T-268/25 Sampension Livsforsikring

Provisional text

JUDGMENT OF THE GENERAL COURT (Second Chamber, sitting with five Judges)

15 July 2026 (*)

( Reference for a preliminary ruling – Taxation – Common system of value added tax (VAT) – Taxable persons – VAT group – Concept of ‘persons closely bound to one another by financial, economic and organisational links’ – Measures to prevent tax evasion or avoidance – Article 11 of Directive 2006/112/EC – Legislation of a Member State making it possible to include in a VAT group persons which are not taxable or are exempt from VAT – Condition of 100% ownership of the capital of the other members of the group in order for a VAT group to be formed)

In Case T‑268/25,

REQUEST for a preliminary ruling under Article 267 TFEU from the Østre Landsret (High Court of Eastern Denmark, Denmark), made by decision of 27 March 2025, received at the Court of Justice on 1 April 2025, in the proceedings

Sampension Livsforsikring A/S

v

Skatteministeriet,

THE GENERAL COURT (Second Chamber, sitting with five Judges),

composed of N. Półtorak (Rapporteur), President, T. Pynnä, G. Hesse, G. Steinfatt and D. Petrlík, Judges,

Advocate General: M. Brkan,

Registrar: H. Eriksson, Administrator,

having regard to the transmission of the request for a preliminary ruling to the General Court by the Court of Justice on 25 April 2025, pursuant to the third paragraph of Article 50b of the Statute of the Court of Justice of the European Union,

having regard to the fact that the case concerns the area referred to in point (a) of the first paragraph of Article 50b of the Statute of the Court of Justice of the European Union and the fact that there is no independent question relating to interpretation within the meaning of the second paragraph of Article 50b of that statute,

having regard to the written part of the procedure,

further to the hearing on 2 February 2026,

after considering the observations submitted on behalf of:

– Sampension Livsforsikring, by S. Andersen and L. Kjær, lawyer,

– the Danish Government, by C. Maertens, acting as Agent, and by R. Andersen and B. Søes Petersen, lawyer,

– the European Commission, by M.-L. Ehlers Defontaine and M. Herold, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 22 April 2026,

gives the following

Judgment

Legal context and the dispute

1The present request for a preliminary ruling concerns the interpretation of Article 11 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1; ‘the VAT Directive’).

2The request has been made in proceedings between Sampension Livsforsikring A/S and the Skatteministeriet (Ministry of Taxation, Denmark) concerning the refusal by the Danish tax authorities of the application for joint registration in respect of value added tax (VAT) submitted by that company and its subsidiary, Sampension Administrationsselskab A/S (‘the management company’).

Legal framework

European Union law

3Article 11 of the VAT Directive provides:

‘After consulting the advisory committee on value added tax …, each Member State may regard as a single taxable person any persons established in the territory of that Member State who, while legally independent, are closely bound to one another by financial, economic and organisational links.

A Member State exercising the option provided for in the first paragraph, may adopt any measures needed to prevent tax evasion or avoidance through the use of this provision.’

Danish law

4Paragraph 47(4) of the lov om merværdiafgift (momsloven) (Law on VAT) provides:

‘A number of taxable persons exclusively carrying out activities subject to registration may, on application, be registered under a single number. The Customs and Tax Administration may allow persons carrying out activities subject to VAT registration to be registered under a single number with persons carrying out activities not subject to registration and persons not engaged in economic activity. The grant of that authorisation shall be subject to the condition that one of the persons (inter alia, the parent company) be the owner of the other person or persons (inter alia, subsidiaries and sub-subsidiaries) registered under the same number, inter alia by directly or indirectly holding all of their capital. …’

The dispute in the main proceedings and the questions referred for a preliminary ruling

5Sampension Livsforsikring is an insurance company engaged in life-insurance and other financial activities, connected with both occupational pensions and company pensions. Some of those activities are exempt from VAT under Paragraph 13 of the Law on VAT.

6Until 1 January 2017, Sampension Livsforsikring was, in accordance with Paragraph 47(4) of the Law on VAT, registered for VAT together with the management company under a single number and accordingly formed with it a ‘VAT group’. The management company, which took charge of the administrative tasks of Sampension Livsforsikring and those of two pension funds which do not belong to that group, was wholly owned by Sampension Livsforsikring.

7On 1 January 2017 both pension funds for whose administrative tasks the management company was responsible each acquired 3% of that company’s share capital.

8As a result of that acquisition, Sampension Livsforsikring no longer owned 100% of the capital of the management company. The VAT group which it formed with that management company therefore ceased to exist since it did not meet the condition, laid down in Paragraph 47(4) of the Law on VAT, that, in a VAT group formed between persons carrying out activities subject to VAT registration and persons carrying out activities not subject to registration, one of the persons in that group must own, directly or indirectly, 100% of the capital of the other persons in that group (‘the 100% ownership condition’).

9By letter of 15 January 2019, Sampension Livsforsikring submitted a request to the Erhvervsstyrelsen (Danish Business Authority) that it be re-registered jointly with the management company for VAT purposes, stating that the 100% ownership condition did not comply with EU law, in particular Article 11 of the VAT Directive.

10By decision of 8 February 2019, the Skattestyrelsen (Danish Tax Agency) rejected the request for registration of Sampension Livsforsikring and the management company under a single number, on the ground that the 100% ownership condition had not been met.

11On 13 December 2021, the Danish Tax Agency’s decision was upheld by the Landsskatteretten (National Tax Tribunal, Denmark), which relied on the same ground as that agency and, in addition, stated that Sampension Livsforsikring could not rely on Article 11 of the VAT Directive since that provision did not have direct effect.

12Sampension Livsforsikring appealed against the decision of the Landsskatteretten (National Tax Tribunal) before the retten i Lyngby (Lyngby District Court, Denmark), which referred the case to the Østre Landsret (High Court of Eastern Denmark, Denmark), which is the referring court, on the ground that the case raised issues of principle.

13In those circumstances, the Østre Landsret (High Court of Eastern Denmark) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

Grounds

Consideration of the questions referred

The first question

14By its first question, the referring court asks, in essence, whether Article 11 of the VAT Directive must be interpreted as precluding legislation of a Member State which makes eligibility to form a VAT group, comprising, on the one hand, persons carrying out activities subject to VAT and, on the other, persons carrying out activities exempt from VAT or not engaged in economic activity, subject to the condition that one person in the VAT group owns, directly or indirectly, all of the capital of the other person or persons in that VAT group.

The first paragraph of Article 11 of the VAT Directive

15It is necessary, first of all, to examine whether a 100% ownership condition can be based on the first paragraph of Article 11 of the VAT Directive, since that provision makes forming a VAT group subject to the members thereof being closely bound to one another by financial links.

16In the first place, it must be borne in mind that, as regards the objectives pursued by Article 11 of the VAT Directive, the EU legislature, by adopting that provision, intended, either in the interests of simplifying administration or with a view to combating abuses such as the splitting-up of one undertaking among several taxable persons so that each might benefit from a special VAT scheme, to ensure that Member States would not be obliged to treat as taxable persons those whose ‘independence’ is purely a legal technicality (see judgment of 15 April 2021, Finanzamt für Körperschaften Berlin, C‑868/19, not published, EU:C:2021:285, paragraph 35 and the case-law cited).

17It must also be borne in mind that treatment as a single taxable person under the first paragraph of Article 11 of the VAT Directive precludes persons who are thus closely linked from continuing to submit VAT declarations separately and from continuing to be identified, within and outside their group, as taxable persons, since the single taxable person alone is authorised to submit such declarations (see judgment of 15 April 2021, Finanzamt für Körperschaften Berlin, C‑868/19, not published, EU:C:2021:285, paragraph 36 and the case-law cited).

18In the second place, the condition laid down in the first paragraph of Article 11 of the VAT Directive that the formation of a VAT group is subject to the existence of close financial, economic and organisational links between the persons concerned needs to be specified at national level, with the result that that provision is conditional inasmuch as it involves the application of national provisions determining the actual scope of such links (judgment of 15 April 2021, Finanzamt für Körperschaften Berlin, C‑868/19, not published, EU:C:2021:285, paragraph 43).

