The European Court of Justice received questions in case C-405/19 (X Aannemingen bvba) on 26 April 2019. The questions asked in this case relate to the extension of the VAT exemption for immovable property.
Unofficial translation
Facts (simplified):
X Aannemingen Bvba constructs and sells apartment buildings. For this, the she builds apartment buildings on land owned by third parties. The apartments are then offered for sale by X in which she incurs publicity and administrative costs and pays commissions to brokers.
With the deed of sale of the apartments, X acts as the seller of the building while the landowner acts as the seller of the land. X fully deducted the VAT on publicity and administration costs and brokerage fees.
The Belgian tax authorities argue that X should only be allowed to recover input VAT, as far as the sale of the buildings is concerned, and not the sale of the land. The first is subject to VAT, as it concerns “new immovable property”, the latter is VAT exempt.
Preliminary questions:
1. Is Article 17 of Directive No 77/388 / EEC to be interpreted as meaning that if an expense also benefits a third party – as is the case when a promoter pays publicity, administrative and brokerage fees when selling apartments which also benefit landowners – this does not prevent the VAT on those costs from being deducted in full, provided that it is established that there is a direct and immediate link between expenditure and economic activity of the taxable person and that the benefit for the third party is secondary to the needs of the business of the taxable person?
2. Does this principle also apply when it is not a matter of general costs but of costs that can be attributed to specific transactions, whether or not subject to VAT, at a later stage, such as the sale of apartments on the one hand and land on the other?
3. Does the fact that the taxpayer has the option / the right to partially pass on the expense to the third party who benefits the expense but does not, has an impact on the question of the deductibility of VAT on these costs ?
Source: MinBuza (Dutch)
