C-165/86
ECLI:EU:C:1987:433
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INTIEM v STAATSSECRETARIS VAN FINANCIEN
OPINION OF MR ADVOCATE GENERAL DA C R U Z VILAÇA delivered on 8 O c t o b e r 1987 *
Mr President, from Intiem in respect of travel expenses so Members of the Court, incurred.
4. That allowance is wholly unconnected 1. I — The Third Chamber of the Hoge with the petrol used by the employees in Raad der Nederlanden (Supreme Court of connection with the distribution of the the Netherlands) has referred a question to material. The system of distribution is as the Court for a preliminary ruling on the follows: before they begin work, Intiem's interpretation of Article 11 (1) (a) and (4) employees refuel their cars at their own of the Second Council Directive expense. At the end of each working day, (67/228/EEC) of 11 April 1967 on the Intiem allows its employees to refuel their harmonization of legislation of Member cars at its expense at a filling station situated States concerning turnover opposite its premises'. The company which taxes — Structure and procedures for runs the filling station invoices Intiem for application of the common system of the petrol supplied to Intiem's delivery staff value-added tax, 1 and Article 17 (2) (d) for its account. and (6) of the Sixth Council Directive (77/388/EEC) of 17 May 1977 2 on the harmonization of the laws of the Member States relating to turnover taxes — Common 5. The dispute arose when Intiem received system of value-added tax: uniform basis of an adjusted assessment to turnover tax assessment. (value-added tax) since the Netherlands tax authorities refused to allow Intiem to deduct the whole of the tax charged to it for the petrol supplied to its employees. 2. The question submitted arose in a dispute between Leesportefeuille 'Intiem' CV and the Netherlands tax authorities. 6. According to the relevant Netherlands legislation — Article 23 of the Uitvoerings- besluit Omzetbelasting 1968 and Article 16 of the Uitvoeringsbeschikking Omzetbe- 3. Leesportefeuille 'Intiem' CV (hereinafter lasting 1968 — an undertaking may deduct referred to as 'Intiem') operates a business from the tax due a percentage — fixed by involving the distribution by its employees the competent minister — of the allowance of a catalogue of reading material to which it pays to its employees for using customers at their homes. Intiem's their own cars in the course of its business. employees use their own cars to make the deliveries and they receive an allowance
* Translated from the Portuguese. 1 — Official Journal, English Special Edition 1967, p. 16. 7. Upon objection by Intiem, the T a x 2 — Official Journal 1977, L 145, p. 1. Inspector considered that those provisions
OPINION OF MR DA CRUZ VILAÇA — C A S E 165/86
should be applied both to the allowances (including each time the goods cross the paid to Intiem's employees and to the frontier of the country of consumption), the amount paid for the petrol used by them. taxable person pays the tax authorities the amount of tax due on his sales, after deducting the amount of tax paid at the 8. Intiem appealed to the Gerechtshof previous stage by his suppliers. (Regional Court of Appeal), Amsterdam, which upheld the Inspector's decision on the ground that the petrol was supplied not to Intiem but to its employees, with the result 13. It is that mechanism which makes it that Intiem could not deduct the possible to put into practice the concept of value-added tax charged on those supplies. value-added tax, which is defined in Article 2 of the First Council Directive (67/227/EEC) of 11 April 1967 on the 9. Taking the view that the petrol used by harmonization of legislation of Member its employees was supplied to the company States concerning turnover taxes 3 as 'a itself in the course of its business and that general tax on consumption exactly Articles 3 (1) (a) and 15 (1) of the 1968 proportional to the price of the goods and Law, which entitled it to deduct the full services, whatever the number of trans- amount of value-added tax charged on that actions which take place in the production basis, were therefore applicable, Intiem and distribution process before the stage at appealed in cassation to the Hoge Raad. which tax is charged'. T h e Hoge Raad considered it necessary, in order to resolve the dispute, to seek a ruling from the Court of Justice on the interpre- tation of the provisions of Commmunity law 14. The deduction of the amount of tax referred to at the outset. borne directly by the various cost components is meant, as the Court recently pointed out in its judgment in Rompelman, 4 10. In accordance with Article 20 of the 'to relieve the trader entirely of the burden Protocol on the Statute of the Court of of the value-added tax payable or paid in Justice of the EEC, the Commission, the the course of all his economic activities'. Netherlands Government and the The Court went on to state that 'the Government of the Federal Republic of common system of value-added tax Germany submitted written observations therefore ensures that all economic acti- which are summarized in the Report for the vities, whatever their purpose or results, Hearing. provided that they are themselves subject to value-added tax, are taxed in a wholly neutral way". 11. II — As is clear from the preceding account of the facts, the problem raised by the national court is centred on the analysis of the deduction mechanism provided for 15. The structure, of the deduction under the system of value-added tax. mechanism is identical in the Second and Sixth Directives, referred to in the judgment of the Hoge Raad, and Article 17 of the 12. T h e principle of deducting input tax is a fundamental component of the common 3 — Official Journal, English Special Edition 1967, p. 14. system of value-added tax. At each stage in 4 — Judgment of 14 February 1985 in Case 268/83 Rompelman v Minister van Financiën [1985] ECR 655, at p. 664, the production and marketing circuit paragraph 19 of the decision.
