- Court Judgment Overview: The Court of Justice ruled on 12 September 2024 that major renovations can qualify as “new buildings” for VAT purposes, thus allowing the extended VAT adjustment period of 15 years to apply, particularly when renovations significantly alter the building’s use or conditions.
- VAT Deduction Rules: Standard VAT adjustment periods last five years for business assets, but an extended 15-year period applies to immovable assets, which include buildings and rights related to them. This distinction is crucial for businesses undertaking significant renovations.
- Case Background: The Ghent Court of Appeal sought clarification from the Court of Justice regarding whether the 15-year adjustment period applies to renovations that do not result in a new building, highlighting inconsistencies in how renovations are treated under VAT law.
- Fiscal Neutrality Principle: The Court emphasized the importance of fiscal neutrality, asserting that similar economic impacts of renovations and new constructions should be treated equally under VAT regulations to prevent unjust distinctions.
- Potential Tax Implications: If Belgian tax authorities align with this ruling, taxpayers may recover additional VAT on renovations previously classified as services. However, this could also lead to the need for partial VAT reimbursement in certain situations, such as the sale of renovated properties. The response of the Belgian tax administration to this ruling remains to be seen.
Source Imposto
See also
- Join the Linkedin Group on ECJ VAT Cases, click HERE
- VATupdate.com – Your FREE source of information on ECJ VAT Cases
