The Court of Justice condemned the French limits on the deductibility of VAT on the purchase of capital goods.
In a judgment of 6 October 2005 the Court of Justice answered on a request of the commission to the question whether or not the French Republic has violated the community law by introducing a national rule limiting the deductibility of value added tax on the purchase of capital goods where they were financed by subsidies. The Court answered that exceptions on the right to deduct are only allowed in the circumstances described in the 6th VAT directive. By introducing a special rule limiting deductibility of value added tax on the purchase of capital goods where they were financed by subsidies, the French Republic has violated Community law. Read the full text of the judgment.
