In Landkreis Potsdam-Mittelmark v Finanzamt Brandenburg Case C-400/15 (15 September 2016) the CJEU found that a local authority which used goods it had acquired for business purposes only to the extent of 2.65% should be allowed the corresponding deduction of input tax.
The Landkreis was a local authority. It was required for the performance of its public functions to construct and maintain roads and to maintain road safety within its area. It had acquired machinery commercial vehicles and equipment which it used mainly for the purposes of its local authority duties. However it also used those goods to the extent of 2.65% to provide various services to third parties. It accounted for VAT on those supplies. The German tax authorities had refused a deduction of VAT on the goods purchased on the ground that the extent of their use for...
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