VATcodexEU VAT case law · Court of Justice and General Court

Immovable property EU VAT case law

88 cases of the Court of Justice and the General Court of the European Union on this point of VAT law, from 1988 to 2026.

Search within this topicThe cases ↓

Provisions these cases interpret most

The 88 cases, most recent first

Under each case, what the Court decided, from its summary. The summaries are AI-generated and are not official documents: open the case for the Court’s own text.

T-397/25 A&P Deco

Judgment · 2 September 2026 · Netherlands

Letting the property back to the buyer does not travel inside the transfer of a business

The General Court held that the letting does not form part of the transfer of a totality of assets where the right to the letting arises on the occasion of the transfer. What passes is not a pre-existing right belonging to the business assets but a newly created contractual right, distinct from the transfer of the business. The fiction of continuity in Articles 19 and 29 therefore does not extend to the letting contract. The transferor continues to use the property for an exempt activity, namely the letting itself, so the use of the capital item changes and the deduction originally taken must be adjusted under Articles 184 to 190. That the transferee carries on the transferred activity in the same building does not alter that. The judgment separates two operations that are ordinarily concluded together and that both serve the continuity of the business, holding that they keep distinct legal characters.

C-243/23 Drebers

Judgment · 12 September 2024 · Belgium

Adjustment period for major renovation and extension works

Works taxed as services are not themselves immovable property acquired as capital goods, but where a Member State has used the Article 190 option it must respect fiscal neutrality and the economic life of the effects of the services. Excluding significant extension or substantial renovation works whose effects last as long as a new building from the extended period is precluded. Whether Article 12(2) conversion occurred is irrelevant. Article 190, read with Article 187, has direct effect and can be invoked against the authorities.

C-516/21 Finanzamt X (Tools and machinery permanently installed)

Judgment · 4 May 2023 · Germany

Letting of permanently installed equipment and machinery as an ancillary supply

Article 135(2), first subparagraph, point (c) does not apply where the letting of permanently installed equipment and machinery is a supply ancillary to a principal exempt letting of a building under the same lease between the same parties, forming a single economic supply. The ancillary supply follows the principal supply's exempt treatment. The exclusion is not a provision requiring a single transaction to be split. It remains for the national court to verify that there is one economic supply and which element is principal. Landlords letting buildings with fixed plant (agricultural sheds, factories, cold stores, restaurants, data-related installations) can rely on the single supply analysis to keep the whole rent exempt where the equipment merely enables better enjoyment of the building and one rent is charged under one lease.

C-612/21 Gmina O.

Judgment · 30 March 2023 · Poland

Municipal renewable energy installations and the limits of economic activity

Such activity does not constitute a supply of goods and services subject to VAT where it is not intended to obtain income on a continuing basis and residents pay at most a quarter of the costs incurred, the balance coming from public funds. The decisive point is the absence of economic activity. No permanence, no staff, structurally loss-making pricing unlike an RES installer. Article 13(1) therefore did not need examination, and the taxable amount question fell away. Useful for advisers to local authorities running subsidised energy efficiency, insulation or renewables schemes.

C-616/21 Gmina L.

Judgment · 30 March 2023 · Poland

Municipal asbestos removal financed by public subsidy, no economic activity

The Court held that such an activity does not constitute a supply of services subject to VAT. Even if a third party subsidy can be consideration, so that a direct link may exist, the municipality does not carry out an economic activity. It employs no staff, seeks no customers, the operation is not recurrent, residents pay nothing and its organisational costs are unreimbursed, so it bears only risk of loss with no profit prospect. Article 13(1) therefore needed no consideration. Article 28 (commission agent) did not apply absent a mandate. Confirms the Gemeente Borsele line for local authorities running one off, grant funded schemes for residents.

C-227/21 HA.EN.

Judgment · 15 September 2022 · Lithuania

Deduction where the vendor is insolvent and cannot pay the output VAT

Article 168(a), read with fiscal neutrality, precludes such a practice. Mere failure to pay duly declared VAT is not fraud, so the purchaser cannot be treated as knowingly participating in fraud, nor is there abuse, since a secured creditor taking over the property after a failed auction pursues debt recovery, not a tax advantage. The Court distinguished ALTI is that a purchaser in a court supervised compulsory sale is not in the position of a contractual counterparty of the principal VAT debtor. Member States may instead use the Article 199(1)(g) reverse charge. Purchasers of real estate in enforcement and insolvency sales, and secured creditors taking assets in satisfaction of debt, keep their deduction even where the vendor's inability to pay is obvious. Relevant to distressed debt, restructuring and property advisers.

C-56/21 ARVI ir ko

Judgment · 30 June 2022 · Lithuania

Option to tax immovable property conditional on the buyer's VAT registration

Those provisions and principles preclude neither of the two national rules. Article 137(2) gives Member States wide discretion to set the detailed rules for, and restrict, the option to tax. A registration condition serves legal certainty and correct collection of VAT and does not affect the right to deduct, which without a valid option would not arise. The seller must therefore adjust. The purchaser's actual use of the property for taxed activities is irrelevant, but the authorities must still check for fraud or abuse by the seller. Confirms that formal conditions attached to the option to tax are not the same as formal conditions on the right to deduct: the Dobre line on VAT identification as a mere formality does not rescue a seller whose option fails. Relevant to property developers and vendors of second-hand commercial property in Member States with registration-based option regimes, notably Lithuania.

C-218/21 Autoridade Tributária e Aduaneira

Judgment · 5 May 2022 · Portugal

Reduced rate for renovation and repair of private dwellings, lifts in residential buildings

The concept covers repair and renovation services for lifts in residential buildings, but not maintenance services for those lifts. Renovation and repair are occasional in character. Regular, continuous maintenance is not. Shared facilities in a multi-apartment residential building, including lifts, fall within "private dwellings" because they are important or indispensable to the use of the individual apartments. For mixed-use buildings, a pro rata allocation is required. Member States may transpose selectively, but not by way of mere administrative instructions. Lift and escalator servicing businesses, facilities managers and building maintenance contractors in Member States applying the reduced rate to dwelling renovation must split contracts.

C-627/21 Administraţia Judeţeană a Finanţelor Publice Sibiu and Direcţia Generală Regională a Finanţelor Publice Braşov

Order · 2 May 2022 · Romania

Deregistration for inactivity cannot trigger an irrebuttable adjustment of input tax

The Court holds that those provisions preclude such rules and practice. An irrebuttable presumption that the capital goods have been used for purposes other than economic activity denies the taxable person any possibility of proving the contrary, and so goes beyond what is necessary to ensure the correct collection of the tax and to prevent evasion. One of a series of Romanian cases on the consequences of deregistration, alongside Promexor Trade and Siemens Gamesa.

C-598/20 Pilsētas zemes dienests

Order · 1 December 2021 · Latvia

Compulsory ground leases outside the exemption for the letting of immovable property

Ruling by reasoned order, the Court held that those provisions do not preclude such legislation. Article 135(2) allows Member States to apply further exclusions to the scope of the exemption in Article 135(1)(l), and the Court has consistently read that as conferring a broad discretion, exercisable by a general rule. Latvia had laid down precisely such a general rule, so the exclusion was within the discretion the directive confers. There was no need to answer the second question. A useful reminder that the letting exemption is not a floor.

