No input tax deduction for building parts used privately – decision in Seeling cases

A 2003 ECJ ruling, almost revolutionary in its nature, in the Legal case „Seeling"“at that time raised the hopes of many taxpayers that, for buildings used partly for business and partly for private purposes initially the full input tax deduction (also applicable to the privately used part). Furthermore, the Private use also Self-consumption to be taxed in relatively small amounts. The fear of significant VAT shortfalls resulted in the tax authorities attempting to „turn off“ the deduction of input tax for building parts used privately, with complex rules and arguments. The legality of the tax authorities' approach was questioned by numerous experts at the time. The consequence was a multitude of Appeals against dismissive decisions of the tax authorities.

After more than six years, the Supreme Administrative Court (28.05.2009, 2009/15/0100) following a prior request to the ECJ now decided, that a denial of the right to deduct input tax for expenses related to private households and lifestyle expenses, based on the provisions of § 12 (2) no. 2 lit. a of the VAT Act, is permissible. According to these specific Austrian provisions, which were already in force before the accession to the EU (1 January 1995) and have not been changed to this day, it is therefore the case for those parts of buildings that primarily for private residential purposes servant, the Input VAT deduction Regrettably unacceptable. Given that dismissive appeal decisions (including in further appeal stages by the UFS or the VwGH) are to be expected, a Continuation the procedures that have been suspended in recent years generally Not more useful to be.

Even with Public law corporations (Municipalities, parishes, etc.) is – albeit on the basis of other decisions by the VwGH (Administrative Court) (of 8.7.2009, 2006/15/0231 and 24.6.2009, 2007/15/0192) and the ECJ (European Court of Justice) (12.2.2009, C-515/07) – the use of a Input tax deduction for the officially used part Not possible. The argument is that sovereign activities do not represent activities subject to the VAT directive (but rather purposes unrelated to business). Here too, a Continuation the appeal proceedings regularly Not more practical to be.

Image: © Martin Green - Fotolia