INTIEM v STAATSSECRETARIS VAN FINANCIËN
Sixth Directive merely explains and no circumstances be deductible on expen- amplifies the principles already set out in diture which is not strictly business expen- Article 11 of the Second Directive. diture, such as that on luxuries, amusements or entertainment.
16. T o all intents and purposes, therefore, my analysis will focus essentially on the Until the above rules come into force, relevant provisions of the Sixth Directive Member States may retain all the exclusions which has, moreover, since it came into provided for under their national laws when force, replaced the Second Directive. this directive comes into force'.
17. Article 17 (2) (a) to (c) of the Sixth 18. That provision permits the deduction Directive provides as follows: mechanism to be broken down as follows: a taxable person may deduct from the value-added tax which he is liable to pay the 'In so far as the goods and services are used tax due or paid: (a) in respect of goods or for the purposes of his taxable transactions, services supplied by another taxable person, the taxable person shall be entitled to (b) in respect of imported goods (which deduct from the tax which he is liable to Article 2 (2) of the Sixth Directive subjects pay: to value-added tax) and (c) in respect of goods and services supplied to oneself.
(a) value-added tax due or paid in respect of goods or services supplied or to be 19. The general principle that tax is supplied to him by another taxable deductible only 'in so far as the goods and person; services are used for the purposes of his taxable transactions', that is to say in the course of the trader's business, entails: (b) value-added tax due or paid in respect of imported goods; (a) the deduction of the whole of the tax borne by the goods or services which meet that general condition in every (c) value-added tax due under Articles respect; 5 (7) (a) and 6 (3).'
Article 17 (6) provides that: (b) the application of a system of proportional deduction in respect of goods and services used both for trans- actions in respect of which value-added 'Before a period of four years at the latest tax is deductible and for transactions in has elapsed from the date of entry into which value-added tax is not deductible force of this directive, the Council, acting (Article 17 (5)), in accordance with the unanimously on a proposal from the system established by each Member Commission, shall decide what expenditure State within the framework laid down shall not be eligible for a deduction of by the various subparagraphs of Article value-added tax. Value-added tax shall in 17 (5);
OPINION OF MR DA CRUZ VILAÇA —CASE 165/86
(c) the exclusion of the right to deduct deduction must be authorized in order to expenditure which, although incurred in prevent the same basis of assessment from the normal course of the undertaking's bearing the same tax twice, to the extent of business, must be regarded as intended the residual amount of value-added tax to meet private needs. payable in respect of one of the under- taking's cost components (the petrol used).
