Articles in the EU VAT Directive
Article 2(1)(a), 9(1), 12 of the EU VAT Directive 2006/112/EU
Facts
In 2009, LN had provided several loans to JM for a total amount of EUR 80,400, repayment of which was secured by mortgages on a number of properties. When the loan was not repaid, three of these properties were auctioned off by LN, which was also a creditor. In 2010, LN sold one of the acquired properties. Later, after the VAT limit was exceeded, LN sold the other two properties in 2011 and 2012. Following a tax audit at LN, it has been determined that all transactions carried out have resulted in such a high income that the activity is classified as an economic activity that is carried out on a permanent basis with the aim of obtaining income from it. The real estate was not used for personal purposes, but purchased for the purpose of reselling it and obtaining income from it. As a result of this check, LN was subject to VAT. LN has appealed against this. The defendants appealed against the decision of that court to the referring court.
Question
The following questions have been raised to the European Court of Justice:
1. Does Article 2 of the VAT Directive preclude a transaction, one whereby a taxpayer, as creditor, acquires immovable property in the context of an enforcement procedure and, sometime later, sells it in order to recover a sum of money which he had loaned, from being regarded as an economic activity in the form of the exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis?
2. Can an individual who has carried out such a legal transaction be regarded as a taxable person within the meaning of Article 9 VAT Directive?
Source
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