C-151/08 Renta

Spanish transfer tax on property dealing is not a turnover tax

What is the case?

Renta disputed the levying of the Spanish tax on transfers of assets and documented legal transactions on purchases of immovable property. The taxpayer's business consisted of buying and selling immovable property, or of acquiring property for development or letting, so the transfer duty fell on transactions carried out in the course of an economic activity. The question was whether the variable or proportional element of that duty amounted to a turnover tax prohibited alongside the common system of VAT.

What is the Court asked?

Whether Article 33(1) of the Sixth Directive, as amended by Directive 91/680, precludes the charging of the variable or proportional amount of the duty on transfers of assets and documented legal transactions when it becomes chargeable on a purchase concluded by an undertaking whose business consists of buying and selling immovable property or of acquiring property for development or letting.

The Court’s decision

Ruling by order, the Court held that Article 33(1) does not preclude that charge. The duty does not display the essential characteristics of VAT. It is not levied generally on all transactions relating to goods and services, is not charged at each stage of production and distribution with deduction of the tax paid at the preceding stage, and is not proportionate in the manner of VAT to the price obtained by the taxable person. One of the recurring questions on the boundary of Article 401 of the VAT Directive, the successor to Article 33 of the Sixth Directive.

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