© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
E3. Occasional activities
Option to treat occasional supply of building/land as economic activity
"(1) Member States may regard as a taxable person anyone who carries out, on an occasional basis, a transaction relating to the activities referred to in the second subparagraph of Article 9(1) and in particular one of the following transactions:
(a)the supply, before first occupation, of a building or parts of a building and of the land on which the building stands;
(b)the supply of building land.
(2) For the purposes of paragraph 1(a), ‘building’ shall mean any structure fixed to or in the ground.
Member States may lay down the detailed rules for applying the criterion referred to in paragraph 1(a) to conversions of buildings and may determine what is meant by ‘the land on which a building stands’.
Member States may apply criteria other than that of first occupation, such as the period elapsing between the date of completion of the building and the date of first supply, or the period elapsing between the date of first occupation and the date of subsequent supply, provided that those periods do not exceed five years and two years respectively.
(3) For the purposes of paragraph 1(b), ‘building land’ shall mean any unimproved or improved land defined as such by the Member States." (Article 12)
- Only refers to persons who are not already a taxable person in respect of their main economic activities
"[30] Accordingly, Article 12(1) of the VAT Directive should be interpreted as referring only to persons who are not already a taxable person for VAT purposes in respect of their main economic activities. On the other hand, in the case of such a taxable person, like Mr Kostov, it would not be consistent with, in particular, the objective that VAT should be levied with simplicity and in as general a manner as possible to interpret the second subparagraph of Article 9(1) of the VAT Directive as meaning that the term ‘economic activity’ appearing in that provision does not encompass an activity which, whilst carried out only occasionally, falls within the general definition of that term in the first sentence of that provision and is carried out by a taxable person who also carries out, permanently, another economic activity for the purposes of the VAT Directive." (Kostov C-62/12)
- Does not apply where transaction is mere exercise of right of ownership
"[49] In the light of the foregoing, the answer to the questions referred is that the supply of land designated for development must be regarded as subject to VAT under the national legislation of a Member State if that State has availed itself of the option provided for by Article 12(1) of the VAT Directive, irrespective of whether the transaction is carried out on a continuing basis or whether the person who effected the supply carries out an activity of a producer, a trader or a person supplying services, to the extent that that transaction does not constitute the mere exercise of the right of ownership by its holder." (Slaby C-180/10)