In HF v Finanzamt Bad Neuenahr-Ahrweiler (Case C-374/19) (9 July 2020) the CJEU ruled that an adjustment must be made under the Capital Goods Scheme rules when taxable activities cease.
The appellant operated a retirement home through which it made exempt supplies. In 2003 it built a cafeteria annex which generated taxable supplies (being used by visitors to the home). The appellant conceded that there would be some exempt use (to the tune of 10%) of the cafeteria by residents and 90% of input tax on the construction of the café was allowed.
From 2009 the appellant no longer operated the cafeteria as such since it had proved to be economically unviable although it could still be visited by residents. The authorities therefore considered that the cafeteria was used wholly for exempt purposes and consequently required an adjustment under Directive 2006/112/EC article 187 (Capital Goods) to...
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