ECJ C-213/24 (Grzera) – Judgment – Selling land through an agent can classify individuals as taxable persons

On April 3, 2025, the ECJ released its judgment in the case C-213/24 (Grzera).

Context: Reference for a preliminary ruling – Common system of value added tax (VAT) – Directive 2006/112/EC – Article 9(1) – Concepts of ‘taxable person’ and ‘economic activity’ – Sale of agricultural land for residential development – Preparation for sale by an agent acting as a professional operator – Legal community of property between spouses who are owners

Summary

Context of the Case: The case involves E.T. and W.T., spouses selling agricultural land through an agent, questioning their VAT liability under EU law.
Key Legal Provisions: The Court interpreted Article 9(1) of the VAT Directive, defining who qualifies as a taxable person and what constitutes an economic activity.
First Finding: Individuals selling land via a professional agent can be considered taxable persons engaging in economic activities, emphasizing the independence of their actions.
Second Finding: The legal community of co-owner spouses can be regarded as a single taxable entity, provided they act jointly in sales, sharing the economic risks involved.
Overall Implication: This ruling clarifies the VAT obligations for individuals involved in property sales and the treatment of co-owned property under EU VAT law.

Articles in the EU VAT Directive

Articles 2(1) and 9(1) of Council Directive 2006/112/EC

Article 2
1. The following transactions shall be subject to VAT:
(a) the supply of goods for consideration within the territory of a Member State by a taxable person acting as such;
(b) the intra-Community acquisition of goods for consideration within the territory of a Member State by:
(i) a taxable person acting as such, or a non-taxable legal person, where the vendor is a taxable person acting as such who is not eligible for the exemption for small enterprises provided for in Articles 282 to 292 and who is not covered by Articles 33 or 36;
(ii) in the case of new means of transport, a taxable person, or a non-taxable legal person, whose other acquisitions are not subject to VAT pursuant to Article 3(1), or any other non-taxable person;
(iii) in the case of products subject to excise duty, where the excise duty on the intra-Community acquisition is chargeable, pursuant to Directive 92/12/EEC, within the territory of the Member State, a taxable person, or a non-taxable legal person, whose other acquisitions are not subject to VAT pursuant to Article 3(1);
(c) the supply of services for consideration within the territory of a Member State by a taxable person acting as such;
(d) the importation of goods.

Article 9
1. ‘Taxable person’ shall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity.
Any activity of producers, traders or persons supplying services, including mining and agricultural activities and activities of the professions, shall be regarded as ‘economic activity’. The exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis shall in particular be regarded as an economic activity.

Facts

On 21 April 1989, E.T. (‘the applicant’), together with her husband W.T., acquired the plots of land at issue in the main proceedings under an agreement transferring the ownership of a farm to a successor. During the examined period, the applicant and her husband sold 19 undeveloped plots of land located in the village of Ł. No VAT was charged on any of those transactions.
On 11 January 2011, the applicant and her husband (‘the principals’) entered into a contract of mandate with the B.A.Z. company (‘the contractor’) concerning cooperation in the development and sale of land located in Ł., municipality of Z., which was intended for residential housing or residential housing and service development. The agreement covered specific plots of land. The plots were to be sold by the end of 2017. Under the contract, the contractor was granted a power of attorney to take all necessary actions. In order to implement the project, the principal commissioned the contractor’s company to perform a number of activities, including:
– planning the division of the aforementioned land property into smaller plots, and carrying out the necessary actions in that regard resulting in formal entries being made in the land registry and in the land and mortgage register;
– connecting the property to utilities, cleaning up the site, and removing trees and shrubs;
– obtaining the relevant permits and decisions from the competent authorities and institutions to carry out the aforementioned works;
– advertising the plots to potential buyers;
– preparing the necessary documents relating to the property in order for the principal to enter into notarised agreements with persons interested in acquiring the plots in question.
The contract also stipulated that the contractor would bear the costs of performing the mandate. In addition, the contractor was to be granted a notarised power of attorney to appear before institutions and administrative bodies in connection with the subject matter of the contract. The contractor’s remuneration was determined as an amount representing the excess of the sale prices established in the contract – either the total amount of that excess or a certain percentage according to the rules established for each individual plot – and was to be paid on the basis of a VAT invoice issued by the contractor for the gross amount of remuneration.
By Annex 1 to the aforementioned contract, concluded on 25 May 2015, the deadline for the sale of the plots was extended until the end of 2021.
5 In the view of the tax authorities, the sale of the immovable property by the applicant constituted an economic activity, and not the management of personal assets, and was therefore subject to VAT. Accordingly, the first–instance authority determined the applicant’s VAT liability for the sale of the plots in an amount corresponding to the applicant’s share [in those plots] for individual months from December 2017 to July 2021. An analogous decision was issued with respect to the applicant’s husband. By its decision of 19 December 2022, the DIAS, as the second–instance tax authority, upheld the decision of the first–instance authority.

Questions

1. Must the provisions of Directive [2006/112], and in particular Articles 2(1) and 9(1) of that directive, be interpreted as meaning that a person who sells an
immovable property, which was not previously used for economic activity, and commissions the preparation for sale [of that property] to a professional trader who subsequently, as that person’s agent, undertakes a series of organised activities with the aim of dividing the property and selling it for a higher price, independently carries out an economic activity?
2. Must the provisions of Directive [2006/112], and in particular Article 9(1) of that directive, be interpreted as meaning that each of the cooperating spouses is to be considered a person who independently carries out an economic activity?

AG Opinion

None

Decision (Unofficial translation)

1. Article 9(1) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax,

must be interpreted as meaning that:

A person who sells land that is initially part of his or her personal assets by entrusting the preparation of the sale to a professional operator, who, in his capacity as agent for that person, may be considered to be a taxable person for value added tax (VAT) carrying out an economic activity independently, for the purpose of such sale, means similar to those deployed by a producer, trader or service provider within the meaning of that provision.

(2) Article 9(1) of Directive 2006/112

must be interpreted as meaning that:

in the context of a sale transaction classified as an economic activity within the meaning of that directive, there is no preclude the legal community formed by co-owner spouses from being regarded as a taxable person carrying out an economic activity independently, if those spouses appear, vis-à-vis third parties, to have carried out together the transaction of selling land belonging to that community, constituting an economic activity, and that the Community bears the economic risk associated with the exercise of that activity.

Source

Curia

Reference to other ECJ Cases

Commission v Greece (C-260/98) – This case is cited to illustrate the broad definition of ‘taxable person’ and ‘economic activity’ under Article 9(1) of the VAT Directive, emphasizing the independence required in carrying out economic activities.
Słaby and Others (C-180/10 and C-181/10) – This case is referenced regarding the criteria for determining whether a transaction constitutes an economic activity, particularly in the context of marketing land.
Trgovina Prizma (C-331/14) – Cited to reinforce the understanding of what constitutes an economic activity, particularly regarding real estate transactions.
AJFP Sibiu and DGRFP Brașov (C-655/19) – This case is mentioned concerning the classification of the sale of land and the criteria for determining economic activities.
Rēdlihs (C-263/11) – Cited to underscore that the initial purpose for which property was acquired does not preclude it from being used for economic activities later.
Nigl and Others (C-340/15) – This case is referenced in the context of assessing whether a person carries out an economic activity independently and the implications for VAT liability.
Valstybinė mokesčių inspekcija (C-312/19) – Cited to emphasize the need for uniform interpretation of taxable person status across Member States.
Dyrektor Izby Skarbowej w L. (C-697/20) – This case is referenced regarding the independent economic activities of co-owners and the implications for VAT.