19However, it is important, for the uniform application of the VAT Directive, that the concept of ‘close financial links’, within the meaning of the first paragraph of Article 11 of that directive, is given an autonomous and uniform interpretation. Such an interpretation is necessary, despite the optional nature, as regards the Member States, of the scheme for which that article provides, in order to avoid differences in application of that scheme between one Member State and another when it is implemented (judgment of 15 April 2021, Finanzamt für Körperschaften Berlin, C‑868/19, not published, EU:C:2021:285, paragraph 44).

20Furthermore, it is not apparent from either Article 11 of the VAT Directive or the system established by that directive that that provision is a derogating or special provision which must be interpreted narrowly (judgment of 1 December 2022, Finanzamt T (Internal supplies within a VAT group), C‑269/20, EU:C:2022:944, paragraph 42). In particular, as follows from the case-law of the Court of Justice, the condition relating to the existence of close financial links cannot be interpreted narrowly (judgment of 15 April 2021, Finanzamt für Körperschaften Berlin, C‑868/19, not published, EU:C:2021:285, paragraph 45).

21In the third place, it is apparent from the case-law of the Court of Justice that the first paragraph of Article 11 in the VAT Directive does not provide that each Member State is able to impose conditions on economic operators as regards eligibility to form a VAT group other than the condition of being established in the territory of that Member State and that of being closely bound to one another by financial, economic and organisational links (see, to that effect, judgments of 25 April 2013, Commission v Sweden, C‑480/10, EU:C:2013:263, paragraph 35, and of 25 April 2013, Commission v Finland, C‑74/11, not published, EU:C:2013:266, paragraph 63).

22In addition, the Court of Justice has clarified that the fact that the nature of the relationship binding those economic operators is merely one of ‘closeness’ may, in the absence of any other requirement, not lead to the conclusion that the EU legislature intended to reserve the benefit of the VAT group scheme only to entities in a relationship of subordination with the controlling company of the group of undertakings considered. The existence of such a relationship of subordination can, in some situations, allow it to be presumed that relations between the entities concerned are close, but it cannot, in principle, be a condition which is necessary for the formation of a VAT group (see, to that effect, judgment of 15 April 2021, Finanzamt für Körperschaften Berlin, C‑868/19, not published, EU:C:2021:285, paragraph 47).

23The Court of Justice has also held that the second subparagraph of Article 4(4) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1; ‘the Sixth Directive’) precluded a condition of national law requiring, in order for close financial links to be established, that a majority of voting rights be held in addition to a majority holding in the share capital (see, to that effect, judgment of 1 December 2022, Norddeutsche Gesellschaft für Diakonie, C‑141/20, EU:C:2022:943, paragraph 71).

24The case-law cited in paragraph 23 above remains relevant to the interpretation of the first paragraph of Article 11 of the VAT Directive, since that provision essentially reproduces the wording of the second subparagraph of Article 4(4) of the Sixth Directive.

25In the present case, it should be noted that a 100% ownership condition for the formation of a VAT group comprising persons carrying out activities not subject to VAT registration or not engaged in economic activity goes beyond what is meant by the condition relating to close financial links, as interpreted by the case-law cited in paragraphs 18 to 23 above.

26In that regard, it follows from the case-law cited in paragraphs 18 to 23 above that, although a relationship of subordination, inter alia in the form of the 100% ownership of capital, can make it possible to presume that relations between the entities concerned are close, it cannot be a condition necessary for the formation of a VAT group. Furthermore, close financial links can also exist in situations where the capital holding is less than 100% since the persons concerned remain closely bound by financial, economic and organisational links within the meaning of the first paragraph of Article 11 of the VAT Directive.

27Consequently, as, moreover, the Danish Government acknowledged at the hearing, a 100% ownership condition cannot be regarded as simply clarifying the condition that there be close financial links within the meaning of the first paragraph of Article 11 of the VAT Directive.

The second paragraph of Article 11 of the VAT Directive

28It is necessary, secondly, to examine whether a 100% ownership condition can still be regarded as being among the measures which may be taken by Member States, under the second paragraph of Article 11 of the VAT Directive, to prevent tax evasion or avoidance through the use of the first paragraph of that article (see, to that effect, judgment of 15 April 2021, Finanzamt für Körperschaften Berlin, C‑868/19, not published, EU:C:2021:285, paragraph 56).

29In that regard, it must be borne in mind that, although Article 11 of the VAT Directive does not expressly provide that Member States may impose on economic operators conditions other than those set out in the first paragraph of that article as regards eligibility to form a VAT group, those States are, in the context of their margin of discretion, entitled to make the application of the VAT group scheme subject to certain restrictions provided that they fall within the objectives of that directive of preventing abusive practices or behaviour or combating tax evasion or tax avoidance, and provided that EU law and its general principles, in particular the principles of proportionality and fiscal neutrality, are respected (see judgment of 15 April 2021, Finanzamt für Körperschaften Berlin, C‑868/19, not published, EU:C:2021:285, paragraph 57 and the case-law cited).

30It should be emphasised that it is for the referring court to determine whether a 100% ownership condition serves to achieve the objectives of preventing abusive practices or behaviour or combating tax evasion or avoidance (see, to that effect, judgment of 16 July 2015, Larentia + Minerva and Marenave Schiffahrt, C‑108/14 and C‑109/14, EU:C:2015:496, paragraphs 43 and 46).

31However, in order to give the referring court a useful answer, the Court of Justice may, in a spirit of cooperation with national courts, provide it with all the guidance that it deems necessary (see, to that effect, judgment of 22 December 2008, Magoora, C‑414/07, EU:C:2008:766, paragraph 33 and the case-law cited).

32In that regard, the Danish Government submits that the 100% ownership condition is intended to prevent the loss of tax revenue and the windfall effects which may result from the inclusion, in VAT groups, of persons carrying out activities exempt from VAT or not engaged in economic activity. According to that government, the participation of those persons in VAT groups would allow them, inter alia, to acquire goods and services from the other members of the group without paying VAT. The benefit of the VAT group scheme should, for such persons, be limited to groups comprised of a company and its wholly owned subsidiaries; otherwise, the extension of that scheme to persons carrying out activities exempt from VAT or not engaged in economic activity which do not meet that condition would remove certain VAT revenue from the budget. Limiting the possibility of creating VAT groups thus contributes to combating tax avoidance.

33It must, however, be noted, in the first place, that the mere existence of a tax advantage resulting from the implementation, by a Member State, of the VAT group scheme provided for by the VAT Directive cannot, in itself, amount, as the Danish Government argues, to tax evasion or avoidance within the meaning of the second paragraph of Article 11 of that directive.

34Transactions effected for remuneration between members of the same group are not subject to VAT (judgment of 11 July 2024, Finanzamt T II, C‑184/23, EU:C:2024:599, paragraph 47). Accordingly, the fact that members of a VAT group may derive economic benefits from their participation in such a group is a necessary consequence of a Member State’s choice to allow, in the context of its tax policy, the formation of VAT groups.

35In addition, taxable persons are generally free to choose the organisational structures and the form of transactions which they consider to be most appropriate for their economic activities and for the purpose of limiting their tax burdens (judgment of 25 May 2023, Dyrektor Izby Administracji Skarbowej w Warszawie (VAT – Fictitious acquisition), C‑114/22, EU:C:2023:430, paragraph 45).

36It follows that the mere reduction in tax revenue resulting from the Member State’s choice to implement the VAT group mechanism, which forms an integral part of the common system of VAT, cannot, in itself, constitute tax evasion or avoidance within the meaning of the second paragraph of Article 11 of the VAT Directive.

37Furthermore, it must be borne in mind that the Court of Justice has already held that a purely theoretical risk of tax evasion or avoidance cannot form the basis of a general and absolute rule which restricts access to the VAT group scheme (see, to that effect, judgment of 15 April 2021, Finanzamt für Körperschaften Berlin, C‑868/19, not published, EU:C:2021:285, paragraph 61). Moreover, the objectives put forward by the Danish Government and referred to in paragraph 32 above do not relate to the risk of tax evasion or avoidance.

38In the second place, it is for the referring court to assess, in the light of the principle of proportionality, whether the 100% ownership condition is necessary and appropriate for attaining the objectives of combating tax evasion or avoidance.

