Supply of a building or parts thereof 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 2012 to 2023.

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Provisions these cases interpret most

Article 12 of Directive 2006/112/EC Taxable persons · 2 of these cases
Article 135 of Directive 2006/112/EC Exemptions for other activities · 2 of these cases
Article 4 of Sixth Directive 77/388/EEC Taxable persons · 2 of these cases
Article 13 of Sixth Directive 77/388/EEC Exemptions · 2 of these cases
Article 137 of Directive 2006/112/EC Exemptions for other activities · 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-239/22 État belge and Promo 54

Judgment · 9 March 2023 · Belgium

Converted buildings and the first occupation test where no national implementing rules exist

The Court held that the exemption applies to a building first occupied before conversion even where the Member State has not adopted such detailed rules. But the absence of binding national rules has no direct effect. Liability follows from the added value generated and from the Court's own definition, so where a building has undergone substantial modifications intended to change its use or alter considerably the conditions of its occupation, an interpretation of national law consistent with the Directive leads to refusal of the exemption. Developers and their advisers cannot rely on a Member State's failure to legislate quantitative or other conversion thresholds to secure exemption on the sale of heavily renovated property.

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-251/16 Cussens and Others

Judgment · 22 November 2017 · Ireland

Direct application of the abuse of rights principle without national transposition

The prohibition of abuse is a general principle of EU law, not a directive provision, so it needs no transposition and may be applied directly to deny exemption, including to pre Halifax transactions. Legal certainty and legitimate expectations do not bar this and an abuser cannot invoke them. Tax on the remaining transactions must rest on national law, not the Directive. The essential aim is assessed by reference to the leases in isolation. An advantage is contrary to Article 13B(g) where the property was not actually used by owner or tenant before sale. Confirms that taxpayers cannot shelter behind the absence of a domestic GAAR. Relevant to anyone assessing historic new build disposal structures and to structures lacking commercial reality between connected parties.

C-308/16 Kozuba Premium Selection

Judgment · 16 November 2017 · Poland

Meaning of first occupation and conversion of buildings

First occupation is an autonomous EU concept meaning first use by the owner or tenant. Member States may not add a condition, absent from the Directive, that it arise in a taxable transaction. A 30% of initial value threshold for upgrades is permissible, but only if upgrade is read as conversion, meaning substantial modifications intended to change the use or considerably alter the conditions of occupation. Whether the works met that qualitative test is for the national court.

C-326/11 J.J. Komen en Zonen Beheer Heerhugowaard

Judgment · 12 July 2012 · Netherlands

Supply of a building part-way through transformation into a new building

The exemption applies. Where, at the time of supply, the old building had undergone only partial demolition and was at least in part still used as such, with the construction work carried out entirely by the purchaser afterwards, there is no supply before first occupation within Article 4(3)(a). The parties' declared intention to create a new building counts only within an overall assessment supported by objective evidence, notably how far the vendor's work had advanced and the use of the property at that date. Relevant to property developers, investors and their advisers structuring sales of buildings destined for redevelopment, particularly in the Netherlands where VAT liability drives the transfer duty exemption.