- If taxpayers actively develop land (e.g., obtaining permits, marketing), the sale is subject to VAT, indicating engagement in business activities rather than private property management.
- A married couple, as joint owners of the land, can be considered a single VAT taxable person if they act together and their joint property bears the economic risk of their activities.
- The determination of who is a VAT taxable person requires assessing whether a specific spouse or the couple collectively conducts independent economic activity, based on their actions and the risk associated with the property.
Source Pawel Mikula
- CJEU Ruling on Spousal VAT Status: The Court of Justice of the European Union (CJEU) ruled that spouses selling a plot of land should be treated as a single VAT taxpayer rather than two separate taxpayers, particularly when the land is part of their joint property. This ruling is expected to necessitate amendments to the VAT Act and updates to the tax office’s IT systems.
- Proxy and VAT Implications: The ruling clarified that a person selling real estate who employs a proxy to enhance the property for sale can still be considered a VAT taxpayer. This implies that individuals engaging in real estate transactions through representatives may be deemed to have conducted economic activity subject to VAT, depending on the nature of the services provided.
- Need for Regulatory Changes: The CJEU’s decision highlights inconsistencies in how different tax authorities treat VAT liability for spouses selling joint property, necessitating legislative changes to clarify their status as a single taxpayer. Additionally, adjustments to the VAT Act are required to align with this ruling and address the complexities related to the sale and leasing of real estate by married couples.
Source Prawo
See also
Other Newsletters
- The Court of Justice of the European Union ruled that the sale of immovable property from private assets can lead to VAT liability if the sale is organized by a professional entrepreneur using means similar to those of a manufacturer, trader, or service provider.
- E.T. and W.T., owners of agricultural land, converted the land into building plots and instructed B.A.Z. to sell them. The Polish tax authorities consider these sales as an economic activity subject to VAT, leading to a preliminary ruling request.
- The Court also ruled that the statutory community of property formed by co-owning spouses can be regarded as a taxable person independently carrying out an economic activity, especially if they jointly sell the land and bear the associated economic risk.
Source Taxlive
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