Real Estate

New questions to CJEU: towards a broader concept of fixed establishment for VAT purposes?

A Romanian Court recently sought a preliminary ruling from the Court of Justice of the European Union (‘CJEU”) about the concept of fixed establishment for VAT purposes in the Berlin Chemie case (C-333/20). This case again shows that the concept of fixed establishment for VAT purposes is evolving.

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CJEU in A Oy case: co-location services do not constitute the leasing of immovable property, nor any other immovable property service

On July 2, 2020 the Court of Justice of the European Union (‘CJEU’) rendered judgment in the A Oy case (C-215/19). The case concerned whether co-location services must be regarded as the leasing of immovable property or as another immovable property service. In many EU Member States the VAT treatment of co-location services is not uniform and this judgment thus provides practical guidance.

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Possibility to recover VAT on running costs for vacant property extended

On June 26, 2020 the Supreme Court ruled that the VAT on running costs (‘instandhoudingskosten’) for a vacant office building is deductible, even if the owner cannot prove, on the basis of objective information, their intention to lease out the property subject to VAT. This judgment has an important outcome for the real estate practice.

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Transfer of (short-term) leased building by a developer not a transfer of a going concern for VAT purposes

In its judgment of May 15, 2020, the Supreme Court upheld the decision by the Court of Appeals. The building in question was leased on a VAT-exempt basis. As a result of this judgment, parties will be confronted with a higher amount of non-recoverable VAT.

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New preliminary ruling question about the ‘fixed establishment’ concept for VAT purposes

On December 20, 2019 the Austrian Bundesfinanzgericht asked the Court of Justice of the European Union for a preliminary ruling on the concept of a ‘fixed establishment’ in the Titanium Ltd case (C-931/19). The case is not only relevant for property letting companies, but potentially also for all VAT taxable persons with foreign activities, as it may provide a more detailed interpretation of the EU concept of fixed establishment.

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VAT recovery based on actual use permitted for bank

On March 27, 2020 the Court of Appeals Den Bosch rendered an interesting judgment about the recovery of VAT in a case concerning a financial institution. The Court ruled that the bank’s ‘actual use method’ had been sufficiently substantiated.

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Acquisition of only the legal ownership of shares in real estate legal entities is not subject to real estate transfer tax

The judgment rendered by the Court of Appeals ‘s-Hertogenbosch could also be important in practice with regard to shares in real estate legal entities that are acquired by investment funds without legal personality.

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Supreme Court: 2% real estate transfer tax more likely on offices converted to apartments

This is a favorable outcome for the real estate market. The acquisition of (an apartment right in) a converted building intended for residential use is more likely to be subject to 2% rather than 6% real estate transfer tax.

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CJEU: VAT payable on assignment of a debt recognized in enforcement proceedings

On October 17, 2019, the Court of Justice of the European Union (‘CJEU’) rendered judgment in the Paulo Nascimento Consulting case (no. C-692/17) concerning the VAT treatment of the assignment of a debt that had been recognized in enforcement proceedings. The CJEU ruled that such an assignment was subject to VAT. 

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