C-45/20 Finanzamt N and Finanzamt G (Communication of the allocation decision)

Judgment · 14 October 2021 · Germany

Deadline for communicating the allocation of mixed-use assets to business assets

The allocation decision itself is a substantive condition. Communicating it is only formal. Nevertheless, a Member State may refuse deduction where, by expiry of the statutory annual return deadline, the authority has not been put in a position to establish allocation by an express decision or sufficient evidence, unless the arrangements for exercising the option breach proportionality. Intention may be shown implicitly, so the national court must weigh less onerous penalties such as administrative fines against outright refusal. Time limits for signalling allocation of mixed-use capital goods survive, but only subject to a proportionality review that national courts must actually carry out.

C-248/20 Skellefteå Industrihus

Order · 18 May 2021 · Sweden

Abandoned property project and the option to tax

By reasoned order under Article 99, the Court held that those provisions preclude national legislation requiring immediate repayment of the whole input VAT plus interest merely because the project produced no taxed activity. The discretion under Article 137(2) cannot revoke a right of deduction already acquired. They do not, however, preclude national legislation imposing an obligation to adjust the input VAT deducted, since abandoning the intended taxed use breaks the direct link required by Articles 184 to 185.

C-604/19 Gmina Wrocław (Transformation of the right of usufruct)

Judgment · 25 February 2021 · Poland

Statutory conversion of perpetual usufruct into ownership by a municipality

The conversion is a supply of goods under Article 14(2)(a). The fee is compensation because it is directly linked to the transfer of ownership and effectively paid, regardless of its nature or amount. Because the fee is payable over 20 years, the municipality obtains income on a continuing basis, so this is economic activity. Absence of active steps is irrelevant. Subject to national verification, the municipality does not exercise public law powers, merely certifying the conversion, so Article 13(1) does not apply. Confirms that Article 14(2)(a) operates independently of Article 14(1). Relevant to municipalities and state property bodies across Member States dealing with statutory land conversions, expropriations and similar compulsory transfers.

C-655/19 AJFP Sibiu and DGRFP Braşov

Judgment · 20 January 2021 · Romania

Sale of mortgaged property acquired by a creditor on enforcement

Such a transaction does not in itself amount to an economic activity where it falls within the simple exercise of the right of ownership and the sound management of private assets, so the person is not a taxable person for that transaction. The qualification is that this depends on the referring court verifying that the aim was recovery of the debts and assets and that no active marketing steps were taken using means comparable to those of a trader. Sales forming a direct extension of a lending business were not at issue. Confirms that the number and scale of disposals are not decisive.

C-449/19 WEG Tevesstraße

Judgment · 17 December 2020 · Germany

Supply of heat by an association of property owners to its members

Article 135(1)(l) precludes such national legislation. Supplying heat generated by a cogeneration unit is the sale of tangible property resulting from exploiting immovable property, not the grant of a right to occupy immovable property and exclude others. A 1977 Council and Commission declaration permitting such an exemption has no legal significance, being unreflected in the wording. Fiscal neutrality does not assist. Single family homeowners and co-owners are distinct groups of consumers. Associations of residential property owners, and their advisers, can no longer rely on the German exemption for heat supplied to members.

C-787/18 Sögård Fastigheter

Judgment · 26 November 2020 · Sweden

Transfer of the capital goods adjustment obligation to the purchaser of a property

The Directive precludes such legislation. Where a Member State uses Article 188(2) to relieve the seller of adjustment because the purchaser will use the property only for deductible transactions, it cannot then impose adjustment of that deduction on the purchaser when the conditions cease to be met. The person liable for amounts due on adjustment is a substantive rule. Only the taxable person who applied the deduction can be required to repay it. The Article 19 question was inadmissible as hypothetical. Confirms and extends Pactor Vastgoed. Relevant to property investors and their advisers pricing acquisitions of opted properties, and to anyone assessed on a predecessor's deductions.

C-791/18 Stichting Schoonzicht

Judgment · 17 September 2020 · Netherlands

Single-step adjustment of input tax on first use of capital goods

The Court held that Articles 184 to 187 do not preclude such a single-step adjustment. Article 187 governs only variations arising after first use, measured against the deduction entitlement for the year of first use. A discrepancy identified at the moment of first use falls under Articles 184 and 185, whose detailed rules Member States lay down under Article 186. The scheme must still allow spread adjustment for later variations, as the Netherlands rules did. The second question was not answered. Relevant to property developers and investors, and to anyone deducting input tax on capital goods on the basis of intended use.

C-716/18 AJPF Caraş-Severin and DGRFP Timişoara

Judgment · 9 July 2020 · Romania

Ancillary real estate transactions and the small enterprise threshold

For a natural person carrying on several liberal professions and letting immovable property, the letting is not an ancillary transaction where it is carried out in the context of his usual business activity. No principal activity need be identified, and no connection with another activity is required. "Ancillary" is an autonomous EU concept covering transactions outside the taxable person's usual business activity, aligned with Article 174(2). Whether the letting is exempt, and whether it forms part of usual activity, is for the national court. Relevant to small unregistered businesses and sole practitioners in Member States operating turnover thresholds, and to their advisers computing that turnover.

C-215/19 Veronsaajien oikeudenvalvontayksikkö (Computing centre services)

Judgment · 2 July 2020 · Finland

VAT treatment of colocation centre services

Such services are neither exempt letting nor services connected with immovable property, subject to verification by the national court. The supplier does not passively make space available with a right to occupy it as owner, and the customers cannot control or restrict access to the relevant part of the building, so there is no right of exclusive use. The cabinets themselves are not immovable property. They are not an integral part of the building and, being merely bolted down and removable, are not permanently installed. Data centre, hosting and colocation providers can normally treat these supplies as taxable under the general B2B rule in Article 44, accounting at the customer's place of establishment rather than registering where the servers sit. Relevant to telecoms and IT operators, and to advisers reviewing cross-border hosting contracts and access arrangements.

C-707/18 Amărăşti Land Investment

Judgment · 19 December 2019 · Romania

Land registration costs borne by the purchaser as a deemed supply to the vendor

The Directive does not prevent the parties from agreeing that the purchaser bears some or all of the administrative costs, but such a clause is not decisive for the purchaser's right of deduction. Because first registration and entry of the proprietor are a statutory obligation of the vendor, a purchaser acting in its own name who performs those steps acts on behalf of the vendor and is deemed under Article 28 to have supplied the services to the vendor, even though the price excludes the value of the land-registration work and nothing was re-invoiced. Purchasers of unregistered immovable property who absorb the vendor's registration, notarial and surveying costs cannot simply treat the input VAT as their own investment expenditure.

C-265/18 Jarmuškienė

Judgment · 2 May 2019 · Lithuania

Small enterprise threshold and a single supply of two properties

Where a supply to the same purchaser comprises two items of immovable property linked by their nature and covered by a single contract of sale, and the turnover limit is exceeded, VAT is due on the value of the entire supply, even though one item alone would not have breached the limit. Separately stated prices do not permit splitting. There is a single supply under Article 14(1) and dividing it would be artificial. The Court expressly left open the treatment of earlier transactions. Relevant to advisers dealing with property developers and occasional builders operating under national small enterprise exemptions.

