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Full cost
A German business which owned and let property had a house built for private usage and letting purposes. It opted to deduct the input VAT on the construction of the house thus making the business subject to VAT in respect of private usage under article 6(2)(a) of the Sixth Directive. A dispute arose as to the interpretation of full cost as applied by article 11(A)(1)(c) and whether this should be established according to the period for depreciation in domestic law or to the period in article 20. The matter was referred to the European Court of Justice.
The court said that article 11(A)(1)(c) did not preclude the taxable amount for VAT from being fixed at a portion of the acquisition and construction costs of the building established in accordance with the length of the period for adjustment of deductions concerning VAT provided for in article 20....
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