39In that regard, a measure can be considered to be an appropriate means of securing the achievement of the objective pursued only if it genuinely reflects a concern to secure the attainment of that objective in a consistent and systematic manner (see, by analogy, judgment of 13 May 2026, Swedish Match (Simplified justification arrangements), C‑322/25, EU:C:2026:402, paragraph 28). That might not be the case as regards the 100% ownership condition, since the tax advantage which may result from the inclusion, in a VAT group, of a person carrying out an activity exempt from VAT or not engaged in economic activity is the same – whether 100% or less of the capital of that person is owned by another member of the group – so long as the condition that there be close financial links within the meaning of the first paragraph of Article 11 of the VAT Directive is met. The 100% ownership condition therefore makes a distinction not on the basis of a real risk of tax avoidance, but on the sole basis of the capital structure of the group. Where the objective of combating tax evasion or avoidance can be attained by means of less restrictive measures, systematic exclusion on the basis of an abstract criterion, which is not connected to a real risk of tax evasion or avoidance, may go beyond what is necessary to achieve that objective (see, to that effect, judgment of 15 April 2021, Finanzamt für Körperschaften Berlin, C‑868/19, not published, EU:C:2021:285, paragraphs 61 to 64).

40In the third place, it is also for the referring court to ascertain whether the 100% ownership condition complies with the principle of fiscal neutrality, which precludes inter alia treating economic operators carrying out the same transactions differently for VAT purposes (see, to that effect, judgment of 15 April 2021, Finanzamt für Körperschaften Berlin, C‑868/19, not published, EU:C:2021:285, paragraph 65 and the case-law cited).

41In that regard, national legislation which prevents persons carrying out an activity exempt from VAT or not engaged in economic activity whose capital is not entirely owned by another member of the group from benefiting from the VAT group scheme, even though they meet the condition of being closely bound by financial, economic and organisational links within the meaning of the first paragraph of Article 11 of the VAT Directive, may lead to a difference in treatment between economic operators which carry out the same transactions and which are, in respect of all the criteria set out in that provision, in comparable situations.

42It falls to the referring court to ascertain, in the light of all the foregoing considerations, whether the 100% ownership condition is a measure needed to prevent tax evasion or avoidance.

43In the light of the foregoing, the answer to the first question is that Article 11 of the VAT Directive must be interpreted as precluding legislation of a Member State which makes eligibility to form a VAT group, comprising, on the one hand, persons carrying out activities subject to VAT and, on the other, persons carrying out activities exempt from VAT or not engaged in economic activity, subject to the condition that one person in the VAT group owns, directly or indirectly, all of the capital of the other person or persons in that VAT group, unless that requirement constitutes a necessary and appropriate measure for attaining the objectives of combating tax evasion or avoidance.

The second question

44By its second question, which is referred only in the event that the first question is answered in the affirmative, the referring court asks, in essence, whether Article 11 of the VAT Directive must be interpreted as having direct effect, with the result that taxable persons are entitled, vis-à-vis a Member State, to be registered as a VAT group where the legislation of that Member State does not comply with that provision and cannot be interpreted in accordance therewith.

45It should be borne in mind, first of all, that, whenever the provisions of a directive appear, so far as their subject matter is concerned, to be unconditional and sufficiently precise, they may be relied upon before the national courts by individuals against the State where the latter has failed to implement the directive in domestic law by the end of the period prescribed or where it has failed to implement the directive correctly. A provision of EU law is unconditional where it sets forth an obligation which is not qualified by any condition, or subject, in its implementation or effects, to the taking of any measure either by the institutions of the European Union or by the Member States (judgment of 16 July 2015, Larentia + Minerva and Marenave Schiffahrt, C‑108/14 and C‑109/14, EU:C:2015:496, paragraphs 48 and 49 and the case-law cited).

46The Court of Justice has also already ruled, in its judgment of 16 July 2015, Larentia + Minerva and Marenave Schiffahrt (C‑108/14 and C‑109/14, EU:C:2015:496), on the direct effect of Article 4(4) of the Sixth Directive, to which Article 11 of the VAT Directive corresponds.

47In that regard, the Court of Justice held that the condition laid down in Article 4(4) of the Sixth Directive that the formation of a VAT group is subject to the existence of close financial, economic and organisational links between the persons concerned needed to be specified at national level and that that article, inasmuch as it involved the application of national provisions determining the actual scope of such links, was therefore conditional. The Court of Justice thus concluded that that provision did not satisfy the conditions necessary for it to have direct effect (judgment of 16 July 2015, Larentia + Minerva and Marenave Schiffahrt, C‑108/14 and C‑109/14, EU:C:2015:496, paragraphs 50 and 51).

48The Court of Justice accordingly ruled that Article 4(4) of the Sixth Directive may not be considered to have direct effect allowing taxable persons to claim the benefit thereof against their Member State in the event that that State’s legislation is not compatible with that provision and cannot be interpreted in a manner consistent with it (judgment of 16 July 2015, Larentia + Minerva and Marenave Schiffahrt, C‑108/14 and C‑109/14, EU:C:2015:496, paragraph 52).

49That case-law remains relevant for the interpretation of Article 11 of the VAT Directive. First, Article 11 of the VAT Directive reproduces, in essence, the wording of Article 4(4) of the Sixth Directive. Secondly, it is apparent from the judgment of 16 July 2015, Larentia + Minerva and Marenave Schiffahrt (C‑108/14 and C‑109/14, EU:C:2015:496), that the implementation of the VAT group scheme necessarily involves the application of national legislation determining the actual scope of the close links envisaged in that provision.

50The fact that, in the present case, unlike the questions referred for a preliminary ruling in the case which gave rise to the judgment of 16 July 2015, Larentia + Minerva and Marenave Schiffahrt (C‑108/14 and C‑109/14, EU:C:2015:496), the present question referred does not concern entitlement to VAT deduction, but entitlement to be registered as a VAT group, is not such as to call that conclusion into question. In both cases, the reliance on Article 4(4) of the Sixth Directive or Article 11 of the VAT Directive concerns the provisions relating to the formation of a VAT group, the actual scope of which, as regards the condition laid down by those provisions requiring the existence of close links, is specified by that national legislation.

51In that regard, it should be pointed out that any national court, hearing a case within its jurisdiction, has, as an organ of a Member State, the obligation to disapply any provision of national law which is contrary to a provision of EU law with direct effect in the case pending before it. By contrast, a provision of EU law which does not have direct effect may not be relied on, as such, in a dispute coming under EU law in order to disapply a provision of national law that conflicts with it (judgment of 24 June 2019, Popławski, C‑573/17, EU:C:2019:530, paragraphs 61 and 62).

52Nevertheless, it follows from settled case-law that the principle that national law must be interpreted in conformity with EU law, by virtue of which the national court is required, to the greatest extent possible, to interpret national law in conformity with the requirements of EU law, is inherent in the system of the Treaties, since it permits the national court, within the limits of its jurisdiction, to ensure the full effectiveness of EU law when it determines the dispute before it. That obligation to interpret national law in conformity with EU law requires the national court to consider, where necessary, the whole body of national law in order to assess to what extent it may be applied so as not to produce a result contrary to EU law (see judgment of 12 May 2021, technoRent International and Others, C‑844/19, EU:C:2021:378, paragraph 53 and the case-law cited).

53In the light of the foregoing considerations, the answer to the second question is that Article 11 of the VAT Directive must be interpreted as not having direct effect allowing taxable persons to rely on it against their Member State in the event that that State’s legislation is not compatible with that provision and cannot be interpreted in a manner consistent with it.