C-201/18 Mydibel

Judgment · 27 March 2019 · Belgium

Adjustment of input tax on a sale and lease back of buildings

Subject to the national court's verification of the facts and national law, no adjustment is required. Creating an emphyteutic right not subject to VAT is not in itself a change in the factors determining the deduction, and where the emphyteutic right and the leaseback are so closely linked as to form a single transaction, no supply of goods occurs because the institutions cannot dispose of the buildings as owner. Had adjustment been due, it would nevertheless respect neutrality and equal treatment. Relevant to businesses using sale and lease back of real estate as a financing tool, and to their lenders and lessors.

C-278/18 Sequeira Mesquita

Judgment · 28 February 2019 · Portugal

Letting exemption applied to transfer of the use of vineyards

The exemption applies. Passivity is judged by the nature of the transaction, not by how the tenant uses the property, so commercial exploitation by the transferee does not defeat it. The short and renewable term is not decisive. Restrictions on the transferee's rights (no replanting with another crop) do not matter, and any accompanying intangible rights are ancillary to a single supply of letting. Vineyards are not equipment or machinery, so that exclusion does not bite. The position would differ if the owner also supplied supervision, management, maintenance or other facilities. Agricultural landowners and their advisers can treat rent from letting planted land, including vineyards and comparable perennial crops, as exempt, and Member States cannot tax it merely because the tenant runs a commercial farming business or because permits, goodwill or a trading name travel with the land.

C-17/18 Mailat

Judgment · 19 December 2018 · Romania

Letting a fully equipped business as a transfer of a going concern

Not a transfer of a totality of assets. The items necessary to carry on the activity were merely let, with no transfer of related property rights, so the lessee could never dispose of them. Continuation under the same name is irrelevant. The contract is a single supply in which the letting of the immovable property is the principal element, the equipment and inventory being ancillary, and it therefore falls within the Article 135(1)(l) exemption. Landlords letting equipped commercial premises (restaurants, hotels, care and leisure operators) cannot rely on Article 19 to avoid adjusting input VAT recovered on works, fixtures and inventory.

C-140/17 Gmina Ryjewo

Judgment · 25 July 2018 · Poland

Adjustment of input tax where a public body changes the use of capital goods

Adjustment is not precluded, provided the national court finds on all the facts that the body acted as a taxable person when it acquired the goods. An express declaration of intended economic use is not required. Intention may be implied, and the concept of acquisition "as a taxable person" is to be construed generously. Relevant evidence includes the dual-use nature of the property and prior VAT registration. Waterschap Zeeuws Vlaanderen is distinguished because there the body acquired the goods acting as a public authority. Public bodies and other partly non-economic actors that failed to deduct on acquisition are not automatically shut out of capital goods adjustment when property is later put to taxable use.

C-364/17 Varna Holideis

Judgment · 27 June 2018 · Bulgaria

Jurisdiction over adjustment where the supply predates accession

The Court declined jurisdiction. Under Article 63 the chargeable event occurred and VAT became chargeable when the building was supplied in 2004, before accession, and the right of deduction under Articles 167 and 179 is directly linked in substance and time to that chargeability. The adjustment mechanism in Articles 184 to 186 is inextricably linked to that same chargeability and deduction. A post-accession event stemming from pre-accession circumstances does not confer jurisdiction. Confirms the boundary line for advisers in Member States that acceded in 2004 and 2007. Relevant to Bulgarian and Romanian real estate and long asset life cases, and to any adjustment, price reduction or nullity claim tracing back to a pre-accession transaction.

C-665/16 Gmina Wrocław

Judgment · 13 June 2018 · Poland

Expropriation of municipal land against compensation as a supply of goods

Article 14(2)(a) is a lex specialis whose conditions are independent of Article 14(1). Transfer of formal legal title, by order of a public authority or in pursuance of the law, against payment of compensation. No transfer of economic control is required, so continued practical management by the same person and dual representation do not prevent taxation. Payment by internal accounting transfer is irrelevant, provided the payment has become effective. The national court must still verify the conditions, including whether the municipality acted as a taxable person rather than as a public authority under Article 13(1). Public bodies and their advisers cannot argue that expropriation lacks an economic transfer where legal title moves and compensation is fixed by statute or administrative decision. Relevant to municipalities, infrastructure and road projects, and to anyone structuring compulsory purchase transactions involving public sector landowners.

C-421/17 Polfarmex

Judgment · 13 June 2018 · Poland

Transfer of property as consideration for a share buy-back

The two legs must be separated. The property transfer is a supply of goods for consideration, because each party acts as both supplier and beneficiary in a reciprocal legal relationship, and it is taxable provided the property is used in the company's economic activity, a matter for the national court. The share redemption itself is not an economic activity. The Court noted, without deciding, that the exemption in Article 135(1)(j) for supplies of old buildings may apply. Relevant to corporate restructurings and buy-backs settled in kind anywhere in the EU.

C-672/16 IMOFLORESMIRA - INVESTIMENTOS IMOBILIÁRIOS

Judgment · 28 February 2018 · Portugal

Adjustment of input tax on vacant property held for taxable letting

Those provisions preclude such legislation. Status as a taxable person and an accrued right of deduction cannot be withdrawn retroactively because, for reasons beyond the taxable person's control, the property was not actually used for taxed transactions. Vacancy after termination of a lease is not a change in the factors under Article 185 where the intention to let taxably persists and steps are taken to that end. The qualification is that authorities may still recover deductions retrospectively in cases of fraud or abuse. No limitation of temporal effects. Relevant to property investors and developers in Member States operating an option to tax, and to their advisers dealing with clawback rules keyed to periods of vacancy.

C-615/16 Kerr

Order · 21 November 2017 · Portugal

When an intermediary's activity counts as negotiation of securities transactions

Ruling by reasoned order, the Court held that the concept of negotiation is capable of covering such an activity, provided that it is the activity of an intermediary remunerated for supplying a service to one of the parties to a contract relating to financial transactions in securities, that the service consists in doing what is necessary for the seller and the buyer to sign that contract, that the intermediary does not itself sign the contract, and that in any event it has no interest of its own in its content. Whether those conditions are met is for the referring court to verify. The conditions restate CSC Financial Services and Volker Ludwig in a compact form, and they are the checklist to run through for any introducer or broker.

C-549/16 Palais Kaiserkron

Order · 12 October 2017 · Italy

A proportional registration duty on commercial leases may coexist with VAT

The Court holds that Article 401 does not preclude it. A duty of that kind does not have the essential characteristics of a turnover tax. It does not apply generally to all transactions concerning goods and services, it is not levied at each stage of production and distribution with deduction of the tax paid at the previous stage, and it does not bear on the added value at each stage. A straightforward application of the four criteria from Banca Popolare di Cremona and Beteiligungsgesellschaft Larentia.

C-132/16 Iberdrola Inmobiliaria Real Estate Investments

Judgment · 14 September 2017 · Bulgaria

Deduction on works to infrastructure owned by a third party

Deduction is available where there is a direct and immediate link with the taxable person's taxed output transactions, and the free benefit to the third party does not defeat it. Two qualifications: the works must not exceed what is necessary to enable the taxable person's taxable output transactions, and their cost must be included in the price of those transactions. If the works go further, the link is partially broken and deduction is limited to the objectively necessary part. Article 26 was not engaged. Confirms that a blanket national denial of deduction because a supply is free of charge, or because the improved asset belongs to someone else, cannot stand.

