Court of Justice (Third Chamber) 3 March 2005, C-32/03 (I/S Fini H v Skatteministeriet.)

Also known as

In Case C-32/03, the Court of Justice (Third Chamber) held that Article 4(1) to (3) of Sixth Directive 77/388/EEC must be interpreted as meaning that a person who has ceased an economic activity but continues to pay rent and charges on formerly used premises due to a non-termination clause in the lease remains a taxable person entitled to deduct input VAT on those payments. The decisive legal issue was whether a direct and immediate link exists between the ongoing payment obligations and the prior economic activity, which the Court answered affirmatively on the basis that the lease was entered into for and actually used in the conduct of that activity, making the continued payments a direct consequence thereof. The right to deduct is conditioned on the period of continued payment being strictly necessary to complete the winding-up of the business and on the absence of any fraudulent or abusive intent, with national courts retaining authority to deny deduction where objective evidence establishes such abuse.AI