Immovable property acquired as capital goods EU VAT case law

5 cases of the Court of Justice and the General Court of the European Union on this point of VAT law, from 2014 to 2024.

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Provisions these cases interpret most

Article 187 of Directive 2006/112/EC Adjustment of deductions · 4 of these cases
Article 184 of Directive 2006/112/EC Adjustment of deductions · 3 of these cases
Article 189 of Directive 2006/112/EC Adjustment of deductions · 3 of these cases
Article 168 of Directive 2006/112/EC Origin and scope of right of deduction · 3 of these cases
Article 167 of Directive 2006/112/EC Origin and scope of right of deduction · 3 of these cases
Article 185 of Directive 2006/112/EC Adjustment of deductions · 2 of these cases
Article 15 of Directive 2006/112/EC Supply of goods · 2 of these cases
Article 190 of Directive 2006/112/EC Adjustment of deductions · 1 of these cases

The 5 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.

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-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-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-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-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.