C-36/16 Posnania Investment

Judgment · 11 May 2017 · Poland

Transfer of land in settlement of tax arrears is not a supply for consideration

Such a transfer is not a supply of goods for consideration. Although a legal relationship of creditor and debtor exists, payment of tax is unilateral. The public authority provides no performance in return, whether the charge is settled in money or in tangible property. There is therefore no reciprocal performance and no supply for consideration. The Court added that any risk of untaxed final consumption where input tax has been deducted on the property is addressed by Article 16 of the VAT Directive. Relevant wherever a Member State permits tax debts to be settled by transferring assets in kind.

C-564/15 Farkas

Judgment · 26 April 2017 · Hungary

Reverse charge applied to the wrong transaction, deduction and penalty

Article 199(1)(g) applies only to immovable property sold by a judgment debtor in a compulsory sale. Deduction of VAT that was not due may be refused even though the seller paid it to the Treasury. The purchaser must seek reimbursement from the seller. But where that is impossible or excessively difficult, notably on the seller's insolvency, he must be able to claim directly from the tax authority. A 50% penalty for a purely administrative error causing no revenue loss appears disproportionate, subject to the national court's assessment. Confirms that domestic reverse charges cannot be extended beyond the categories listed in Article 199 without an Article 395 derogation, which is where national insolvency and auction regimes are exposed.

C-128/14 Het Oudeland Beheer

Judgment · 28 April 2016 · Netherlands

Valuing a self-supply of an office building held under a long lease

The Court holds that both elements may be included, notwithstanding the earlier payment and full deduction. As to measurement, where the land and the building under construction were acquired through the grant of a right in rem, the value of that right corresponds to the amount payable each year for the remainder of the long lease, corrected or capitalised by the same method used to value the grant of the leasehold. One of the technical anchors of the self supply rules now in Articles 18(a) and 74.

C-595/13 Fiscale Eenheid X

Judgment · 9 December 2015 · Netherlands

Real estate funds as special investment funds and the limits of "management"

Such property investment companies may be special investment funds where investors pool capital, bear the risk and receive dividends and capital growth, but only if the Member State has subjected them to specific State supervision. The exemption is not confined to investments in transferable securities. However, "management" does not cover the actual management of the immovable property. That is inherent in any investment and not specific to collective investment, unlike selection, purchase and sale plus administration and accounting tasks.

C-331/14 Trgovina Prizma

Judgment · 9 July 2015 · Slovenia

Sale of land held as private assets by a sole trader

Allocating goods to private assets does not by itself take a sale outside VAT. The sale must also be made in the course of managing private assets rather than the economic activity. Where plots were acquired over a short period, were all necessary for the construction, and development work was carried out on them, the vendor acts as a taxable person and the sale is taxable. National verification reserved. Relevant to sole traders, property developers and their advisers who rely on holding land outside the business balance sheet.

C-209/14 NLB Leasing

Judgment · 2 July 2015 · Slovenia

Repossession under a finance lease and reduction of the taxable amount

Where the lease provides for transfer of ownership on expiry, or the lessee enjoys all essential powers of ownership with substantially all risks and rewards and the present value of the payments is practically identical to market value, the transaction is an acquisition of capital goods. Article 90(1) does not permit reduction where the taxable person has in fact received all the consideration, or where, absent refusal or cancellation, the recipient is no longer liable for the price. Neutrality does not bar separate taxation of the lease and the onward sale unless they form a single supply, for the national court to decide. Relevant to lessors and to sale and lease back structures over immovable property.

C-42/14 Wojskowa Agencja Mieszkaniowa w Warszawie

Judgment · 16 April 2015 · Poland

Utilities and service charges recharged by a landlord to tenants

Where the landlord contracts with the suppliers and simply passes on the costs, he is treated as making those supplies to the tenant. Auto Lease Holland does not apply. Such supplies are in principle distinct and independent from the letting, assessed separately, unless the elements are so closely linked as to form a single indivisible economic supply which it would be artificial to split. Individual meters, consumption-based and separately itemised billing, and tenant choice of supplier point to separate supplies. National courts must assess the contract. Relevant to landlords, property managers and their advisers who recharge utilities and waste services.

C-499/13 Macikowski

Judgment · 26 March 2015 · Poland

Obligations of the court enforcement officer as paying agent on compulsory sales

None of these provisions precludes the Polish mechanism. The officer is a mere intermediary collecting tax on the taxable person's behalf, not a person liable, jointly liable or a tax representative under Article 204. The scheme falls within Article 273. Personal liability with all his assets is proportionate only if the officer actually has all the legal means to discharge the obligation in time, which the national court must verify. The supplier retains its right to deduct and may claim repayment of any overpayment. Confirms that Member States may use third party collection agents under Article 273 without engaging the liability rules in Articles 193 to 205. Relevant to enforcement officers, insolvency practitioners and auctioneers in Member States operating similar withholding mechanisms, and to advisers on compulsory sales of land.

C-55/14 Régie communale autonome du stade Luc Varenne

Judgment · 22 January 2015 · Belgium

Making a football stadium available, letting or taxable service

As a general rule, no. Such an arrangement is not a letting of immovable property. The characteristic supply is the provision of access to sporting facilities in a usable condition, supported by the owner's active role (permanent on-site caretaking) and the 80% weighting of the services. The Court left the fact finding to the national court, which must assess whether all the services are genuinely necessary for football use and whether the enjoyment is merely occasional and temporary. Relevant to stadium, arena and sports facility operators, municipalities and their autonomous corporations, and anyone structuring facility use agreements with clubs.

C-500/13 Gmina Międzyzdroje

Order · 5 June 2014 · Poland

Ten-year capital goods adjustment period and the refusal of a one-off adjustment

By reasoned order, the Court held that those provisions and the neutrality principle do not preclude such rules. Article 187 applies where goods initially used for non-deductible purposes are later put to deductible use, and its terms are binding. An adjustment period of at least five years (extendable to twenty for immovable property) is an essential element of the system. A ten-year period running from first use is a proper transposition, and Article 187 precludes any one-off adjustment within a single tax year. Confirms that a change of use of immovable property from non-economic or exempt to taxable activity gives access to input VAT only in annual fractions over the national adjustment period, not as an immediate lump-sum credit.

C-139/12 Caixa d’Estalvis i Pensions de Barcelona

Judgment · 20 March 2014 · Spain

Indirect tax on share acquisitions in property-rich companies

The Court held that the Sixth Directive does not preclude such national legislation. The capital transfers tax lacks the essential characteristics of VAT and so is not a turnover tax caught by Article 33(1), and concurrent taxation, including resulting double taxation, is permitted. The first question needed no answer, since the referring court had not shown whether Spain had used its options under Articles 5(3) and 13C(b). The Treaty question was inadmissible as the situation was purely internal.

C-249/12 Tulică and Plavoşin

Judgment · 7 November 2013 · Romania

Whether a price agreed without reference to VAT is treated as VAT inclusive

Where the supplier cannot recover the VAT subsequently claimed from the purchaser, the agreed price must be treated as already including VAT. Otherwise the supplier bears a tax intended for the final consumer and the authorities collect more than the taxable person received. The position is different if national law allows the supplier to add a supplement equal to the tax and recover it from the purchaser. Whether such recovery is possible is for the national court to determine. The answer turns entirely on national contract and tax law. Relevant to property developers and individuals reclassified as taxable persons, and more widely to any silent-contract or undeclared-supply assessment.

