 67/228/EEC of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes – Structure and procedures for application of the common system of value added tax (OJ, English Special Edition 1967, p. 16) (‘the Second Directive’), the Court held that the definition of ‘capital goods’ in the third indent of the first paragraph of Article 17 of that directive covered 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 (Case 51/76 Verbond van Nederlandse Ondernemingen  [1977] ECR 113, paragraph 12).
28. In the case which gave rise to the judgment in Verbond van Nederlandse Ondernemingen , it was for the national court to ascertain, having regard to the Netherlands legislation in force, whether office supplies of low value could be regarded as capital goods which could, under Article 17 of the Second Directive, be excluded from the right to deduct VAT provided for by that directive. Even if vehicles purchased by a business in order to carry on its business activities may constitute capital goods in terms of the interpretation given, in that context, of Article 17 of the Second Directive, it cannot be inferred merely from the criteria laid down by the Court in that judgment that such vehicles are to be classified as capital goods in respect of the application of Article 19(2) of the Sixth Directive.