- Classification of Transactions: The Spanish Tax Court ruled that a sale and lease-back transaction between an entity and a bank is classified as a financing transaction rather than a supply of goods (real estate) for VAT purposes, emphasizing that the primary intent was to secure financing.
- Conditions of the Transaction: The court noted that the transfer of real estate to the bank was contingent upon subsequent leasing with a purchase option, indicating that ownership transfer was not the true purpose. The entity retained usage and responsibility for the property, while the bank did not assume risks or benefits associated with it.
- Implications for VAT Treatment: As a result of this ruling, VAT cannot be charged on the sale of the real estate, and any VAT initially deducted cannot be adjusted under the capital goods scheme. This decision aligns with the EU Court of Justice’s precedent (case C-201/18) and serves as binding doctrine for tax authorities, guiding businesses in the VAT treatment of similar transactions.
Source: jdsupra.com
