Official Journal of the European Union

C 32/7

(Case C-371/07) (1)

(Sixth VAT Directive - Article 6(2) - Supplies of services carried out free of charge by a taxable person for purposes other than those of his business - Right to deduct VAT - Second subparagraph of Article 17(6) - Member States' option to retain exclusions from the right to deduct which were provided for under their national laws when the Sixth Directive came into force)

(2009/C 32/11)

Language of the case: Danish

Referring court

Parties to the main proceedings

Applicants: Danfoss A/S, AstraZeneca A/S

Defendant: Skatteministeriet

Re:

Reference for a preliminary ruling — Vestre Landsret — Interpretation of Article 6(2) and the second subparagraph of Article 17(6) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (OJ L 145, p. 1) — Right to deduct tax relating to meals provided free of charge to staff and clients in a company canteen — Possibility for the Member States to maintain their legislation excluding the right to deduct on the date of entry into force of the Directive

Operative part of the judgment

1)The second subparagraph of Article 17(6) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment, must be interpreted as precluding a Member State from applying, after the entry into force of the Sixth Directive, an exclusion from the right to deduct input value added tax on expenditure in respect of meals provided by company canteens free of charge to business contacts and staff in the course of work meetings, where, at the moment when the Sixth Directive entered into force, that exclusion was not actually applied to that expenditure because of an administrative practice of taxing services provided by company canteens at cost price, that is to say, the price of the raw materials plus the cost of wages for preparation and sale of the food and drinks and the administration of the canteens, in return for the right to deduct input value added tax in full;

2)Article 6(2) of Sixth Directive 77/388 must be interpreted in such a way that, on the one hand, it does not cover the provision, free of charge, of meals in company canteens to business contacts in the course of meetings held on the company premises where objective evidence indicates — this being a matter for the referring court to determine — that those meals are provided for strictly business-related purposes. On the other hand, Article 6(2) applies in principle to the provision, free of charge, of meals by a company to its staff on its premises, unless — this likewise being a matter for the referring court to determine — the needs of the company, such as the need to ensure that work meetings are run smoothly and without interruptions, require the employer to ensure that meals are provided.

(1) OJ C 247, 20.10.2007.