ECJ’s Resolution, of January 22nd, 2015. Régie. Concept of VAT exempted letting of immovable property
The article 13, paragraph B, letter b) of the Sixth Directive, reproduced in Article 135 of the current VAT Directive 2006/112/EC, includes the application of the exemption on the leasing of immovable property, with some exceptions like the provision of accommodation in the hotel sector and similar.
In the current dispute a Belgian corporation acquired the facilities of a football stadium, for which borne the VAT. Then, the owner of the premises ceded the use thereof, under certain conditions, to a football club, which could make use of them for 18 days of the season. Among the conditions agreed the owner of the facilities reserved the right to offer the same to other recipients on days other than the 18 agreed with the club.
Also, the owner was entitled to access to the stadium at any time, to verify and monitor the correct use of the facilities and to have permanent control of them. Finally, it is specified that 80% of the income received came from the provision of cleaning, maintenance, facility support and overall management thereof.
In this sense, the Belgian tax authorities considered that the transaction of ceasing the sports facilities was a lease of immovable property, exempt from VAT, which limited the right to deduct the VAT on the acquisition thereof.
The EU Court uses the jurisprudence to remember the characteristics that make a lease of property, that is, the tenant’s right to use the property with all the powers attributed to the owner and to prevent the use of the property by another person. In short, the keys of a leasing are the right to occupy it, the exclusion of other parties to use it and in consideration of a rent and for a certain time.
Considering the present case, the Court understood that it is more complex than a simple leasing service, which involves facilitating access, facilities management, maintenance and other services involving the permanent presence of representatives of the owner, by which the latter has a more active role, in addition to the above services that are necessary for the activity to take place on the premises.
Moreover, the fact that 80% of the revenue does correspond to these services is considered as a proof for considering those as the main services. Finally, the Court suggest the National Court to review the element of temporary in the contract, since it seems to have an occasional nature with the duration of 18 days.
According to the above, the Court concludes that the service provided is not deemed as a lease of immovable property and, therefore, does not apply the VAT exemption.
A copy of the resolution C-55/14 can be downloaded hereunder.