## Facts

- Ursula Becker was a self-employed credit negotiator in Germany.
- For the 1979 tax year, German VAT law treated her credit-negotiation services as subject to VAT.
- The Sixth VAT Directive (Directive 77/388/EEC) required Member States to exempt “the granting and the negotiation of credit” (art. 13B(d)(1)).
- Germany’s extended implementation deadline was 1 January 1979, but the relevant national measures took effect only on 1 January 1980.
- Becker claimed VAT exemption for 1979 directly under article 13B(d)(1); the local tax office (Finanzamt Münster-Innenstadt) rejected the claim.
- The German Fiscal Court (Finanzgericht Münster) referred questions to the Court of Justice in a preliminary ruling procedure.

## Issues

1. After the implementation deadline, may a taxpayer invoke article 13B(d)(1) of Directive 77/388/EEC directly in national court against a tax authority when the Member State failed to implement the directive in time?
2. Does article 13C of the directive permit a Member State to impose conditions or limitations that narrow the scope of the article 13B exemptions, including the exemption for credit negotiation?
3. May a Member State rely on its own failure to implement a directive to deny individuals rights conferred by that directive?

## Decision

- The Court held that article 13B(d)(1) is sufficiently clear, precise, and unconditional to be directly effective after the implementation period expires.
- The Court held that a Member State may not rely on its failure to implement a directive within the prescribed period to deprive individuals of rights conferred by the directive.
- The Court held that article 13C does not authorize Member States to alter or restrict the substantive scope of exemptions in article 13B; it only concerns conditions for any optional election between exemption and taxation where the directive permits such an option.
- The Court’s ruling required the national court to give effect to the directive’s exemption for the relevant period despite contrary domestic VAT rules.

## Legal Principles

- A directive provision has vertical direct effect when, after the implementation deadline, it imposes an obligation that is unconditional and sufficiently precise.
- Even if a directive contains areas of Member State choice, severable provisions that meet the direct-effect test may be invoked independently.
- A Member State cannot invoke its own noncompliance with EU obligations (including failure to implement by the deadline) to defeat rights the directive confers on individuals.
- Discretionary provisions allowing options or administrative modalities (such as article 13C) cannot be used to reduce the substantive content of mandatory exemptions (such as article 13B).

## Conclusion

The Court of Justice held that the Sixth VAT Directive’s exemption for the negotiation of credit was vertically directly effective after the implementation deadline, allowing a taxpayer to claim the exemption against a tax authority despite late national implementation, and it rejected any attempt to use article 13C to narrow the exemption’s scope.


Becker v. Finanzamt Münster-Innenstadt, Case 8/81, [1982] E.C.R. 53 (C.J.E.C. 1982)