ECJ C-655/19 (LN) – Judgment – Property acquisition under enforcement procedure and subsequent sale is not an economic activity

On January 20, 2021, the ECJ issued its decision in the case C-655/19 (LN). This case is about whether a Property acquisition under enforcement procedure and subsequent sale is an economic activity.

Articles in the EU VAT Directive

Article 2(1)(a), 9(1), 12 of the EU VAT Directive 2006/112/EU


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.


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?

AG Opinion


Decision (Unofficial translation)

Article 2 (1) (a) and Article 9 (1) of Council Directive 2006/112 / EC of 28 November 2006 on the common system of value added tax have the meaning that the which a person acquires by immovable property confiscated in the course of enforcement proceedings initiated for the purpose of repaying a previously granted loan and then proceeds with the sale of the property does not in itself constitute an economic activity, where that transaction falls within his exercise merely ownership and the proper management of private property, in which case the person in question cannot be considered a taxable person as a result of that act.






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