C-622/11 Pactor Vastgoed

Judgment · 10 October 2013 · Netherlands

Who bears the clawback on an adjusted deduction

The Directive precludes recovering sums due on adjustment of a deduction from anyone other than the taxable person who applied it. Designating the debtor is a substantive rule, not a procedural detail Member States may fix. Article 21 lists exhaustively when another person can be liable, and the joint and several liability option does not permit a separate liability. Neither Article 20(4) nor the Netherlands reverse charge derogation supports charging the purchaser for an acquisition to which it was extraneous. Relevant to property investors and developers, and to advisers on opted-to-tax land and building transfers, particularly in the Netherlands where the clawback provision was struck down.

C-210/11 Medicom and Maison Patrice Alard

Judgment · 18 July 2013 · Belgium

Rent-free occupation of company property by managers and the letting exemption

Without rent in money there is no letting. The exemption cannot apply, and treatment of the occupation as a benefit in kind for income tax purposes is irrelevant, since it is not shown that the managers gave up salary or that part of their work was consideration. Nor need the taxable person show any direct link between the private use and its taxable transactions. The national court must still verify, on all the evidence, whether the features of a letting are present. Confirms and extends Seeling for corporate owner-occupiers.

C-155/12 RR Donnelley Global Turnkey Solutions Poland

Judgment · 27 June 2013 · Poland

Place of supply of complex warehousing services

Such a complex storage service falls within Article 47 only where storage is the principal service of a single transaction and the recipient is given a right to use all or part of expressly specified immovable property. Absent that, for example where customers have no right of access to the part of the warehouse holding their goods, or the property is not a central and essential element, Article 44 applies. Repackaging is a separate principal supply where not necessary for better storage. For warehousing and third-party logistics operators, and their customers abroad, the contract turns on whether a right of use over identified space is granted.

C-125/12 Promociones y Construcciones BJ 200

Judgment · 13 June 2013 · Spain

Reverse charge on property sold in insolvency proceedings

The Court held that every sale of immovable property by a judgment debtor comes within "compulsory sale procedure", whether made in the liquidation of the debtor's assets or in insolvency proceedings preceding liquidation, provided the sale is necessary either to settle creditors' claims or to enable the debtor to re-establish its economic or professional activities. The Spanish text ("liquidación") is narrower than most language versions and does not govern. A strict reading of the derogation must not deprive it of effect. On a purchase of real estate from an insolvent Spanish seller, and elsewhere on the same reasoning, reverse charge liability runs from the moment insolvency proceedings open and not only once liquidation begins.

C-153/12 Sani treyd

Order · 21 March 2013 · Bulgaria

Building rights granted in exchange for construction make the tax chargeable at once

The Court holds that tax may become chargeable when the right is granted, provided all the relevant elements of the future supply are already known, so the services are precisely identified and the value of the right can be expressed in money. It is irrelevant that granting the right is an exempt transaction made by non taxable persons. Articles 73 and 80 do preclude a national rule imposing open market value in every barter, outside transactions between connected parties. A reasoned order under Article 99 of the Rules of Procedure that follows Orfey Balgaria closely.

C-532/11 Leichenich

Judgment · 15 November 2012 · Germany

Letting of a permanently moored houseboat as immovable property

The exemption applies. Where the houseboat is fixed by attachments not easily removable to the riverbank and bed, occupies a demarcated identifiable location and is used under the contract exclusively for the permanent operation of a restaurant-discotheque, it forms a functional and economic unit with the submerged and non-submerged ground. That is a single exempt supply, the landing stage being ancillary. Such a houseboat is not a vehicle. What matters is actual current function, not original use.

C-299/11 Gemeente Vlaardingen

Judgment · 8 November 2012 · Netherlands

Self-supply charge on goods improved by a third party on the taxable person's own land

The self-supply option covers not only goods produced entirely in-house but also goods constructed or improved by a third party using materials, including land, supplied by the business, and VAT may be charged on the aggregate of the transformation costs and the land value, measured by market value at the time of application. But no VAT may be charged on an element of value on which the taxable person has already paid VAT, and the charge cannot apply if the land falls within the exemption for land not built on that is not building land. Relevant to any exempt operator (local authorities, sports and leisure providers, healthcare, education, social housing) that refurbishes or develops its own land using contractors in a Member State applying the self-supply option.

C-392/11 Field Fisher Waterhouse

Judgment · 27 September 2012 · United Kingdom

Service charges under a commercial lease as part of a single exempt supply

The letting and the linked services may constitute a single supply for VAT purposes. A termination right for non-payment of the service charges supports that view but is not decisive. The fact that a third party could in principle supply the services does not prevent a single supply. Inclusion in the lease is likewise not decisive. Services which objectively could not be indivisible from or ancillary to the letting remain separate. Where some services are independent and taxable, an overall charge must be apportioned. Classification is for the national court. Landlords and tenants of commercial property, and their advisers, cannot treat service charges as automatically taxable merely because the services could have been bought from a third party, nor as automatically exempt because they sit in the lease.

C-259/11 DTZ Zadelhoff

Judgment · 5 July 2012 · Netherlands

Brokerage on share sales of property-owning companies

The exemption applies. Transactions designed to transfer, and which do transfer, shares are exempt share transactions even though in the final analysis they concern the immovable property held by those companies and its indirect transfer. The objective character of the transaction actually carried out governs, whatever the vendor's initial intention. The exclusion in the second indent is not applicable where the Member State has not exercised the Article 5(3)(c) option. Brokerage aimed at bringing the parties together, the broker having no interest of its own in the terms, is exempt "negotiation". Confirms that fee income of real estate brokers, corporate finance intermediaries and advisers on share deals in property-holding companies is exempt, with the input VAT consequences that follow, in Member States that have not enacted the Article 5(3)(c) equivalent (now Article 15(2) of the VAT Directive).

C-621/10 Balkan and Sea Properties and Provadinvest

Judgment · 26 April 2012 · Bulgaria

Open market value as the taxable amount for supplies between connected persons

The conditions in Article 80(1) are exhaustive. National legislation may not rely on that provision to make open market value the taxable amount outside the listed cases, in particular where the taxable person has a full right of deduction, since no evasion or avoidance risk arises there. Member States remain free to impose other anti-evasion obligations under Article 273. Article 80(1) may be relied on directly, and incompatible national provisions must be disapplied, leaving Article 73 to apply. Member States operating blanket connected-party valuation rules cannot apply them where both parties have full deduction rights.

C-436/10 BLM

Judgment · 29 March 2012 · Belgium

Private use of company property by staff and the letting exemption

The Court held that those provisions preclude such national legislation where the characteristics of a letting are absent. Seeling is not confined to natural persons. Article 6(2)(a) expressly covers use by a taxable person's staff and draws no distinction by legal form. Without rent, an agreed duration of enjoyment, a right of occupation and the exclusion of third parties, there is no exempt letting. It remains for the national court to verify whether a letting exists on the facts. Member States cannot deny deduction on mixed use immovable property held by companies by recharacterising rent free occupation by directors or employees as an exempt letting. Relevant to corporate property holdings, family companies granting usufructs, and advisers handling director accommodation.

