Comments on ECJ C-243/23: ECJ to reassess VAT deduction rules for improvement works

The European Court (EC) is currently considering a case (C-243/23 Drebers) that could have significant implications for Belgian VAT rules related to adjustment periods for renovation works in the real estate sector.
The case questions the Belgian regulation that applies a 15-year adjustment period only to renovations meeting the criteria of a “new building” under national law, while the standard adjustment period is 5 years.
The taxpayer argues that the strict application of the concept of “immovable investment goods” in national law contradicts the VAT Directive and that the economic life of a thoroughly renovated building should be considered for its classification as an immovable investment good.
The taxpayer claims that the principle of tax neutrality requires that all immovable investment goods with comparable economic lives should be treated equally under VAT, including the same adjustment period.
The Court of Appeal has referred preliminary questions to the European Court of Justice (CJEU) to determine whether the Belgian regulation is compliant with EU law and whether the taxpayer can directly rely on the VAT Directive.

The outcome of this case could potentially lead to significant changes in the Belgian VAT rules for determining adjustment periods for renovation works, impacting the VAT landscape in the real estate sector in Belgium and potentially beyond. The CJEU will ultimately decide on the matter.

Source VATconsult