Costs

Costs

54Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the General Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds,

THE GENERAL COURT (Second Chamber, sitting with five Judges)

hereby rules:

1. Article 11 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax

2. Article 11 of Directive 2006/112

Provisional text

OPINION OF ADVOCATE GENERAL

MARTÍN Y PÉREZ DE NANCLARES

delivered on 13 May 2026 (1)

Case T‑366/25 [Szytelbiecka] (i)

D.B.

v

Dyrektor Krajowej Informacji Skarbowej

(Request for a preliminary ruling from the Naczelny Sąd Administracyjny (Supreme Administrative Court, Poland))

( Reference for a preliminary ruling – Taxation – Common system of VAT – First paragraph of Article 19 of Directive 2006/112/EC – Concept of ‘transfer of a totality of assets or part thereof’ – Gift of an undertaking in two equal parts to two natural persons intending to make of them a contribution in kind to a partnership – Multiple beneficiaries – Analysis of a series of transactions – Concept of ‘economic reality’ )

I. Introduction

1‘The law is a practical concept, that is to say, one with a specified end, and any end-oriented concept is essentially twofold, since it contains within it an antithesis: the end and the means. … There is no legal institution … the definition of which is not necessarily twofold, in that it tells us the end pursued and the means of achieving it. However, the means, as varied as it may be, always boils down to the struggle against injustice.’ So begins the famous pamphlet by Rudolf von Jhering, in which, taking as his source material his valedictory address to the University of Vienna, delivered on 11 March 1872, he sets out the appealing idea of a constant struggle for the law. (2) According to Jhering, that is a specific struggle in which the teleological interpretation of the rules must ensure that the law achieves its true social function, so that, as he sets out in his subsequent (and voluminous) work, Law as a Means to an End, (3) the law is not an end in itself, but the instrument for achieving a social purpose and preventing a formalistic interpretation, confined to the letter of the law, from leading to an unfair application. And, indeed, it has been a debate in the most renowned legal literature ever since whether it is the law that shapes social reality or vice versa.

2The present case poses a similar dilemma, in that the General Court must determine whether the purpose (namely carrying on an economic activity) prevails over the means used (a series of successive transactions involving several beneficiaries) in the interpretation of the first paragraph of Article 19 of Directive 2006/112/EC. (4)

3By its request for a preliminary ruling, the Naczelny Sąd Administracyjny (Supreme Administrative Court, Poland) asks about the scope of the first paragraph of Article 19 of Directive 2006/112, in the context of a dispute between a natural person carrying on an economic activity and the Dyrektor Krajowej Informacji Skarbowej (Director of National Tax Information, Poland; ‘the tax authority’), concerning the latter’s refusal to regard that natural person’s transfer of her undertaking to her descendants, in this case her two daughters, as not being subject to value added tax (VAT).

4The specific feature of this case lies in the fact that the two daughters, to each of whom will be transferred a 50% share of their mother’s undertaking, in turn intend to contribute their shares to a partnership which they jointly manage and which will continue to carry on the economic activity of the transferred undertaking.

5In essence, the referring court is uncertain as to whether it is appropriate to treat that series of transfer transactions as distinct and independent transactions or, on the contrary, as forming an inseparable whole. The answer to that question will determine whether or not the transfer of the mother’s undertaking to her daughters falls within the scope of the first paragraph of Article 19 of Directive 2006/112.

II. Legal framework

A. European Union law

6According to Article 1(2) of Directive 2006/112, ‘on each transaction, VAT, calculated on the price of the goods or services at the rate applicable to such goods or services, shall be chargeable after deduction of the amount of VAT borne directly by the various cost components’.

7Under Article 2(1)(c) of Directive 2006/112, ‘the supply of services for consideration within the territory of a Member State by a taxable person acting as such’ is to be subject to VAT.

8The first paragraph of Article 16 of that directive provides that:

‘The application by a taxable person of goods forming part of his business assets for his private use or for that of his staff, or their disposal free of charge or, more generally, their application for purposes other than those of his business, shall be treated as a supply of goods for consideration, where the VAT on those goods or the component parts thereof was wholly or partly deductible.’

9The first paragraph of Article 19 of Directive 2006/112 provides that:

‘In the event of a transfer, whether for consideration or not or as a contribution to a company, of a totality of assets or part thereof, Member States may consider that no supply of goods has taken place and that the person to whom the goods are transferred is to be treated as the successor to the transferor.’

B. Polish law

10The ustawa o podatku od towarów i usług (Law on the tax on goods and services) of 11 March 2004 (Dz. U. of 2024, item 361, as amended; ‘the Law on VAT’) provides, in Article 2(27e) thereof, that:

‘For the purposes of the following provisions: “an organised part of an undertaking” shall mean an organisationally and financially separate group of tangible and intangible assets within an existing undertaking, including liabilities, used to perform specific economic tasks, which at the same time could constitute an independent undertaking performing those tasks independently’.

11Article 6(1) of the Law on VAT provides that the provisions of that law do not apply to ‘transactions involving the disposal of an undertaking or an organised part thereof’.

12Article 7(2)(1) of the Law on VAT provides that:

‘The transfer, without consideration, by a taxable person of goods forming part of his or her undertaking shall also constitute a supply of goods within the meaning of Article 5(1)(1), in particular:

(1) the transfer or consumption of goods for the personal use of the taxable person or his or her employees, including former employees, partners, members, shareholders, members of cooperatives and members of their household, members of entities constituting legal persons, members of associations’.

III. Background to the dispute and request for a preliminary ruling

13D.B. carries on an economic activity under the name ‘Przedsiębiorstwo B.’ (‘D.B.’s undertaking) and is subject to VAT. She intends to gift the whole of her undertaking to her two daughters, A.K. and P.K., each of whom will receive a 50% share of it. (5)

14A.K. and P.K. manage their own undertaking, P., in the form of a partnership (‘A.K. and P.K.’s partnership’), which is subject to VAT. They plan to incorporate D.B.’s undertaking and to carry on its activities in a substantially unchanged form.

15D.B. applied to the tax authority for a tax ruling concerning the provisions of the Law on VAT concerning the exemption from VAT for a gift of goods.

16In a tax ruling of 26 June 2020, the tax authority took the view that each of D.B.’s daughters would receive only part of D.B.’s undertaking, with the result that the subject of the transfer without consideration would not be the undertaking, but a shareholding in its various components. Holding such a share would not enable economic activities to be carried out independently. Moreover, the assets of D.B.’s undertaking are not used for the performance of specific economic tasks, since the economic activity in the context of which they will be used will be carried on by a third party, namely A.K. and P.K.’s partnership, to which the latter intend to transfer the shares received.

17The Wojewódzki Sąd Administracyjny w Poznaniu (Regional Administrative Court, Poznań, Poland) dismissed the action brought by D.B. against the tax ruling by judgment of 30 March 2021, agreeing with the tax authority’s opinion.

18D.B. brought an appeal on a point of law before the referring court, the Naczelny Sąd Administracyjny (Supreme Administrative Court).

19The referring court points out that the Court of Justice has not analysed, in the context of the first paragraph of Article 19 of Directive 2006/112, transposed into Polish law by Article 6(1) of the Law on VAT, the case of a transfer of a totality of assets to two natural persons who, moreover, are not entrepreneurs and who, by subsequent acts, will contribute their shares in the joint ownership of the undertaking to a business partnership.

20According to the referring court, the first paragraph of Article 19 of Directive 2006/112 can be interpreted in two different ways. According to the first, which is based on an isolated examination of each transaction, the gift of a 50% share of an undertaking cannot be regarded as a transfer within the meaning of that provision, since it does not allow an economic activity to be carried on independently. Furthermore, A.K. and P.K. cannot be regarded as intending to carry on such an activity since they intend to contribute their shares, by a subsequent act, to a third party, namely the partnership of which they are joint owners.

21According to the second interpretation, which is functional, it is necessary to analyse the series of transactions as having as their purpose the transfer of the whole undertaking and the pursuit of its economic activity, with the result that the first paragraph of Article 19 of that directive is applicable.

22Moreover, the referring court states that a separate dispute is currently pending before it, the purpose of which is to determine whether the transfer by A.K. and P.K. of the shares in D.B.’s undertaking to the partnership of which they are joint owners will be exempt from VAT under the first paragraph of Article 19 of Directive 2006/112.

23In those circumstances, the Naczelny Sąd Administracyjny (Supreme Administrative Court) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling under the procedure laid down in Article 267 TFEU:

‘Must Article 19 of Council Directive [2006/112] be interpreted as meaning that a transfer of a totality of assets within the meaning of that provision also occurs when there is a transfer without consideration by a taxable person of a [50%] share each of a totality of assets to two individuals who are not taxable persons and who intend to contribute those shares immediately as a contribution in kind to a business partnership of which they are partners?’

IV. Procedure before the Court of Justice and the General Court

24The present request for a preliminary ruling was lodged at the Registry of the Court of Justice on 19 May 2025. Pursuant to Article 50b of the Statute of the Court of Justice of the European Union, the request was referred to the General Court.

