Update

Christiaan Cornet

Tax director

12 jun. `24

In our previous news articles, we frequently reported on the sale of leased real estate and its implications for VAT. In this article, we briefly revisit an earlier article and provide you with a recent update.

Recap

In our last article, we shared that the Court of Justice ruled in early 2023, in a Polish case, that the sale of a leased property, a shopping center, can be considered the transfer of (a part of) a business, resulting in no VAT being owed on the purchase price. This ruling was a welcome development for project developers or other taxpayers selling real estate in a leased condition, and it still is. In this article, we also connected this to two Dutch procedures.

In May 2022, the Court ruled on two cases concerning the transfer of leased real estate. The Court concluded that both cases involved the transfer of a business within the meaning of Article 37d of the Dutch VAT Act 1968. While the tax inspector attributed significance to the seller’s intent (i.e., if the intent was to sell, it was not considered a business transfer), the Court found this intent (whether to sell or lease) irrelevant. Both cases have been appealed. Our expectation was, and still is, that given the Court of Justice’s ruling, the Supreme Court will resolve both cases in line with the Court’s judgment.

Our expectation, as mentioned earlier, is further confirmed by a recent opinion from the Advocate General (A-G). The role of the A-G is to provide independent advice on legal questions. The A-G advises the Supreme Court to uphold the May 2022 ruling of the Arnhem-Leeuwarden Court of Appeal and to dismiss the Secretary of State’s objections as unfounded. The decision now rests with the Supreme Court.