Case Law

ECJ held that to allow taxable persons to deduct all input VAT even though, in the context of their normal commercial operations, no transactions conforming to the deduction rules would have enabled them, or allowed them, to deduct such VAT would be contrary to the principle of fiscal neutrality and, therefore, contrary to the purpose of those rules. Halifax plc, Leeds Permanent Development Services Ltd, County Wide Property Investments Ltd v Commissioners of Customs and Excise Case C-255/02

The receipt of dividends is not consideration for an economic activity and it does not fall within the scope of VAT. Consequently, such amounts should be excluded from the calculation of the deductible proportion. Sofitam SA v Ministre chargé du Budget Case C-333/91