25Written observations were submitted by the tax authority, the Polish Government and by the European Commission. D.B., the tax authority, the Polish Government and the Commission took part in the hearing which was held on 25 March 2026.

V. Legal assessment

26By its single question, the referring court asks about the scope of the first paragraph of Article 19 of Directive 2006/112. It thus asks whether the derogation provided for in that provision may apply where a taxable person transfers, without consideration, a totality of assets, in the amount of 50% each, to two non-taxable natural persons who intend to make of those shares an immediate contribution in kind to a partnership carrying on an economic activity, of which they are sole shareholders.

27As I stated in the introduction and in the summary of the facts giving rise to the dispute, (6) two interpretations of the first paragraph of Article 19 of Directive 2006/112 appear possible.

28In order to give the General Court the best possible guidance on the interpretation of that provision to be given, I shall begin, as a first step, with a number of preliminary remarks, which will allow the scope of the question to be defined (A). As a second step, I shall address the option of analysing each transaction separately from the series of transactions at issue in the main proceedings (B) before considering, as a third step, the possibility of examining the transactions forming that series of transactions together (C). That will enable me, in the fourth and final step, to provide an answer to the General Court as to the interpretation of the scope of the first paragraph of Article 19 of Directive 2006/112 which it should, in my view, adopt (D).

A. Preliminary remarks

29In order to gain a better understanding of the two possible options for interpreting the scope of the first paragraph of Article 19 of Directive 2006/112 available to the General Court, I consider it necessary to provide some clarification on the factual context (1), the case-law (2), and the concept of ‘person to whom the goods are transferred’ in that provision (3).

1. Factual context

30In the light of the questions which the Commission was able to raise in its written observations and which the judges of the General Court and I myself were able to raise at the hearing, it seems to me important to clarify the following factual elements.

31In wishing to make a gift of 50% of her undertaking to each of her daughters, A.K. and P.K., it is the shares in her undertaking, that is to say, her assets, that D.B. will pass on to them.

32Consequently, as the tax authority stated, by receiving by transfer a 50% share of D.B.’s undertaking, A.K. and P.K. obtain a fraction of the right of ownership over each asset held by their mother.

33It is therefore necessary to classify the transfer of the shares of D.B.’s undertaking to A.K. and P.K. as a transaction whereby a taxable person transfers, without consideration, the assets of her business to non-taxable persons. The transfer of A.K. and P.K.’s shares to their partnership is a transaction whereby two non-taxable persons make a contribution in kind to a company.

34The transactions in question being thus defined, it is possible to respond to the doubts expressed by the Commission regarding whether or not the question referred is hypothetical. Its doubts arise from the fact that the referring court has not indicated on what legal basis the transfer of the assets of D.B.’s undertaking to A.K. and P.K., in the amount of 50% each without consideration, could, in principle, be subject to VAT. In my view, such a transfer could be subject to VAT under Article 7(2)(1) of the Law on VAT, which transposes the first paragraph of Article 16 of Directive 2006/112. That, however, is a matter for the national court to determine. (7)

35In any event, I would point out that, according to settled case-law, in the factual and legislative context which the national court is responsible for defining and the accuracy of which is not a matter for the Court of Justice to determine, the questions submitted by the national court enjoy a presumption of relevance. (8)

36It is clear from the request for a preliminary ruling that the referring court considers that the transfer of the shares of D.B.’s undertaking to her daughters will be subject to VAT if it does not fall within the scope of the first paragraph of Article 19 of Directive 2006/112.

2. Case-law

37It should be borne in mind that the first paragraph of Article 19 of Directive 2006/112 is drafted in identical terms to Article 5(8) of Sixth Directive 77/388/EEC (9) and must be interpreted in the light of the case-law of the Court of Justice relating to the latter provision. (10)

38As regards the existing case-law relating to the first paragraph of Article 19 of Directive 2006/112, it provides, in my view, a reasonably comprehensive interpretation of the scope of that provision. I would like to recall the following lessons for the purposes of the present Opinion.

39In the first place, it seems to me to follow from the case-law of the Court of Justice that two cumulative conditions must be satisfied in order for the first paragraph of Article 19 of Directive 2006/112 to apply: first, the transfer of a totality of assets or part thereof must enable an independent economic activity to be carried on and, second, the transferee must intend to carry on such an activity. (11)

40As regards the first condition, the concept of ‘a transfer … of a totality of assets or part thereof’ must be interpreted as meaning that it covers the transfer of a business or an independent part of an undertaking including tangible elements and, as the case may be, intangible elements which, together, constitute an undertaking or a part of an undertaking capable of carrying on an independent economic activity, but that it does not cover the simple transfer of assets, such as the sale of a stock of products. (12)

41Moreover, in order for there to be a transfer of a business or an independent part of an undertaking, all of the elements transferred must, together, be sufficient to allow an independent economic activity to be carried on. (13)

42As regards the second condition, the transferee must have intended to operate the business or the part of the undertaking transferred and not simply to immediately liquidate the activity concerned and sell the stock, if any. (14)

43In the second place, it should be noted that the wording of the first paragraph of Article 19 of Directive 2006/112 uses the term ‘transferor’ in the singular, which implies that it is not envisaged that that provision will apply where a number of transferors are selling their shares to the same transferee. (15)

44In the third place, the first paragraph of Article 19 of Directive 2006/112 provides that ‘the person to whom the goods are transferred is to be treated as the successor to the transferor’. It is apparent from the clear wording of that provision that the treatment to which it refers is a consequence of the fact that no supply is deemed to have taken place. (16)

45That interpretation of the first paragraph of Article 19 of Directive 2006/112 is supported by the objective of that provision, which is to enable the Member States to facilitate transfers of undertakings or of parts of undertakings by making such transfers simpler and by preventing the resources of the recipient from being overburdened by a disproportionate charge to tax which, in any event, would ultimately be recovered through deduction of the input VAT paid. (17)

3. Concept of ‘person to whom the goods are transferred’

46Since, in the present case, D.B.’s undertaking is transferred to several persons, it is necessary to consider the concept of ‘person to whom the goods are transferred’ in the first paragraph of Article 19 of Directive 2006/112 and whether, under that provision, a totality of assets may be transferred to several such persons.

47That question involves understanding the scope of the phrase ‘the person to whom the goods are transferred is to be treated as the successor to the transferor’.

48In that regard, I would point out that, according to settled case-law, when interpreting a provision of EU law, it is necessary to consider not only its wording but also the context in which it occurs and the objectives pursued by the rules of which it is part. (18)

49It seems to me to be clearly evident from the case-law that the person to whom the goods are transferred designates the person to whom a totality of assets or part thereof, enabling an independent economic activity to be carried on, is transferred, and who intends to carry on such an activity. Since a transfer of a totality of assets may be in part, a totality of assets may be the subject of several separate transfers (all in part, in such a case), which, in turn, implies the existence of several beneficiaries.

50That said, since, in the phrase ‘the person to whom the goods are transferred is to be treated as the successor to the transferor’, the term ‘person to whom the goods are transferred’ is used in the singular, (19) it must be understood, in my view, that the transfer of a totality of assets, whether whole or in part, may, in any event, be made only to a single beneficiary.

51That literal interpretation seems to me not only to be consistent with the case-law referred to in point 43 of this Opinion concerning the term ‘transferor’ in that phrase, but also supported by a contextual and teleological interpretation of Article 19 of Directive 2006/112.

52As regards the context in which Article 19 of Directive 2006/112 was adopted, I would note, like Advocate General Jacobs in his Opinion in Abbey National, (20) that there is little information, whether in the preamble to the Sixth Directive or Directive 2006/112 or in the Commission’s proposals for directives, (21) to clarify the choice made by the legislature as to the wording used in both the first paragraph of Article 19 of Directive 2006/112 and Article 5(8) of the Sixth Directive.

53However, it should be noted that the predecessor to Article 5(8) of the Sixth Directive, which was a note relating to Article 5(1) in Annex A to Directive 67/228/EEC, (22) already stated that ‘in case of contribution to a company of the whole or part of the contributor’s assets, Member States may regard the benefiting company as the successor in title of the contributor’.

54In other words, from the outset, the provisions of EU law referred to a single person to whom the goods are transferred and a single transferor.

