BELGIUM: EU fails in driving instructors VAT deduction case

The European Commission has failed in its bid to force the French government to abandon its tough line over the right of driving instructors to deduct value-added tax (VAT) for vehicles bought for their jobs; Paris insists that they can claim a rebate, but only where automobiles are used "exclusively" for teaching.

At the European Court of Justice, Brussels maintained that under the EU's Sixth Council Directive, (on VAT), instructors should be given no condition, other than that the vehicle is used in some way for their work.

However, judges agreed with the French government, that because the EU had failed to agree on a comprehensive system of exemptions from the directive on the right to deduct, it had the right to impose some of its own conditions.

The Commission won a related case, however, where France had reintroduced a ban on drivers reclaiming VAT on diesel used in vehicles on which no rebate had been claimed when they had been first purchased.

Judges ruled that whereas in the driving instructors' case Paris had not significantly widened the scope of exemptions allowed under the Sixth Directive, with its ban on diesel rebates, it had sharply diverged from EU law and so it should scrap the ruling.

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