Judgment
Case C-118/11
Decision:
"On those grounds, the Court (Second Chamber) hereby rules:
1. Article 168(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that:
- a leased motor vehicle is to be regarded as used for the purposes of the taxable person?s taxed transactions if there is a direct and immediate link between the use of that vehicle and the taxable person?s economic activity and the time when the right to deduct arises and when it is necessary to take into account the existence of such a link is on the expiry of the period to which each payment relates;
- a motor vehicle leased under a financial leasing contract and placed in the category of capital goods is to be regarded as used for the purposes of taxed transactions if the taxable person acting as such acquires that vehicle and allocates it entirely to the assets of his undertaking, input value added tax payable being fully and immediately deductible, and any use of that vehicle for the taxable person?s private purposes or for those of his staff or for purposes other than those of his undertaking being treated as a supply of services carried out for consideration.
2. Articles 168 and 176 of Directive 2006/112 must be interpreted as not precluding national legislation which provides for the exclusion from the right to deduct of goods and services intended to be supplied free of charge or for activities outside the scope of the taxable person?s economic activity, provided that goods categorised as capital goods are not allocated to the assets of the undertaking."
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