If there is a clear and direct link between the purchase of goods and their use in output transactions on which VAT was payable, input tax was deductible even if VAT was not deductible in respect of all the supplies. Where the link is indirect than the tax may be deductible only in part. Legal services provided to a Bank first in support of financial services and then in an action for damages for negligence were directly connected. It was for the national court to interpret that connection. The deduction system is meant to relieve the trader entirely of the burden of the VAT payable or paid in the course of all his economic activities, provided that such activities are themselves, in principle, subject to VAT.
Citations:
Times 16-Jun-2000, C-98/98, [2000] STC 501, [2000] 1 WLR 2080, [2000] EUECJ C-98/98
Links:
Statutes:
First Council Directive 67/227/EEC on the harmonization of turnover taxes.
Jurisdiction:
European
Cited by:
Cited – Royal and Sun Alliance Insurance Group plc v Her Majesty’s Commissioners of Customs and Excise HL 22-May-2003
The landlord had elected to waive exemption to charging VAT on its lettings. The tenant relet the demised premises, but at first without charging VAT. It later charged VAT on the sublease, but the commissioners objected to the attempt of the . .
Cited – Commissioners for Customs and Excise v Southern Primary Housing Limited CA 18-Nov-2003
The land owner had elected to pay VAT on the purchase of land. It sought to recover that VAT. The Commissioners appealed an order allowing that.
Held: Ther were three transactions, the purchase, the sale, and a development contract. The input . .
Cited – Revenue and Customs v Frank A Smart and Son Ltd SC 29-Jul-2019
The question was whether a taxpayer can deduct as input tax the VAT which it has incurred in purchasing entitlements to an EU farm subsidy, the Single Farm Payment. The taxpayer had used those entitlements to annual subsidies over several years and . .
Lists of cited by and citing cases may be incomplete.
VAT, European
Updated: 17 April 2022; Ref: scu.162355