Court of Justice 8 May 2019, C-566/17 (Case C-566/17: Judgment of the Court (Second Chamber) of 8 May 2019 (request for a preliminary ruling from the Wojewódzki Sąd Administracyjny we Wrocławiu — Poland) — Związek Gmin Zagłębia Miedziowego w Polkowicach v Szef Krajowej Administracji Skarbowej (Reference for a preliminary ruling — Common system of value added tax (VAT) — Directive 2006/112/EC — Article 168(a) — Deduction of input tax — Principle of VAT neutrality — Taxable person engaged in both economic and non-economic activities — Goods and services purchased for the purposes of performing both transactions subject to VAT and non-taxable transactions — Absence of apportionment criteria in national legislation — Principle of lawfulness of the tax))

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In Case C-566/17, the Court of Justice of the European Union addressed whether a taxable person may deduct the entirety of input value added tax (VAT) on goods and services used for both economic and non-economic activities when national legislation lacks specific apportionment criteria. The Court held that Article 168(a) of Directive 2006/112/EC precludes national practices allowing full deduction in such circumstances, notwithstanding the absence of statutory rules for determining the share of tax connected to economic versus non-economic activities. The ruling reinforces the principle of VAT neutrality by requiring an allocation of input tax even where specific national allocation methods have not been legislated.AI