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N4. Business/non-business apportionment
Apportionment necessary
- T cannot be given right to recover input relating to non-taxable activity on the basis of future deemed supply
"[36] Indeed, as the Advocate General observed in point 57 of her Opinion, to permit a taxable person, such as the Association of Municipalities, carrying out both economic and non-economic activities, to deduct the input VAT paid in respect of mixed expenditure in full would give it an advantage contrary to the principle of fiscal neutrality, which, in the Court’s view, was intended by the EU legislature to reflect, in matters relating to VAT, the general principle of equal treatment (see, to that effect, judgment of 29 October 2009, NCC Construction Danmark, C‑174/08, EU:C:2009:669, paragraph 41 and the case-law cited)." (Związek C-566/17)
Method of apportionment
- Directive silent, for Member State to determine
"[29] In the third place, it should be borne in mind that the Court has already held that, since the VAT Directive is silent on this point, the determination of the methods and criteria for apportioning input VAT between economic and non-economic activities falls within the discretion of the Member States. When exercising that discretion, Member States must have regard to the aims and broad logic of the VAT Directive and, on that basis, provide for a method of calculation which objectively reflects the part of the input expenditure actually to be attributed, respectively, to those two types of activity (see, inter alia, judgment of 25 July 2018, Gmina Ryjewo, C‑140/17, EU:C:2018:595, paragraph 58 and the case-law cited)." (Związek C-566/17)