Court of Justice (Sixth Chamber) 18 July 2013, C‑124/12 (AES-3C Maritza East 1 EOOD v Direktor na Direktsia ‘Obzhalvane i upravlenie na izpalnenieto’ pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite, Plovdiv.)

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In Case C-124/12, the Court of Justice (Sixth Chamber) held that Articles 168(a) and 176 of Directive 2006/112/EC preclude national legislation denying a taxable person the right to deduct input VAT on costs for transport services, work clothing, protective gear, and business trips incurred for staff supplied by a third-party entity, where those costs bear a direct and immediate link with the taxable person's general economic activities, regardless of the absence of a formal employment relationship between the taxable person and the staff. The Court further held that the standstill clause in the second paragraph of Article 176 precludes a Member State, upon accession to the European Union, from introducing a new limitation on the right to deduct—specifically an exclusion for goods and services intended to be supplied free of charge—where no such exclusion existed in the national legislation in force at the date of accession. The referring court is required to interpret domestic law in conformity with EU law and, where such conforming interpretation is impossible, to disapply the conflicting national provisions.AI