C-156/08 Vollkommer

German land transfer tax on future building work alongside VAT

What is the case?

Ms Vollkommer acquired a plot of land that had not yet been built on, in a transaction linked to future building work on that plot. The German Grunderwerbsteuer, a tax on transfers of land, was assessed on a taxable amount that included the value of the building work still to be carried out, even though that work was itself subject to VAT. The result was that the same economic operation attracted both VAT and the transfer tax, and the taxpayer argued that this cumulation was incompatible with the common system of VAT.

What is the Court asked?

Whether Article 33 of the Sixth Directive, as amended by Directive 91/680, precludes a Member State, on the transfer of a plot of land not yet built on, from including future building work in the taxable amount used to assess a tax on transfers and transactions such as the Grunderwerbsteuer, and thereby subjecting a transaction already subject to VAT to that further tax.

The Court’s decision

Ruling by order, the Court held that Article 33 does not preclude that treatment, provided that the tax concerned cannot be characterised as a turnover tax. Article 33 does not forbid the coexistence of VAT with other national taxes on the same transaction. It forbids only taxes that display the essential characteristics of VAT and would therefore compromise the functioning of the common system. The reasoning tracks Renta and the wider Article 401 case law.

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