C-153/11 Klub

Judgment · 22 March 2012 · Bulgaria

Deduction on capital goods not yet brought into use

A taxable person who acquires capital goods acting as such and allocates them to the assets of the business may deduct the VAT in the tax period in which the tax became chargeable, even if the goods are not immediately used for business purposes. Whether the person acquired the goods for the purposes of his economic activity is a question of fact for the national court, assessed on all circumstances including the nature of the asset, the interval before business use and steps taken to obtain the necessary authorisations, as is any fraud or abuse. Confirms that absence of immediate use, and even absence of a permit allowing use, does not of itself defeat deduction on capital goods.

C-530/09 Inter-Mark Group

Judgment · 27 October 2011 · Poland

Place of supply of fair and exhibition stands

All three heads may apply, depending on the facts. Article 56(1)(b) where the stand is designed or used for advertising, that is to convey a message about the exhibitor's goods or services or as an inseparable part of a campaign. Article 52(a) where it is designed and provided for one specific themed fair, or matches a model prescribed by the organiser. Article 56(1)(g) where temporary provision of the material elements for payment is the determining element, notably stands reused at events in several Member States. Never Article 45: no direct connection with immovable property. Stand builders, exhibition contractors and event agencies must classify each engagement rather than apply one place-of-supply rule across the business.

C-270/09 MacDonald Resorts

Judgment · 16 December 2010 · United Kingdom

Timeshare points schemes, when the supply occurs and where

The supply must be classified at the moment the customer converts his rights into an actual service, not when the Points Rights are bought: the elements needed for tax to become chargeable are not then known, so the prepayment rule does not apply. On conversion into hotel accommodation or temporary use of a property, the supply is connected with immovable property and taxable where the hotel or property is situated. Conversion into a right to occupy is a letting, but Member States may exclude it from exemption. Operators of points based holiday clubs, timeshare exchange businesses and resort groups must account for VAT by reference to each redemption, at the location of the property or hotel used, rather than at establishment on sale of the points entitlement.

C-37/08 RCI Europe

Judgment · 3 September 2009 · United Kingdom

Place of supply of timeshare exchange services

All three fee streams are consideration for a single service of facilitating exchange, and that service is sufficiently directly connected with immovable property. The place of supply is where the property over which the member concerned holds the timeshare right is situated, not where the operator is established. Where the operator buys in weeks from third parties to top up the pool, it receives nothing from those third parties and is not liable to VAT on that transaction. Timeshare exchange clubs and holiday ownership operators must localise membership, subscription and exchange fee income by reference to the location of each member's own timeshare property, not their own establishment.

C-572/07 RLRE Tellmer Property

Judgment · 11 June 2009 · Czechia

Cleaning of common parts as a supply separate from exempt letting

In circumstances such as those in the main proceedings, letting of immovable property and cleaning of its common parts are autonomous, severable transactions, so the cleaning falls outside Article 13B(b) and is taxable. The Court relied on the separate invoicing and on the fact that cleaning can be supplied in various ways (by a third party billing tenants directly, by the landlord's own staff, or by a cleaning firm). The second question therefore did not require an answer. Residential and commercial landlords who recharge service costs need to test each element rather than assume it is absorbed into the exempt rent.

C-151/08 Renta

Order · 27 November 2008 · Spain

Spanish transfer tax on property dealing is not a turnover tax

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.

C-451/06 Walderdorff

Judgment · 6 December 2007 · Austria

Grant of fishing rights is not a letting of immovable property

The grant of such a fishing right is not the leasing or letting of immovable property. Exemption requires all elements of the Community law concept of letting, including the right to occupy the property and to exclude all others. Here the club could only fish, and the grantor kept fishing rights for herself and a daily guest, so no exclusive occupation arose. The Court therefore did not need to decide whether such a contract relates to immovable property at all. The supply is taxable. Relevant to landowners, estates, agricultural and forestry businesses and angling or shooting clubs, and to anyone structuring grants of rights over land or water.

C-174/06 CO.GE.P

Judgment · 25 October 2007 · Italy

Concession of State-owned port property as exempt letting of immovable property

The Court held that the relationship is covered by the concept of leasing or letting of immovable property and so is exempt. Its substance, provision of a defined area for a period against payment with the right to occupy it and exclude others, is decisive. The administrative form of the grant and the below-value consideration are irrelevant. The consortium was not acting as a public authority, since it administered the property on its own account and made independent decisions, so the non-taxable person rule did not apply. Relevant to port authorities, airports and other public bodies granting concessions over State property, and to their concessionaires.

C-111/05 Aktiebolaget NN

Judgment · 29 March 2007 · Sweden

Supply and laying of an undersea fibre-optic cable, goods or services, and where taxed

A single, indivisible transaction, and a supply of goods, where the cable is transferred to the customer to dispose of as owner following functionality tests, the cable price clearly represents the greater part of total cost, and the supplier's services are confined to laying without altering the cable's nature or adapting it to the customer's specific requirements. Each Member State taxes pro rata to the length of cable in its territory, covering materials and laying services alike. No VAT on the parts in the exclusive economic zone, on the continental shelf or at sea. Relevant to contractors installing infrastructure that crosses borders.

C-166/05 Heger

Judgment · 7 September 2006 · Austria

Fishing permits as services connected with immovable property

Such a transfer is a supply of services connected with immovable property. Absent use of the Article 5(3) option, the transfer of fishing rights is a supply of services, not goods. A permanently delimited area of land, including one covered by water, is immovable property. Article 9(2)(a) is not a narrow exception to Article 9(1), but it requires a sufficiently direct connection. Here the specific stretch of water is a central and essential element of the supply and the place of consumption. Relevant to anyone selling rights of use over defined land or water.

C-184/04 Uudenkaupungin kaupunki

Judgment · 30 March 2006 · Finland

Adjustment of input tax where property moves from exempt to taxed letting

Adjustment of deductions on capital goods under Article 20 is mandatory, subject only to the Article 20(5) derogation, and is not an alternative to taxing private-use applications under Articles 5(6) and 6(2), which concern private use only. Adjustment applies where the goods were first used in non-taxable activity giving no deduction and later in taxable activity. Neither Article 13(C) nor Article 17(6) permits the six-month cut-off: Member States may set procedural conditions for exercising the option but not shorten the adjustment period. No temporal limitation. Property owners and public bodies letting immovable property in Member States operating an option to tax can recover pre-option construction and refurbishment VAT through the capital goods adjustment mechanism, notwithstanding domestic time limits tied to first use.

C-114/05 Gillan Beach

Judgment · 9 March 2006 · France

Place of supply of inclusive services provided by fair and exhibition organisers

The Court held that such an inclusive service falls within the first indent of Article 9(2)(c). A fair or show is a "similar activity". It involves complex, various services provided generally to a number of different recipients, at a specific event and in an easily identifiable place. Organisers' services relating to such activities are covered. Having answered on that basis, the Court declined to consider whether the service could also fall within any other Article 9(2) category. Fair, exhibition and trade show organisers are taxable where the event physically takes place, regardless of establishment.

C-246/04 Turn- und Sportunion Waldburg

Judgment · 12 January 2006 · Austria

Restricting the option to tax letting of immovable property by category of taxable person

Member States may differentiate by type of transaction or category of taxable person when granting the option to tax, but only if they respect the general objectives and principles of the Sixth Directive, in particular fiscal neutrality and the correct, straightforward and uniform application of the exemptions. Whether a blanket exemption of all transactions of non-profit-making sports clubs, denying them the option, exceeds that discretion is for the national court to decide. Confirms wide but not unlimited Member State discretion in shaping option-to-tax regimes for immovable property.

C-63/04 Centralan Property

Judgment · 15 December 2005 · United Kingdom

Capital goods adjustment where a building is disposed of by two linked supplies

Provided each transaction transfers the right to dispose of the property as owner under Article 5(1), a matter for the national court, both are supplies for Article 20(3) purposes, and the goods are treated for the rest of the adjustment period as used partly for taxable and partly for exempt activities in proportion to the respective values of the two transactions. The holding is confined to inextricably linked transactions, one exempt and one taxable. No need to consider abuse of rights. Apportionment by value applies on a capital goods disposal even though Article 20(3) contains no express apportionment mechanism and speaks of a single supply.

C-428/02 Fonden Marselisborg Lystbådehavn

Judgment · 3 March 2005 · Denmark

Letting of boat moorings and the parking of vehicles exclusion

Both the letting of water-based mooring berths and of land storage sites in the port are letting of immovable property. A clearly delimited, immovable part of the port basin qualifies, and occasional use of a berth by visitors while the lessee is away does not alter the relationship. However, "vehicles" in the parking exclusion is not to be read strictly and covers all means of transport, including boats, so such lettings fall outside the exemption and are taxable. Marinas, ports and boatyards in all Member States must treat mooring berth and winter storage lettings as taxable supplies rather than exempt property lettings, whether the berth is on water or on land, and regardless of the length of the letting.

C-284/03 Temco Europe

Judgment · 18 November 2004 · Belgium

What counts as an exempt letting of immovable property

They do, provided the contracts as actually performed have as their essential object the passive making available of premises for a payment linked to the passage of time. Neither a term unfixed at the outset, nor consideration reflecting other factors that are merely accessory, nor contractual restrictions such as shared parts or landlord access, defeats the exemption. If instead the arrangement amounts to a distinct service, it falls outside. The characterisation is for the national court on all the circumstances. Confirms that labelling an arrangement a licence, excluding national letting rules or omitting a fixed term will not secure taxable treatment where performance shows passive making available of space. Relevant to property owners recovering input VAT on refurbishment, intra-group occupation arrangements, serviced offices, business centres and storage.

C-269/03 Vermietungsgesellschaft Objekt Kirchberg

Judgment · 9 September 2004 · Luxembourg

Prior approval as a condition of opting to tax property letting

Those provisions permit such a condition. The option to tax is a derogation from the exemption in Article 13(B)(b), so Member States have a wide discretion to fix the details of its use. A prior approval procedure is such a detail and allows the statutory conditions, notably the tenant's status, to be verified. The absence of retroactivity is not disproportionate, because the taxpayer could have obtained full deduction simply by declaring before the letting began, and non-retroactivity encourages timely declarations. Relevant to property developers, landlords and their advisers in Member States operating an opt-to-tax regime with a formal notification or approval step.

C-487/01 Gemeente Leusden and Holin Groep

Judgment · 29 April 2004 · Netherlands

Withdrawal of the option to tax property lettings and capital goods adjustments

Withdrawal of the option is permitted and may carry with it adjustment of deductions on let immovable property under Article 20(2), which is not an exhaustive list and covers legislative change. Adjustment may arise from circumstances outside the taxpayer's control. The Member State must, however, respect legitimate expectations in the implementing arrangements, though repeal of advantageous legislation is not in itself a breach. Article 5(7)(a) concerns application of goods for business purposes and cannot be used for such a legislative withdrawal. Landlords and developers who deducted input VAT on the basis of an opted-to-tax letting cannot resist adjustment merely because the option was removed by law rather than by their own choice. Relevant to property funds, local authority sports and leisure lettings, and sale-and-leaseback style structures relying on the option.

C-275/01 Sinclair Collis

Judgment · 12 June 2003 · United Kingdom

Vending machine siting agreements and the letting of immovable property exemption

It is not a letting. Exemption requires the passive provision, for an agreed period and for payment, of a right to occupy defined property as if owner and to exclude others. Here no precisely defined area was allotted, the machines could be moved at the site owner's wish, and the operator controlled access only to the machine itself, within opening hours. Occupation of space was merely the means of delivering the real supply. An exclusive right to sell cigarettes on the premises. Confirms that machine siting, concession and space sharing arrangements are taxable services rather than exempt lettings where no defined area is allotted and the recipient cannot control access to it. Relevant to vending, ATM, gaming machine, photo booth and similar concession operators and to pub, hotel, retail and leisure site owners.

C-269/00 Seeling

Judgment · 8 May 2003 · Germany

Private use of a building held wholly as business assets

Those provisions do not allow that treatment. The private use of a dwelling in a building fully allocated to business assets is a taxable deemed supply of services, not an exempt letting. There is no rent, no agreed duration of the right of occupation and no right to exclude third parties. Article 13B(b) cannot be applied by analogy. Any resulting untaxed final consumption, given the limited adjustment period, is a deliberate legislative choice and does not justify a broad reading of the exemption.

C-315/00 Maierhofer

Judgment · 16 January 2003 · Germany

Letting of prefabricated buildings as immovable property

Such a letting is exempt. What matters is that the structures are fixed to or in the ground and cannot be easily dismantled or easily moved. They need not be inseverably fixed, and the lease term and intended removal and re-use are not decisive. National civil law classification cannot govern the Community concept. Whether the lessor provides the land as well as the building is irrelevant. Classification turns on the essential features of the transaction, however it is presented. Relevant to providers of modular and prefabricated accommodation, site cabins, temporary schools, hospitals and worker or refugee housing, and to their landlords.

C-108/99 Cantor Fitzgerald International

Judgment · 9 October 2001 · United Kingdom

Reverse premium paid to an incoming tenant on assignment of a lease

Such a supply is not exempt under Article 13B(b). The incoming tenant made an identifiable taxable supply under Article 2(1) by agreeing to assume the lease obligations. The cash payment by the outgoing tenant was mere consideration. Article 13B(b) covers the grant of occupation rights by the landlord, not transactions merely based on or ancillary to a lease and not effected by the landlord. Lubbock Fine is confined to a tenant surrendering occupation back to its own landlord. Fiscal neutrality does not widen the exemption where economically equivalent alternatives exist. Confirms that the direction of payment determines the VAT treatment on lease assignments. Relevant to landlords and property occupiers exiting over-rented leases.

C-326/99 Goed Wonen

Judgment · 4 October 2001 · Netherlands

Grant of a usufruct treated as exempt letting of immovable property

Neither provision precludes the Dutch rules. Member States may attach conditions when exercising the Article 5(3) option, including a value threshold, even if rarely met in practice, provided the nature of the option is not fundamentally altered. Leasing and letting is an autonomous EU concept, broader than national civil law. A right in rem conferring, for an agreed period and for payment, the right to occupy property as owner and exclude others shares the essential characteristic of letting, so it may be exempted. Confirms that usufruct, emphyteusis and similar rights in rem over immovable property can be captured by the exemption for letting, defeating structures in which an exempt or non taxable body (housing associations, hospitals, banks, insurers, municipalities) grants such a right at below cost to a related entity to unlock input tax on construction.

