37As for the purpose of the Sixth Directive, it should be borne in mind that, on the one hand, according to the fundamental principle which underlies the common VAT system and which follows from Article 2 of First Council Directive 67/227/EEC of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes (OJ, English Special Edition 1967, p. 14), and from the Sixth Directive, VAT applies to each transaction by way of production or distribution after deduction of the VAT directly borne by the various cost components (Case C-98/98 Midland Bank [2000] ECR I-4177, paragraph 29, and Abbey National, cited above, paragraph 27).
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