Land with only foundations is 'building land' subject to VAT.

European Court of Justice (Seventh Chamber) · 7 november 2024 · Judgment · Preliminary ruling

( Reference for a preliminary ruling – Common system of value added tax (VAT) – Directive 2006/112/EC – Supply of land that has only the foundations of residential housing structures in place – Classification – Article 12 – Concepts of ‘building land’ and ‘building or parts of a building’ – Criterion of the ‘first occupation’ of a building )

Rechtsvraag

Whether the supply of land that, at the date of supply, has only the foundations of residential housing structures in place constitutes a supply of 'building land' within the meaning of Article 12 of the VAT Directive.

Regel

  • Article 12(1)(a) and (b), Directive 2006/112/EC (VAT Directive) (Defines taxable transactions related to buildings and building land)
  • Article 135(1)(j) and (k), Directive 2006/112/EC (Exempts certain transactions involving buildings and land from VAT)

Conclusie

The court concluded that under Article 12 of the VAT Directive, the supply of land that, at the date of supply, has only the foundations of residential housing structures in place constitutes a supply of 'building land'. Therefore, it is subject to VAT, as it does not meet the exemption criteria for buildings.

Tijdlijn

  1. 2006 NSS acquired an immovable property used until that time as a camping site.
  2. 2008 NSS divided the immovable property into several plots.
  3. 01-2009 Connections for electricity, water, heating, and sewerage were installed on some plots by NSS.
  4. Autumn 2010 NSS began casting foundations on some plots based on building permits obtained from the competent authority.
  5. 01-01-2011 The foundation works were completed on some plots before this date.
  6. 01-01-2015 NSS transferred ownership of 16 plots with foundations in place to a company governed by Danish law.
  7. 28-09-2017 SKAT (Tax Authority, Denmark) ordered NSS to pay VAT on the supply of the 16 plots with foundations in place, considering it a supply of 'building land'.
  8. 01-09-2021 The National Tax Tribunal found that the supply of the 16 plots did not constitute a transaction subject to VAT, thereby exempting NSS from VAT.
  9. 01-12-2021 The Ministry of Taxation brought an action against the decision of the National Tax Tribunal before the Retten i Aalborg.
  10. 20-09-2023 The Vestre Landsret (High Court of Western Denmark) referred the case to the European Court of Justice for a preliminary ruling.
  11. 26-09-2023 The European Court of Justice received the request for a preliminary ruling from the Vestre Landsret.
  12. 07-11-2024 The European Court of Justice issued a judgment interpreting Article 12 of Council Directive 2006/112/EC as meaning that a supply of land with only foundations constitutes 'building land'.