Luxembourg, 27/05/2005 (Agence Europe) - Kretztechnik, a company limited by shares established in Austria, develops and sells medical equipment. In January 2000, Kretztechnik resolved to increase its capital by issuing new shares and was admitted to the Frankfurt Stock Exchange. It was required to pay VAT on the supplies it received in that connection (advertising, lawyers' fees, technical and legal advice). Subsequently, the tax authorities (Finanzamt Linz) refused to allow it to deduct VAT input tax on the ground that a share issue is a transaction exempt from VAT. Kretztechnik challenged the tax assessment before the competent Austrian court (Unabhängiger Finanzsenat, Außenstelle Linz - Independent Tax Tribunal, Linz), which asked the Court of Justice of the European Communities to rule as to whether a company carries out a transaction for consideration within the meaning of the Sixth VAT Directive when it issues shares for new shareholders against payment of an issue price upon being admitted to a stock exchange, and whether that directive confers a right to deduct input tax paid on the supplies of services connected with the share issue. The Court pointed out that the fiscal nature of a share issue does not differ depending on whether it is made by a company for the purpose of admission to a stock exchange or by a company not quoted on the stock exchange, and ruled that the Sixth VAT Directive allows deduction of all the VAT on expenditure incurred in respect of the various supplies received by a taxable person in connection with a share issue, provided that all the transactions undertaken by that taxable person in the context of his economic activity constitute taxed operations.