On November 25, 2021, the ECJ issued its decision in the case C-334/20 (Amper Metal Kft.).

A. Consideration was given to Article 168(a) of the VAT Directive

‘In so far as the goods and services are used for the purposes of the taxed transactions of a taxable person, the taxable person shall be entitled, in the Member State in which he carries out these transactions, to deduct the following from the VAT which he is liable to pay:

(a) the VAT due or paid in that Member State in respect of supplies to him of goods or services, carried out or to be carried out by another taxable person’.

B. Description of the facts

The Hungarian tax authority rejected deduction of input value added tax (VAT) paid by Amper Metal for advertising services.

Amper Metal is a Hungarian company active in the electrical installations sector.

In 2014 Amper Metal concluded a contract with the company Sziget-Reklám Kft., concerning the provision of advertising services, which consisted of affixing advertising stickers bearing the name of Amper Metal to cars at a motor racing championship in Hungary.

Twelve invoices were issued in 2014 by Sziget-Reklám in respect of those services, for a total amount of approximately EUR 133 230, to which VAT of approximately EUR 35 970 was added.

Amper Metal deducted the VAT paid for those services in its tax returns for the period from 1 January to 31 December 2014.

C. Arguments of the Tax Authority which rejected the right of the company to claim the relevant Input VAT

1. The costs relating to the advertising services concerned did not constitute a charge linked to taxed income-generating transactions for Amper Metal;

2. Those advertising services were too expensive and were in fact of no use to Amper Metal, in particular in the light of the nature of that company’s customers, namely paper factories, hot-lamination workshops and other industrial plants, which were not likely to have their commercial decisions influenced by self-adhesive stickers on racing cars.

D. Arguments of Amper Metal claiming that the right to deduct VAT may be exercised

1. Even if the expenditure incurred by the taxable person was neither reasonable nor economically profitable, it does not affect that right.

2. The requirement of a quantifiable benefit, item by item, is contrary to EU law, since the purpose of the common system of VAT is to ensure complete neutrality of the tax burden of all economic activities, whatever their purpose or results, provided that those activities are themselves subject, in principle, to VAT.

3. The taxable amount corresponds to the consideration actually received by the service provider, in this case Sziget-Reklám.

E. Questions referred to the Court for a preliminary ruling

1. Whether the excessive nature of the price invoiced for the services supplied to the taxable person, on the one hand, and

2. Whether the fact that those services did not generate any increase in the taxable person’s turnover, on the other, are capable of precluding the right to deduct input VAT in respect of those services.

F.  Consideration of the questions referred

1. The right to deduct is an integral part of the VAT scheme and in principle may not be limited.

2. It is exercisable immediately in respect of all the taxes charged on input transactions. The deduction system is intended to relieve the trader entirely of the burden of the VAT payable or paid in the course of all his or her economic activities. The common system of VAT ensures neutrality of taxation of all economic activities, whatever their purpose or results, provided that they are themselves subject in principle to VAT. In so far as the taxable person, acting as such at the time when he or she acquires goods or receives services, uses those goods or services for the purposes of his or her taxed transactions, he or she is entitled to deduct the VAT paid or payable in respect of those goods or services.

3. The finding that the price invoiced for services supplied to the taxable person was excessive and of its effect on the right to deduct, it should be noted, first, that the application of Article 168(a) of the VAT Directive presupposes the existence of an input transaction which is itself subject to VAT.

4.  A supply of services is made for consideration, within the meaning of the VAT Directive, and hence is taxable, only if only if there is a legal relationship between the provider of the service and the recipient pursuant to which there is reciprocal performance, the remuneration received by the provider of the service constituting the value actually given in return for the service supplied to the recipient.

That is the case if there is a direct link between the service supplied and the consideration received, the sums paid constituting actual consideration for an identifiable service supplied in the context of a legal relationship pursuant to which there is reciprocal performance.

There is a direct link where two services are dependent on each other, that is to say, that one is made only on condition that the other is also made, and vice versa.

5. In contrast, the fact that the price paid for an economic transaction is higher or lower than the cost price, and, therefore, higher or lower than the open market value, is irrelevant for the purpose of establishing whether it was a transaction effected for consideration, since that circumstance is not such as to affect the direct link between the services supplied or to be supplied and the consideration received or to be received, the amount of which is determined in advance and according to well-established criteria

6. The right to deduct is exercisable, in principle, in respect of all the taxes charged on input transactions, those taxes being calculated by reference to the applicable taxable amount. According to the general rule set out in Article 73 of the VAT Directive, in respect of the supply of goods or services, other than as referred to in Articles 74 to 77, the taxable amount is to include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price of the supply. The taxable amount is therefore the consideration established between the parties and paid to the supplier, and not an objective value, such as the market value or a reference value determined by the tax authorities.

7. Although Article 80 of the VAT Directive establishes an exception to that general rule in order to prevent tax evasion and avoidance, by providing that the taxable amount may correspond to the open market value of the transaction concerned, it must be borne in mind that that provision concerns only the supply of goods and services to recipients with whom there are family or other close personal, management, ownership, membership, financial or legal ties, as defined by the Member State concerned.

8. As regards the finding that there was no increase in the taxable person’s turnover, which shows that the services supplied to him or her as inputs were ineffective, it should be borne in mind at the outset that Article 168(a) of the VAT Directive presupposes that the goods and services acquired by the taxable person as inputs are used for the purposes of his or her taxed transactions.

9. In particular, under the first paragraph of Article 176 of the VAT Directive, expenditure which is not strictly business expenditure, such as that on luxuries, amusements, or entertainment, is expressly excluded from the right to deduct. Thus, although the expenditure incurred by the taxable person as inputs must be of a business nature and although the goods or services acquired must be used for the purposes of the taxable person’s taxed transactions, neither Article 168(a) nor the first paragraph of Article 176 of the Directive make the exercise of the right to deduct subject to a criterion relating to an increase in the taxable person’s turnover or, more generally, to a criterion of economic profitability of the input transaction.

10. In the context of that assessment, the absence of an increase in the turnover of the taxable person cannot affect the exercise of the right to deduct. 

11. The right to deduct, once it has arisen, is retained even if, subsequently, the economic activity envisaged has not been carried out and, therefore, did not give rise to taxed transactions or if the taxable person was unable to use the goods or services which gave rise to a deduction in the context of taxable transactions by reason of circumstances beyond his or her control (judgment of 12 November 2020, Sonaecom, C‑42/19, EU:C:2020:913, paragraphs 38 and 40 and the case-law cited).

G. Decision

In the light of all the foregoing considerations, it must be held that Article 168(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that a taxable person may deduct input value added tax (VAT) in respect of advertising services where such a supply of services constitutes a transaction subject to VAT, within the meaning of Article 2 of Directive 2006/112, and where it has a direct and immediate link with one or more taxable output transactions or with the taxable person’s economic activity as a whole, under his or her general costs, without it being necessary to take into consideration the fact that the price invoiced for such services is excessive in relation to a reference value defined by the national tax authority or that those services have not given rise to an increase in that taxable person’s turnover.



This publication has been prepared as a general guide and for information purposes only. It is not a substitution for professional advice. One must not rely on it without receiving independent advice based on the particular facts of his/her own case.  No responsibility can be accepted by the authors or the publishers for any loss occasioned by acting or refraining from acting on the basis of this publication.

December 2021




Demetra Constantinou

Partner – Accounting and VAT




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