CJEU – Recent Developments in Value Added Tax 2015

S. 329Comment to the Discussion on CJEU’s Case Law on Deductions

Professors Terra and Henkow encouraged the panelist and the audience to think about the Court’s demand that the acquisitions must have a direct link to taxable sales. We were provoked to think about how this principle has developed up to now and to which direction it can develop from now on in the future.

Prof. Terra presented a phrase of Art. 1(2) VAT Directive at the beginning of his speech stating that the right to deduct VAT has been extended by the Court with its interpretation. According to Terra, this is often done in order to respect the principle of neutrality. When explaining the case law, Terra questioned whether the secondary use could also create a direct link to taxable sales. As an example of this development in the case law, Terra mentioned the Court’s cases BLP and SKF. In the case BLP, the right to deduct VAT relating to the costs of selling shares was denied by the Court – in the latter case, the Court took a different perspective on these costs arguing that there might be a direct and immediate link between the costs associated with the input services and the overall economic activities of the taxable pers...