P-GmbH & Co. KG (Voyages-cafe) (VAT - Right to deduct input tax due or paid - Opinion)

(Request for a preliminary ruling from the Bundesfinanzhof (Federal Fiscal Court, Germany))

( Reference for a preliminary ruling - Taxation - Common system of value added tax - Directive 77/388/EEC - Article 17 - Right to deduct input tax due or paid - Article 26 - Special scheme for travel agents - Scope - Excursions combined with sale of goods - Margin taxation - Negative margin - No right to deduct )

The common system of value added tax ('VAT') consists in taxing all business revenue at each stage of marketing, and because, at each stage, the tax paid at the preceding stage is deducted, the tax is not cumulative and the final burden is borne by the consumer.

However, some types of activities are taxed under special rules, according to which tax is levied strictly on the value added at each stage of marketing, while the taxable person recovers the input tax paid in the price of its goods or services. Such special taxation rules apply, inter alia, under the special scheme for travel agents, which is the subject of the present case.

The question the present case poses to the Court is specifically whether that special tax scheme should apply in the unusual situation where a taxable person provides tourist services at a loss, and therefore does not generate added value from those services, but its business is profitable thanks to the sale of goods combined with those services. That is because the application of the special tax scheme in such circumstances is in conflict with the basic principles of the common system of VAT.