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H1. Land exemptions
The exemptions in domestic law​
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- XX
XX
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The exemptions in EU law​
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- Supply of building/part of building
"(j) the supply of a building or parts thereof, and of the land on which it stands, other than the supply referred to in point (a) of Article 12(1);" (Article 135(1))​
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- Supply of land which has not been built on
"(k) the supply of land which has not been built on other than the supply of building land as referred to in point (b) of Article 12(1);" (Article 135(1))​
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- Leasing or letting of immovable property
"(l) the leasing or letting of immovable property." (Article 135(1))​
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- Mandatory carve outs from leasing or letting (hotels, parking, installed equipment)
"The following shall be excluded from the exemption provided for in point (l) of paragraph 1:
(a) the provision of accommodation, as defined in the laws of the Member States, in the hotel sector or in sectors with a similar function, including the provision of accommodation in holiday camps or on sites developed for use as camping sites;
(b) the letting of premises and sites for the parking of vehicles;
(c) the letting of permanently installed equipment and machinery;
(d) the hire of safes." (Article 135(2))
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- Discretionary carve outs from leasing or letting of immovable property
"Member States may apply further exclusions to the scope of the exemption referred to in point (l) of paragraph 1." (Article 135(2))​
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- Discretionary carve out cannot be used to tax the surrender of a lease where it was exempt to grant the lease
"[12] Article 13B allows Member States to exclude certain types of letting from the scope of the exemption and hence to subject them to tax. However, it cannot be construed as allowing them to tax a transaction terminating a lease where the grant of that lease was compulsorily exempt. The relations created by a lease cannot be broken up in this way." (Lubbock Fine C-63/92)
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Right to occupy for agreed period​
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- Right to occupy property and exclude others for an agreed period in return for rent
"[40] In addition, in the absence of a definition of those notions in the VAT Directive, the Court defined the ‘letting of immovable property’, for the purposes of Article 135(1)(l) of that directive, as an arrangement whereby the lessor assigns to the lessee, in return for rent and for an agreed period, the right to occupy its property and to exclude any other person from it (see, inter alia, judgment of 19 December 2018, Mailat, C‑17/18, EU:C:2018:1038, paragraph 36 and the case-law cited)." (WEG C-449/19)
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Passivity​
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- Relatively passive activity: distinguish provision of services from simply making property available
"[41] The Court has also specified that the exemption provided for in Article 135(1)(l) of the VAT Directive is due to the fact that the letting of immovable property, whilst being an economic activity, is normally a relatively passive activity, not generating any significant added value. Such an activity is thus to be distinguished from other activities which are either industrial and commercial in nature, or have as their subject matter something which is best understood as the provision of a service rather than simply making property available, such as the right to use a golf course, the right to use a bridge in consideration of payment of a toll or the right to install cigarette machines in commercial premises (judgment of 2 July 2020, Veronsaajien oikeudenvalvontayksikkö (Computing centre services), C‑215/19, EU:C:2020:518, paragraph 41 and the case-law cited)." (WEG C-449/19)
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- Supply of heat not passive
"[42] In the main proceedings, as is apparent from the request for a preliminary ruling, the activity at issue consists in the supply of heat generated by the operation, by WEG Tevesstraße, of a cogeneration power unit. By supplying that heat, that association simply sells tangible property which is the result of the exploitation of another tangible property, albeit the latter is immovable, without however conferring on the purchasers of the heat, that is to say the property owners belonging to that association, the right to occupy an immovable property, in the present case the cogeneration power unit, and to exclude any other person from enjoyment of such a right, within the meaning of the case-law referred to in paragraph 40 above." (WEG C-449/19)
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Transactions related to leases​
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- Payment to surrender lease is exempt where lease itself was exempt
"[28] However, the Court must make clear that that judgment [in Lubbock Fine] was given in respect of a tenant who returned the immovable property leased to the landlord and who, consequently, for the purposes of taxation, assigned his right to occupy the property back to the landlord by surrendering it. That is why the Court ruled, in paragraphs 9 and 12 of the judgment, that the tenant's surrender of the supply of services made by the landlord, which involved a change in the contractual relationship, has to be exempt where the supply itself is exempt." (Cantor Fitzgerald C-108/99)
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"[9] Where a given transaction, such as the letting of immovable property, which would be taxed on the basis of the rents paid, falls within the scope of an exemption provided for by the Sixth Directive, a change in the contractual relationship, such as termination of the lease for consideration, must also be regarded as falling within the scope of that exemption." (Lubbock Fine C-63/92)
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- Paying person to accept assignment of lease is supply by the recipient of the assignment, but not exempt
"[21] The letting of immovable property for the purposes of Article 13B(b) of the Sixth Directive essentially involves the landlord of property assigning to the tenant, in return for rent and for an agreed period, the right to occupy his property and to exclude other persons from it (see, to that effect, Case C-358/97 Commission v Ireland [2000] ECR I-6301, paragraphs 52 to 57, Case C-359/97 Commission v United Kingdom [2000] ECR I-6355, paragraphs 64 to 69; and Case C-326/99 Goed Wonen [2001] ECR I-6831, paragraph 55).
[22] The supply at issue in the main proceedings does not meet those conditions.
[23] On the contrary, it was the new tenant, CFI, which, by agreeing to take on the rights and obligations arising under the existing lease, supplied a service to the former tenant, Wako. Wako did not make a supply of services to CFI but paid consideration in cash for the service supplied by CFI, consideration which, as such, is not liable to VAT. The landlord was the only person to effect a supply of services to CFI within the meaning of Article 2(1) of the Sixth Directive, which was exempt under Article 13B(b) thereof, namely the right to occupy its property in consideration for the payment of rent." (Cantor Fitzgerald C-108/99)
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