Article in the EU VAT Directive
Article 392 of Council Directive 2006/112/EC
Article 392 (Derogation)
Member States may provide that, in respect of the supply of buildings and building land purchased for the purpose of resale by a taxable person for whom the VAT on the purchase was not deductible, the taxable amount shall be the difference between the selling price and the purchase price.
Facts
Icade Promotion Logement (a parcel company, hereinafter: the applicant) has declared the assignment of building sites to private individuals in 2007 and 2008 under the VAT system on the profit margin. The petitioner has asked the tax authorities for a refund of the tax paid on it. The tax authorities refused this, after which the applicant submitted the dispute to the tax court. The applicant is appealing in cassation against the second judgment of the cour administrative d’appel, in which that court, without judging admissibility, declared the application for refund of the company unfounded.
Consideration:
Second, the question arises whether Article 392 of the VAT Directive should be interpreted as excluding the application of a profit margin tax on supplies of construction sites in the following two situations: the taxable person has converted uncultivated land into construction sites between acquisition and resale , whether the characteristics of the land have changed between the time of acquisition and that of resale by the taxpayer, for example by division into lots or the execution of works to enable connection to various facilities (roads, drinking water, electricity, gas, sewer , telecommunications). Those questions determine the resolution of the present case and, in the absence of any case-law of the Court clarifying the subject-matter and scope of the provisions,
Questions
Is Article 392 of [Council] Directive [2006/112/EC] of 28 November 2006 [on the common system of value added tax] to be interpreted as reserving the application of the margin taxation scheme to transactions for the supply of immovable property the purchase of which has been subject to VAT, without the taxable person who subsequently resells the property having the right to deduct that tax, or does it permit that scheme to be applied to transactions for the supply of immovable property the purchase of which has not been subject to VAT, either because that purchase falls outside the scope of VAT or because it falls within the scope of VAT but is exempt from it?
Is Article 392 of Directive [2006/112] to be interpreted as excluding the application of the margin taxation scheme to transactions for the supply of building land in the following two cases:
where that land, purchased as land that has not been built on, becomes building land in the time between it is purchased and resold by the taxable person;
where that land, in the time between it is purchased and resold by the taxable person, is developed, in the sense that it is divided into parcels or works are carried out in order to install services (roads, drinking water, electricity, gas, sewage, telecommunications)?
AG Opinion
Decision
Personal comments/VATupdate
Source Curia
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