Finanzamt Hildesheim v BLC Baumarkt GmbH & Co KG

In the German case of Finanzamt Hildesheim v BLC Baumarkt GmbH & Co KG (CJEU Case C-511/10) a company (B) had constructed a building which included commercial premises and an apartment. The rent from the commercial premises was subject to VAT whereas the rent from the apartment was exempt. B reclaimed input tax in respect of the building. The German tax authority issued a ruling that only the tax attributable to the commercial premises was deductible and that under German law the deductible proportion should be determined on the basis of the relevant floor space of the commercial premises and the apartment. B appealed contending that the deductible proportion should be determined on the basis of the income from each part. The case was referred to the CJEU for a ruling on the interpretation of article 17(5) of the EC Sixth Directive. The CJEU held...