55A teleological interpretation of the first paragraph of Article 19 of Directive 2006/112 confirms that that is a deliberate choice on the part of the legislature. As recalled in point 44 of the present Opinion, that provision seeks, by providing that ‘the person to whom the goods are transferred is to be treated as the successor to the transferor’, to ensure that the transferor’s rights and obligations in relation to VAT are assumed by the person to whom the goods are transferred. The person to whom the goods are transferred will therefore be required, where appropriate, to adjust the tax deducted by the transferor, as if the transferor had continued to use the assets. (23)

56The first paragraph of Article 19 of Directive 2006/112 is therefore based on the principle that the proper functioning of the common system of VAT will not be compromised by the mere change of ownership of an undertaking (or part of an undertaking); as if there is ultimately only ever one and the same taxable person. (24)

57That is why, in my view, the term ‘person to whom the goods are transferred’ is, like the term ‘transferor’, in the singular.

58It follows from the foregoing that, in my view, a transfer of a totality of assets, whether in whole or in part, may be made only to a single recipient.

B. Option of a separate analysis of the transactions at issue

59A separate analysis of the transactions at issue is justified by the principle that, for VAT purposes, each transaction must normally be regarded as distinct and independent, as follows from the second subparagraph of Article 1(2) of Directive 2006/112, (25) and also by the fact that the application of the first paragraph of Article 19 of Directive 2006/112 presupposes that a totality of assets is transferred between a transferor and a person to whom the goods are transferred. (26)

60Since A.K. and P.K. are two distinct natural persons, they do not share the same assets. Thus, in the present case, there are four transactions: the first, between D.B. and A.K.; the second, between D.B. And P.K.; the third, between A.K. and A.K. and P.K.’s partnership, and the fourth, between P.K. and that partnership.

61From that perspective, it is necessary to determine whether the first paragraph of Article 19 of Directive 2006/112 is applicable both to the transaction between D.B. and A.K. and to that between D.B. and P.K. (27)

62In the light of the conditions laid down in the first paragraph of Article 19 of Directive 2006/112, (28) the first question which arises is whether, individually, A.K. and P.K. are in a position to carry on an independent economic activity by each holding half the shares in their mother’s undertaking.

63In my view, the answer to that question should be in the negative.

64It is apparent from the request for a preliminary ruling that the distribution between D.B.’s two daughters consists in giving each of them a 50% share of the undertaking and not of allocating among them, specifically, the assets of that undertaking, with the result that they could, ‘each on their own’, have carried on an independent economic activity.

65The fact that they will hold 100% of D.B.’s undertaking between them and therefore between them hold the totality of assets enabling them to carry on an independent economic activity is not capable of calling that conclusion into question, since they do not have common assets, with the result that each transaction, as defined in point 60 of the present Opinion, must be analysed separately. It is therefore in relation to each daughter that the condition that it must be possible to carry on an independent economic activity must be examined.

66Since one of the two conditions laid down in the first paragraph of Article 19 of Directive 2006/112 is not satisfied, it must be concluded that that provision is not applicable, without it even being necessary to consider the intention of the transferees, since the conditions set out in point 39 of the present Opinion are cumulative.

67That said, it is also reasonable to question whether, in the present case, the second condition of the first paragraph of Article 19 of Directive 2006/112, namely A.K. and P.K.’s intention to carry on the economic activity of D.B.’s undertaking, is satisfied. It is true that their intention is to carry on the economic activity of their mother together, but such an activity will take place through their partnership. That presupposes, therefore, that they contribute their shares to their partnership. In other words, their intention is, as regards the shares which they will receive, to relinquish them to the benefit of their partnership. Moreover (and perhaps most importantly), they have no intention of becoming liable to VAT themselves and thus of themselves being D.B.’s successor. Thus, neither of them will take over any of D.B.’s rights or obligations in relation to VAT. In the light of the case-law referred to in point 42 of the present Opinion, it must therefore be concluded that the second condition laid down in the first paragraph of Article 19 of Directive 2006/112 is not satisfied either.

68In any event, even if one were to regard the transfer of D.B.’s undertaking to her two daughters as a single transaction, on the basis that, between them, they are able to carry on the economic activity of that undertaking and intend to do so, the first paragraph of Article 19 of Directive 2006/112 would still be inapplicable, since, as I have established in point 58 of the present Opinion, a transfer of a totality of assets may take place only in respect of one beneficiary.

69Consequently, the first paragraph of Article 19 of Directive 2006/112 must be interpreted as excluding from its scope the transfer by a taxable person of a totality of assets in equal shares to two non-taxable persons.

C. Option of a joint analysis of the transactions at issue

70While a separate analysis of the transactions at issue appears consistent with the principle referred to in point 59 of the present Opinion, the question nevertheless arises as to whether a joint analysis of such transactions would not be more ‘natural’, in the sense that it would appear to be more consistent with the economic reality of those transactions.

71The concept of ‘economic reality’, although regularly cited by the Court, has not been defined by it. (29) In my view, the aim of that concept is to avoid adopting a merely formalistic approach to transactions and to see them for what they really are and the effects which they produce, taking into account the aims of the business community. (30)

72Such a concept may thus serve as a criterion for establishing the existence of an abuse of rights, as well as for correctly interpreting and applying the provisions of Directive 2006/112. (31)

73Thus, it is necessary to consider whether the concept of ‘economic reality’ is capable of calling into question the conclusion reached in point 69 of the present Opinion. Taking account of the economic reality constitutes a fundamental criterion for applying the common system of VAT. (32)

74From that point of view, for the purposes of interpreting the scope of the first paragraph of Article 19 of Directive 2006/112, preference could be given to the objective pursued by the series of transactions at issue, as submitted by D.B., namely the pursuit of the economic activity of D.B.’s undertaking by A.K. and P.K’s partnership. Such an approach would justify considering the series of transactions at issue as a whole and adapting the application of that provision to that situation as (re)defined.

75Focusing on the ultimate objective of that series of transactions involves adopting a less formalistic approach, (33) thus giving greater effect to the objective pursued by Article 19 of Directive 2006/112, which is, it will be recalled, to facilitate the transfer of undertakings.

76Such an approach involves determining how to classify and deal with a series of transactions.

77In that regard, it is necessary to ascertain, in the first place, whether the series of transactions at issue could be classified as a ‘single transaction’. The rule of principle referred to in point 59 of the present Opinion is subject to two exceptions, linked to the concept of a ‘single transaction’. (34)

78In the first place, there is a single transaction where two or more elements or acts supplied by the taxable person are so closely linked that they form, objectively, a single, indivisible economic supply, which it would be artificial to split. (35)

79In the second place, a single transaction must also be found to exist where a supply consists of a principal supply and the other supply or supplies constitute one or more ancillary supplies which are treated in the same way for tax purposes as the principal supply. In particular, a supply must be regarded as ancillary to a principal supply if it does not constitute for customers an end in itself but a means of better enjoying the principal service supplied. (36)

80It seems to me to follow from that case-law that a single transaction is, schematically, an economic supply provided by a single taxable person and made up of various elements regarded as inseparable in the eyes of his or her customer. (37)

81In my view, in the present case, we find ourselves neither in the first nor the second situation referred to in points 78 and 79 of the present Opinion. On the one hand, the persons involved in the various transactions are different. On the other, the different transactions can be carried out independently of each other and serve different purposes. The only link between those transactions is therefore D.B., A.K. and P.K.’s intention. While the declared intention of the parties concerning the VAT liability of a transaction must be taken into consideration, that is on the condition that it is supported by objective evidence. (38) However, I do not believe that that intention is actually supported by objective evidence, since, from a strictly economic point of view, each of those transactions could exist without the others and would retain its entire economic meaning, even in isolation from the other transactions. (39) Moreover, it appears that D.B.’s intention amounts to the transfer of her undertaking to her daughters, as a gift.

82In the second place, leaving aside the notion of a ‘single transaction’, it is possible to consider, in the light of the sequence of events, that the acquisition of the undertaking by A.K. and P.K. was, in reality, a mere ‘intermediate’ or ‘transitional’ acquisition. In such circumstances, it would be necessary, in my view, to verify that the conditions for the application of the first paragraph of Article 19 of Directive 2006/112 are satisfied in the case of the final recipient, in the present case, A.K. and P.K.’s partnership. In so far as that partnership receives the totality of the assets from D.B.’s undertaking and intends to carry on its economic activity, that provision would apply. Moreover, such an interpretation is consistent with the requirement that there can be only one beneficiary, as set out in point 58 of the present Opinion, since, in this case, the final recipient is indeed a single entity: A.K. and P.K.’s partnership.

