Court of Justice 24 February 2005, C-465/03 (Kretztechnik AG v Finanzamt Linz.)

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In this Opinion delivered in Case C-465/03 (Kretztechnik AG v Finanzamt Linz), Advocate General Jacobs opines that a public limited company issuing new shares and obtaining a stock market listing does not make a supply of services for consideration within the meaning of Article 2(1) of the Sixth VAT Directive, as the transaction constitutes an acquisition of capital rather than a supply, drawing on the Court's reasoning in KapHag (C-442/01) regarding partnership admissions. The Advocate General further opines that, because the share issue falls entirely outside the scope of VAT, the input VAT incurred on services acquired in connection with the listing and share issue should be treated as a general overhead attributable to the company's economic activity as a whole, rendering it deductible under Article 17(1), (2), and (5) of the Sixth Directive to the extent that the company's output transactions are taxed. Accordingly, the Advocate General recommends that the Court answer the first referred question in the negative and confirm a right to deduct input tax proportionate to the taxed output transactions of the issuing company.AI