C-358/97 Commission v Ireland

Judgment · 12 September 2000 · Ireland

VAT on road and bridge tolls charged by private operators

Providing road access for a toll is an economic activity and a supply for consideration. There is a direct link between the road use and the toll. Article 4(5) requires both action as a public authority and a body governed by public law. The Irish operators were private-law traders, so it did not apply. Article 13B(b) did not cover the tolls because the parties agreed no duration of enjoyment, an essential element of letting. Own resources recoverable only from the 1994 budgetary year, by analogy with the four-year correction rule. Confirms that infrastructure charges levied by concessionaires and other private operators are taxable, whatever the statutory framework or public interest character of the activity.

C-359/97 Commission v United Kingdom

Judgment · 12 September 2000 · United Kingdom

VAT treatment of road and bridge tolls

Tolling is an economic activity and a supply of services for consideration, there being a direct link between access and the toll. The Article 4(5) exclusion cannot apply where the operator is a private law trader, and the Commission had not shown that public bodies operated on the same terms as private traders. No letting exemption: the parties agree no duration of enjoyment, an essential element of a letting. Own resources recoverable only from the 1994 budgetary year, by analogy with the four year correction rule. Confirms that toll charges for road and bridge access are taxable supplies unless made by a body governed by public law under a special legal regime, so concession structures matter.

C-12/98 Amengual Far

Judgment · 3 February 2000 · Spain

Taxation of lettings of business premises as the general rule

The Court held that Article 13B(b) allows Member States, by means of a general rule, to subject lettings of immovable property to VAT and, by way of exception, to exempt only lettings used for dwelling purposes. Member States have wide discretion under Articles 13B(b) and C as to whether such transactions are taxed or exempt, and the drafting route chosen to reach the permitted result is immaterial. No answer was needed on direct effect. Confirms that the Directive binds as to result, not legislative technique.

C-381/97 Belgocodex

Judgment · 3 December 1998 · Belgium

Withdrawal of the option to tax property lettings

Those provisions do not prevent a Member State from abolishing the right of option. Member States have a wide discretion under Article 13B and C, unlimited in time and unconstrained by an earlier contrary decision, so a right of option once introduced may be revoked and the exemption restored. Fiscal neutrality does not make the choice irreversible, and the Article 28 case law barring reintroduction of abolished transitional exemptions does not transpose. Whether retroactive repeal of a law whose implementing decree was never adopted breached legitimate expectations or legal certainty is for the national court. Confirms that an option to tax immovable property lettings is a policy lever Member States may pull in either direction, so property investors and landlords cannot treat the availability of an option as a settled entitlement when modelling recovery on development and renovation costs. Relevant to advisers on real estate structures, and to anyone with deductions claimed under an option later repealed with retroactive effect or never brought into operative form.

C-60/96 Commission v France

Judgment · 3 July 1997 · France

Extension of the immovable property letting exemption to movable property

The Court declared that France had failed to fulfil its obligations under Article 2 of the Sixth Directive. The Article 13B(b) exemption is restricted exclusively to the letting of immovable property and cannot be extended to movable property. The infringement was assessed by reference to the position at the expiry of the reasoned opinion period, so the later rescission of the circular and the 1995 legislation could not be taken into account. France paid the costs. Confirms that the letting exemption cannot be stretched to cover movable items, however residential their use in practice. Relevant to campsite, holiday park, houseboat and mobile home operators and their advisers.

C-63/92 Lubbock Fine

Judgment · 15 December 1993 · United Kingdom

VAT treatment of consideration for the surrender of a lease

The exemption for letting of immovable property covers the surrender of a lease by a tenant to his immediate landlord. Where a transaction falls within an exemption, a change in the contractual relationship, including termination for consideration, falls within it too. Member States may exclude certain types of letting from exemption, but cannot use that power to tax the termination of a lease whose grant was compulsorily exempt. The relations created by a lease cannot be broken up. The third question did not arise. Establishes that payments for varying or terminating an exempt lease follow the VAT treatment of the lease itself, so reverse surrender premiums paid by landlords to exempt tenants cannot be taxed by domestic exclusion. Relevant to landlords, tenants and their advisers negotiating lease surrenders, break payments and restructurings, and to input tax recovery on associated costs.

C-186/89 Van Tiem

Judgment · 4 December 1990 · Netherlands

Grant of building rights as an economic activity

Granting building rights for a specified period against consideration (here 18 years for an annual sum) is exploitation of tangible property for income on a continuing basis, and so an economic activity. "Exploitation" covers all transactions, whatever their legal form, seeking continuing income from the property. Where the Article 5(3)(b) option has been exercised, "transfer" in Article 5(1) includes the creation of such a right in rem. Taxable person status depends solely on Article 4, irrespective of whether that option was taken. Confirms that owners granting long leasehold-type rights in rem over land are carrying on an economic activity and can therefore be taxable persons with deduction rights, even where the grant is a one-off arrangement with a related company. Relevant to property developers, landowners and their advisers in Member States using the Article 5(3)(b) option, where such grants are treated as supplies of goods.

C-320/88 Shipping and Forwarding Enterprise Safe

Judgment · 8 February 1990 · Netherlands

Supply of goods without transfer of legal ownership

Supply of goods means the transfer of the right to dispose of tangible property as owner, even where legal ownership is not transferred. The concept is autonomous and does not depend on national rules governing transfer of ownership, since a uniform definition of taxable transactions would otherwise be undermined. The Court declined to apply that test to the contract before it. It is for the national court to decide, on a comprehensive appraisal of the facts, whether the right to dispose as owner has passed. The foundational authority on when a supply of goods occurs.

C-173/88 Skatteministeriet v Henriksen

Judgment · 13 July 1989 · Denmark

Letting of closed garages and the parking exclusion from the property exemption

The exclusion covers all places designed for parking vehicles, closed garages included. Language differences preclude a narrow textual reading and an exception to an exemption is not construed restrictively. But a parking letting stays exempt where it is closely linked to an exempt letting of property for another purpose so that the two form a single economic transaction. Same complex, same landlord, same tenant. Member States must tax parking lettings falling outside that link. They cannot exempt them. Sets the accessory-letting test still used for parking in residential and commercial developments.

C-50/87 Commission v France

Judgment · 21 September 1988 · France

Limiting deduction by reference to the level of rent charged

France had failed to fulfil its obligations. Where the option to tax is exercised, the landlord is a taxable person and must be able to deduct all input tax immediately. Limitations affect the tax burden and are permitted only where the Directive expressly provides. Article 2 of the First Directive states only the principle of deduction. Anti-evasion measures require the Article 27 procedure. Lettings whose rent means they amount to a concession rather than an economic activity are dealt with by the Article 20 adjustment mechanism. Confirms that once a Member State opens the option to tax property lettings it cannot claw back deduction through a rent-to-value ratio or similar proportionality test. Relevant to property investors, group letting structures and public bodies letting at below-market rents, and to advisers reviewing national deduction caps.

Related topics

Right of deduction · Adjustment of deductions · Exemptions · Supply of goods · Supply of services · Origin and scope of right of deduction · Supply of goods or services · Taxable transactions · Economic activity · Harmonisation of fiscal legislation