Owing to lack of agreement within the Council, the Sixth Directive did not 23. The fact that the petrol is pumped establish a Community list of exclusions, directly into the tank of the employee's car and Article 17 (6) merely refers in general and is used on account of the undertaking terms to expenditure on luxuries, in no way affects the legal and economic amusements or entertainment and provides reality of the transaction. for the compilation of that list before the end of a four-year transitional period. 24. To begin with, the petrol is supplied in performance of a contract which was Until then, Article 17 (6) allows the concluded between two taxable Member States to retain the exclusions persons — the purchaser and the provided for under their national laws seller — and which produces legal effects in (standstill clause) but not to introduce any relations between them. That contract trans- new ones. ferred to the purchasing undertaking 'the right to dispose of tangible property as owner', which is treated in Article 5 (1) of the Sixth Directive as the factor that defines 20. III — I believe that the question the 'supply of goods' for the purpose of submitted to the Court by the Hoge Raad delimiting the field of application of der Nederlanden seeks to ascertain whether, value-added tax (Article 2 (1)). It is that for the purposes of the deduction of the full transfer of the legal right to dispose of amount of value-added tax in accordance property (and not the supply transaction with Article 17 (2) (a) of the Sixth itself) which lies at the root of the concept Directive, petrol supplied directly to of 'taxable transaction' and constitutes the Intiem's employees for them to use in their essential element on which my analysis is own cars in the course of the undertaking's based. business, the corresponding invoices being paid by Intiem directly to the supplier, is to be regarded as a supply to the taxable person. 25. The manner in which the goods are used in the course of the undertaking's business is, in its turn, governed either by the trader's right to organize its own acti- 21. In my view, that question must vities or by another contract (a contract of decidedly be answered in the affirmative. employment) concluded between the trader and his employees. In any event, since the petrol constitutes an input by the under- 22. If the petrol is used exclusively for the taking, its delivery to the undertaking's purposes of the undertaking's business ('for employees for them to use in their cars for the purposes of [its] taxable transactions') the purposes of the undertaking's business and paid for by the undertaking to the does not constitute a 'supply of goods' supplier on receipt of the invoices issued within the meaning of Articles 2 (1) and in accordance with Article 22 (3), the 5 (1) of the Sixth Directive; it makes no
INTIEM v STAATSSECRETARIS VAN FINANCIËN
sense, therefore, to consider the re-impo- maintains that the system which it applies sition of value-added tax with the possible on the basis of the contracts concluded with deduction of the corresponding amount its employees and with the petrol supplier either in whole or in part, particularly since (and which is described above) is capable of there is no transfer 'between taxable ensuring that only the petrol used in travel persons'. for distribution purposes gives rise to the deduction of the total amount of the tax incorporated in the corresponding price. 26. In economic terms, the petrol with which Intiem is invoiced and for which it has to pay constitutes one of its production cost components which bears the 31. That allegation is plausible in view of value-added tax charged on it at the the system of supervision that is used. previous stage.
27. The legal and economic position is 32. In any event, that is a mere question of essentially the same whether the trader fact which must be assessed by the receives the goods (the petrol) himself, competent courts in accordance with the whether he sends an employee to fetch it in evidence admitted by the legislation of each a truck loaded with oil drums or in a Member State in the context of the Sixth tanker, whether he avails himself of the Directive. Moreover, the possibility of abuse services of a carrier or whether (by also exists where delivery staff use company agreement with the supplier) he arranges for cars which have been refuelled with petrol the petrol to be pumped directly into his supplied at the company's expense and employees' car tanks to be used by them. which — in the absence of effective super- vision — could be used by them for private purposes of their own, without the trader's knowledge. 28. It is difficult to see why it should be necessary to accept a distortion in the system of value-added tax as a result, for instance, of the fact that certain book distributors have their own tankers or stocks 33. The allowances paid by Intiem to its of petrol, whilst others do not. employees for using their own cars in the course of its business are another matter. Since the cars can be used for business as well as for private purposes, the 29. It is of course necessary to ensure that Netherlands legislation provides — as is laid the petrol is used by the employees exclu- down in the directive — for a limited sively for business purposes and not for flat-rate deduction. private purposes of their own as well, in which case the provisions concerning a proportional deduction not exceeding a maximum percentage would be applicable. 34. That system should also apply to the petrol supplied to its employees and paid for by Intiem if it were established that the 30. In that regard, the appellant in the petrol was used on a regular basis for proceedings before the Hoge Raad non-business purposes as well.
OPINION OF MR DA CRUZ VILAÇA—CASE 165/86
35. IV — I therefore suggest, on the basis of the information at my disposal, that the Court answer the question submitted by the Hoge Raad der Nederlanden as follows :
'The supply of goods by one taxable person directly to the employees of another taxable person, in performance of a contract concluded between those two taxable persons, confers on the employer a right to the deduction of the full amount of value-added tax, in accordance with Article 17 (2) (a) of the Sixth Directive, even though the goods are intended for use in cars belonging to those employees, provided that the purchaser is invoiced with the supplies in question in accordance with Article 18 (1) (a) and Article 22 (3) of the Sixth Directive and that the goods in question are used exclusively, in the course of the undertaking's business, for the purposes of its taxable transactions'.