83Should the General Court be inclined to follow that approach, I would encourage it, in order to limit the risks of abuse, to focus on the timing of the transmissions concerned. In that regard, I note that the referring court has indeed highlighted, both in its request for a preliminary ruling and in the question which it has referred, the fact that A.K. and P.K. will immediately make the contribution in kind of their shares to their partnership. (40)

84Indeed, I consider that the ‘functional’ interpretation of the first paragraph of Article 19 of Directive 2006/112 could work provided that it is demonstrated that there was no possibility that the intermediate (or transitional) acquisition would be converted into a final acquisition. That would prevent a situation where, under the guise of intending to transfer an undertaking at a later date, persons who cannot deduct input VAT evade the payment of VAT and thereby acquire assets at a lower cost, in breach the first paragraph of Article 16 of Directive 2006/112 and the principle of fiscal neutrality, understood as an expression of the general principle of equal treatment in VAT matters. (41)

85Consequently, a consideration of the economic reality should lead to transactions linked by a common objective and immediately successive in time being regarded as forming a whole, and to a verification that the conditions laid down in the first paragraph of Article 19 of Directive 2006/112 have been met in the case of the final recipient.

D. Proposed option

86It follows from the foregoing that the choice between the two possible interpretations of the scope of the first paragraph of Article 19 of Directive 2006/112 depends on the way in which it is decided that a series of transactions which have to be carried out are to be understood.

87Either a preference is shown for the classic route, in accordance with the fundamental principle referred to in point 59 of the present Opinion, or the decision is taken to strike out on a different path, one which is paved by the concept of ‘economic reality’.

88While the second option is not without its allure and even appeared to me, at first sight, to be the most logical one, it does not succeed in overcoming certain reservations and, therefore, even taking into account the temporal nature of the succession of transactions, fails to win my full conviction.

89First, if the application of the first paragraph of Article 19 of Directive 2006/112 to a series of transactions had to be subject to the condition that the final acquisition must immediately follow the intermediate acquisition, the question would inevitably arise as to what is meant by ‘immediately’. Should it be a matter of hours or days? Could it be accepted that the final acquisition takes place several weeks, or even months, after the intermediate acquisition?

90Second, the individual transactions comprising the series of transactions are different in nature and none of them may be classified as a transfer of totality of assets. In other words, it is the whole which would be classified as such, whereas the transactions constituting it are two gifts of half of the assets of an undertaking to separate persons and two contributions in kind made by those persons. Thus, on the one hand, there would be a mismatch between the classification of the elements making up a whole and the classification of that whole. On the other, if, for one reason or another, the third and fourth transactions, as defined in point 60 of the present Opinion, were ultimately not to take place, difficulties would certainly arise in relation to the adjustment of VAT.

91Third, I would point out that the Court of Justice has already held that requiring the tax authorities to carry out inquiries to determine the intention of the taxable person would be contrary to the objectives of the common system of VAT of ensuring legal certainty and facilitating the measures necessary for the application of VAT by having regard, save in exceptional cases, to the objective character of the transaction concerned. (42)

92In the present case, the type of transactions envisaged by D.B. and her daughters, as well as the sequence of those transactions, are perfectly clear, with the result that, taken individually, they do not pose any difficulties when it comes to classification. (43) Moreover, as D.B. acknowledged at the hearing, there was nothing to prevent her from transferring the totality of the assets of her undertaking to A.K. and P.K.’s partnership. The decision to give her undertaking to her daughters, who would then contribute it to the capital of their partnership, is therefore a choice made by persons involved. That decision has tax consequences for D.B., her daughters and their partnership which they cannot attempt to circumvent by seeking to have clearly defined transactions treated the same way as another type of transaction which they preferred not to carry out for reasons which, I hasten to add, are their own. (44) Moreover, that would be contrary to the principle of fiscal neutrality, since it would amount to treating different situations in the same way. (45)

93Furthermore, while the concept of ‘economic reality’ is intended to focus on the effects of transactions rather than on their form, it cannot be relied on in such a way as to favour the intention of the parties over the consequences of the specific choices they made, contrary to the case-law referred to in points 81 and 91 of the present Opinion.

94It is for all of those reasons that, despite the attractiveness of the option of a joint analysis of the transactions at issue, I am led to adopt the interpretation based on a separate examination of those transactions. Moreover, it seems to me to be consistent not only with the principle relating to VAT recalled in point 59 of the present Opinion, but also with the objective pursued by Article 19 of Directive 2006/112, which is to facilitate the transfer of undertakings and not tax schemes.

95Accordingly, I propose that the General Court answer the question referred to the effect that Article 19 of Directive 2006/112 must be interpreted as meaning that a transfer of a totality of assets does not occur when there is a transfer without consideration by a taxable person of a 50% share each of a totality of assets to two individuals who are not taxable persons and who intend to contribute those shares immediately as a contribution in kind to a business partnership in which they are partners.

VI. Conclusion

96In the light of the foregoing, I propose that the following answer be given to Naczelny Sąd Administracyjny (Supreme Administrative Court, Poland):

Article 19 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that a transfer of a totality of assets does not occur when there is a transfer without consideration by a taxable person of a 50% share each of a totality of assets to two individuals who are not taxable persons and who intend to contribute those shares immediately as a contribution in kind to a business partnership in which they are partners.

Signatures

José Martín y Pérez de Nanclares

Delivered in open court in Luxembourg on 13 May 2026.

[Signatures]

Notes

(1) Original language: French.

i The name of the present case is a fictitious name. It does not correspond to the real name of any party to the proceedings.

(2) Von Jhering, R., Der Kampf um’s Recht, G.J. Manz, Vienna, 1872, p. 7, translated into French by Meydieu, A.F., Le combat pour le droit, A. Durand et Pedone-Lauriel, Paris, 1875, p. 1. That work was subsequently enriched and improved, giving rise to 11 different editions in the author’s lifetime.

(3) Von Jhering, R., Zweck im Recht, Druck und Verlag von Breitkopf & Härtel, Leipzig, 1877, translated into French based on the third German edition by Meulenaere, O., Chevalier-Marescq et Cie, Paris, 1901.

(4) Council Directive of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1).

(5) It should be noted that, in the request for a preliminary ruling, mention is made of the fact that it is D.B. and her husband, the father of A.K. and P.K., who intend to make a gift of the entire undertaking to their two daughters. However, D.B.’s husband is mentioned only once and neither his status nor his role in the series of transactions at issue in the main proceedings is specified, with the result that it appears to follow from the facts available to me that only D.B. must be regarded as the transferor, within the meaning of the first paragraph of Article 19 of Directive 2006/112. Moreover, at the hearing, it was confirmed that the transactions at issue in the main proceedings have actually taken place.

(6) See points 5, 20 and 21 of the present Opinion.

(7) See, to that effect, judgment of 13 July 2017, Túrkevei Tejtermelő Kft. (C‑129/16, EU:C:2017:547, paragraph 43 and the case-law cited).

(8) See judgment of 15 May 2003, Salzmann (C‑300/01, EU:C:2003:283, paragraph 31 and the case-law cited).

(9) Council Directive of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1).

(10) See order of 16 January 2023, Dyrektor Izby Administracji Skarbowej w Łodzi (C‑729/21, not published, EU:C:2023:74, paragraph 33 and the case-law cited).

(11) See, to that effect, judgment of 30 May 2013, X (C‑651/11, EU:C:2013:346, paragraph 32 and the case-law cited). That is also the view of the tax authority, the Polish Government and the Commission, as is apparent from their written observations. However, it is worth noting that, under the second paragraph of Article 19 of Directive 2006/112, ‘Member States may, in cases where the recipient is not wholly liable to tax, take the measures necessary to prevent distortion of competition. They may also adopt any measures needed to prevent tax evasion or avoidance through the use of this Article.’ For an overview of the other conditions imposed by the national laws of the Member States: Annacondia, F., EU VAT Compass 2021/2022, IBFD, Amsterdam, 2021, pp. 803-805.

(12) See judgments of 27 November 2003, Zita Modes (C‑497/01, EU:C:2003:644, paragraph 40); of 10 November 2011, Schriever (C‑444/10, EU:C:2011:724, paragraph 24 and the case-law cited); and order of 16 January 2023, Dyrektor Izby Administracji Skarbowej w Łodzi (C‑729/21, not published, EU:C:2023:74, paragraph 30). On the actual impact of the definition of the concept of ‘transfer of a totality of assets or part thereof’ given by the Court of Justice in its judgment of 27 November 2003, Zita Modes (C‑497/01, EU:C:2003:644), in certain national legal systems: Culot, A., and Thilmany, J., Manuel des droits d’enregistrement et de la TVA applicables aux actes de société, Larcier-Intersentia, Brussels, 2025, p. 145 and 146; Calderón Carrero, J.M., and Quintas Seara, A., ‘El IVA en la transmisión del patrimonio empresarial: la progresiva flexibilización comunitaria de la regla de no sujeción’, Revista técnica tributaria, No 102, 2013, pp. 95-117 (p. 108). That judgment also resolved the difficulties which had previously existed relating to the classification of a partial transfer of activity: Wäger, C., ‘Nicht steuerbare Veräußerung eines Geschäftsbetriebs im ganzen bei Absicht der Fortführung des übertragenen Geschäftsbetriebs oder Unternehmensteils durch den Erwerber’, Umsatzsteuer-Rundschau, 2004, pp. 24-27 (p. 26).

(13) See, to that effect, judgment of 10 November 2011, Schriever (C‑444/10, EU:C:2011:724, paragraph 25).

(14) See, to that effect, judgment of 27 November 2003, Zita Modes (C‑497/01, EU:C:2003:644, paragraph 44).

(15) Judgment of 30 May 2013, X (C‑651/11, EU:C:2013:346, paragraph 46).

(16) See, to that effect, order of 16 January 2023, Dyrektor Izby Administracji Skarbowej w Łodzi (C‑729/21, not published, EU:C:2023:74, paragraph 36 and the case-law cited) and Opinion of Advocate General Brkan in A&P Deco (T‑397/25, EU:T:2026:263, points 41 and 45).

(17) See judgment of 10 November 2011, Schriever (C‑444/10, EU:C:2011:724, paragraph 23 and the case-law cited).

(18) Judgments of 17 November 1983, Merck (292/82, EU:C:1983:335, paragraph 12); of 9 March 2023, ACER v Aquind (C‑46/21 P, EU:C:2023:182, paragraph 54); and of 18 December 2025, E. (Set-off of claims) (C‑481/24, EU:C:2025:996, paragraph 29).

(19) The term ‘person to whom the goods are transferred’ is used in the singular in all the language versions of the first paragraph of Article 19 of Directive 2006/112.

(20) (C‑408/98, EU:C:2000:207, point 23).

(21) See the proposal for a Sixth Council Directive on the harmonisation of legislation of Member States concerning turnover taxes – Common system of value added tax: uniform basis of assessment, COM(73) 950 final of 20 June 1973 and, as regards Directive 2006/112, the proposal for a Council Directive on the common system of value added tax, COM(2004) 246 final of 15 April 2004.

(22) Second Council Directive of 11 April 1967 on the harmonisation of legislation of Member States concerning turnover taxes – Structure and procedures for application of the common system of value added tax (OJ 1967 L 71, p. 1303).

(23) Sánchez Gallardo, F.J., IVA para expertos, Francis Lefebvre, Madrid, 2024, 4th ed., pp. 1790-1798 (point 20547), and Serlooten, P., Debat, O., Droit fiscal des affaires, Dalloz, Paris, 2022/2023, 21st ed., p. 344.

(24) Consequently, the adjustment of the rules aimed at taxing supplies of goods in order to promote economic activity appears both pragmatic and sensible.

(25) See judgment of 1 August 2025, Határ Diszkont (C‑427/23, EU:C:2025:596, paragraph 37 and the case-law cited).

(26) See paragraph 58 of the present Opinion and, in that regard, judgment of 30 May 2013, X (C‑651/11, EU:C:2013:346, paragraphs 46 and 47).

(27) The question whether the first paragraph of Article 19 of Directive 2006/112 applies to the third and fourth transactions does not arise, in that context, since the transactions are examined separately and are the subject of a dispute separate from the dispute in the main proceedings, as the referring court specifies.

(28) See point 39 of the present Opinion.

(29) The absence of any definition has been criticised by some authors: Nellen, F., and van Doesum, A., ‘Economic Reality in EU VAT’, EC tax review, 2020, Vol. 29, No 5, pp. 213-226; van Abswoude, K., ‘The Principle of Fiscal Neutrality and Economic Reality in EU VAT: Two Peas in a Pod?’, International VAT Monitor, 2022, Vol. 33, No 5.

(30) On the importance of focussing on transactions’ effects rather than their form: Beisse, H., ‘Die paradigmatischen Gob’, in Hommelhoff, P., Zätzsch, R., Erle, B. and Müller, W., Gesellschaftsrecht, Rechnungslegung, Steuerrecht: Festschrift für Welf Müller zum 65. Geburtstag, Beck, Munich, 2001, pp. 731-753 (p. 739).

(31) On the application of the concept of ‘economic reality’ in the case-law of the Court of Justice: Nellen, F., and van Doesum, A., (footnote 29 of the present Opinion), and, by the same authors, ‘Economic Reality in EU VAT and the Reductionist Approach’, EC tax review, 2025, Vol. 34, No. 6, pp. 222-230.

(32) Judgment of 28 June 2007, Planzer Luxembourg (C‑73/06, EU:C:2007:397, paragraph 43).

(33) In his Opinion in Kopalnia Odkrywkowa Polski Trawertyn P. Granatowicz, M. Wąsiewicz (C‑280/10, EU:C:2011:592, points 1, 31, 36 and 38), Advocate General Cruz Villalón warned precisely against the risk of an overly formalistic interpretation of Directive 2006/112.

(34) See, to that effect, judgment of 4 September 2019, KPC Herning (C‑71/18, EU:C:2019:660, paragraph 38); Opinion of Advocate General Mengozzi in Solar Electric Martinique (C‑303/16, EU:C:2017:507, point 57), and Opinion of Advocate General Pitruzzella in Finanzamt X (Permanently installed equipment and machinery) (C‑516/21, EU:C:2022:976, point 27).

(35) See Opinion of Advocate General Mengozzi in Solar Electric Martinique (C‑303/16, EU:C:2017:507, point 58 and the case-law cited).

(36) See Opinion of Advocate General Mengozzi in Solar Electric Martinique (C‑303/16, EU:C:2017:507, point 59 and the case-law cited).

(37) See, to that effect, Opinion of Advocate General Mengozzi in BLV Wohn- und Gewerbebau (C‑395/11, EU:C:2012:564, points 46 and 47).

(38) See judgment of 4 September 2019, KPC Herning (C‑71/18, EU:C:2019:660, paragraph 40 and the case-law cited).

(39) If, for example, A.K. decided to resell her portion rather than contribute it to the partnership which she manages with P.K., that would in no way prevent P.K. from transferring her portion to that partnership. That would enable A.K. to benefit from the money from the sale of her portion and P.K. to obtain shares within the partnership.

(40) It should also be noted that, at the hearing, D.B. stated that the transfer of the shares held by A.K. and P.K. to their partnership actually took place a few days after the transfer of those shares from D.B. to her daughters.

(41) See, to that effect, judgments of 16 September 2020, Mitteldeutsche Hartstein-Industrie (C‑528/19, EU:C:2020:712, paragraph 59 and the case-law cited), and of 17 December 2020, WEG Tevesstraße (C‑449/19, EU:C:2020:1038, paragraph 48).

(42) Judgment of 27 September 2007, Teleos and Others (C‑409/04, EU:C:2007:548, paragraph 39).

(43) See, to that effect, point 81 of the present Opinion.

(44) See, by analogy, judgment of 13 March 2014, Malburg (C‑204/13, EU:C:2014:147, paragraphs 46 and 47).

(45) See, to that effect, judgment of 10 April 2008, Marks & Spencer (C‑309/06, EU:C:2008:211, paragraph 49).