The lease of a commercial property together with movable goods does not constitute the transfer of a going concern not subject to VAT. Judgment of the ECJ of December 19, 2018


The Court of Justice of the European Union (ECJ) has pronounced in its judgment of December 19, 2018 (case-law C-17/18) on the VAT taxation in the transmission of a total or partial universality of goods or services, by concluding that the VAT non-taxable rule does not apply in the case of the lease of a commercial property together with the rest of capital assets and consumer goods, despite the fact that the purchaser continued to carry out the same activity and under the same commercial name.

The present case is based on a preliminary ruling on whether TOGC, not subject to VAT, should apply in the lease, to another company, of a property in which a restaurant was operated, together with all the assets in it, while the tenant company would continue the exploitation of the restaurant.

In this regard, a company that operated a restaurant in a commercial premises, agreed to lease it, along with all capital goods and furniture linked to the restaurant, to another company that would continue to operate the restaurant, claiming in this regard that said operation had to fit within the non-subjection to the VAT rule contemplated in Articles 19 and 29 of the VAT Directive and, therefore, would not be subject to the tax.

However, the ECJ is contrary to this opinion. The Court begins by recalling the essential characteristics of the rule, which implies the need to transmit a set of elements necessary to develop an autonomous economic activity and, in order to assess whether this happens with movable and real estate property, it must be assessed according to the nature of the economic activity. Thus, if the activity does not require the use of specific premises or with fixed facilities for the development thereof, there may be a global transmission even without the transmission of the property rights of the asset. However, for those activities that consist in the exploitation of an inseparable set of movable and immovable property, the jurisprudence of the Court establishes the need to make the premises available to the transferee.

In the present case, the exploitation of a restaurant undoubtedly requires a commercial space and where can be stored and allocated the material, equipment and raw materials for the activity. However, the premises and the necessary assets were only leased, without the transfer of property rights. In addition, with regard to the continuity of the activity, the Court notes that, in the present case, although it continued with this activity for two years and it maintained the employees and the suppliers, the acquirer was never in a position to liquidate the activity, since he was not the owner of the goods. The Court recalls that the circumstance that the beneficiary continues the personality of the assignor does not make the continuation of this person a requirement for the application of the rule, so it is irrelevant in this case.

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