The right to deduct input Value Added Tax (VAT) is a fundamental element in the operation of the tax, the general rule being that there is a right to deduct so long as the taxable person uses the acquired goods or services for activities which are in turn subject to VAT.
This rule has been set out in the Sixth Council Directive 77/388/EEC of 17 May 1997 on the harmonisation of the laws of the Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment, which establishes in Article 17 that:
"1. The right to deduct shall arise at the time when the deductible tax becomes chargeable.
2. In so far as the goods and services are used for the purposes of his taxable transactions, the taxable person shall be entitled to deduct from the tax which he is liable to pay:
