6.3.3.2 For the private use of the taxable person or of his staff or, more generally, for purposes other than those of the business of the taxable person

By treating the private use of goods that form part of the assets of the business of a taxable person as a supply of services for consideration, the EU VAT Directive aims, first, to ensure equal treatment as between a taxable person, who was able to deduct the VAT on the acquisition or construction of those goods, and a final consumer, by preventing the former from enjoying an advantage to which he is not entitled by comparison with the latter who buys the goods and pays VAT on them, and, second, to ensure fiscal neutrality by ensuring a correspondence between deduction of input VAT and charging of output VAT.1

The terms used to describe ‘private use’ in CJEU case law are the use as an “ordinary consumer who buys goods and pays VAT on them”,2 “acting in a private capacity and not as a taxable person”3, or as a “final consumer”.4 “Personal benefit” or “personal advantage” is derived from this use or application.5 The CJEU has also stated that private use is considered “by definition completely different from the business of the taxable person”.6 The CJEU stated this to explain that non-economic activities, as opposed to private use, can perfectly well be considered business transactions.7 As mentioned in Section 6.3.2.1, in my view, the Union concept of “business activities” (or any other concept) from the EU VAT directive cannot be applied to activities that are outside the scope of that VAT Directive.

Even though the text of Article 16 of the EU VAT Directive mentions the private use or, more generally, for purposes other than those of the business of the taxable person, the ‘or’ does not mean that these are separate criteria. It is clear from CJEU case law that the private use should be interpreted as an example or species of use for purposes other than those of the business of the taxable person, as is also suggested by the words ‘more generally’.8 This means that private use is only treated as a supply for consideration, and therefore subject to VAT, if the private use serves a purpose other than the purpose of the business. What, then, are ‘purposes other than those of the business’?

From CJEU case law, it is clear that this purpose still has to be ‘private use’, but that it is not confined to the private use by the taxable person himself or that of his staff. In other words, private (or consumptive) use by other parties is also covered by this provision. As I mentioned before, these ‘purposes’ do not include non-economic activities of a business. It has to be ‘private use’ in the sense as described above.

With regard to the question whether non-economic activities may be considered to be carried out for ‘purposes other than’ those of the business, the CJEU noted that in other cases, it had stated that non‑economic activities do not fall within the scope of the directive, specifying that the deductions scheme relates to all economic activities of a taxable person, whatever their purpose or results, provided that they are, in principle, themselves subject to VAT. It follows that the provisions that treat certain activities as supplies of goods or services for consideration are not intended to establish a rule that transactions outside the scope of the system of VAT may be considered to be carried out for ‘purposes other than’ those of the business within the meaning of those provisions. Such an interpretation would have the effect of rendering Article 2(1) of the EU VAT Directive meaningless.9

The phrase ‘for purposes other than those of his business’ could be interpreted as meaning that as long as some degree of business purposes are served, the use or application of goods or services should not be taxed. As indicated above, this is not the case. I will explain below, in Section 6.4.1, taxation will only not occur when the element of private consumption is accessory to the business purposes of the use or application of the goods or services for free. The CJEU has repeatedly confirmed that free application or use of goods or services for other than business purposes, where the private use element is not negligible, should be taxed.10