On June 13, 2013, the ECJ issued its decision in the case C-125/12 (Promociones y Construcciones BJ 200).
Context: Directive 2006/112/EC – Article 199(1)(g) – Voluntary insolvency proceedings – Person liable for payment of tax – Liability of the person who is the recipient of certain transactions – Concept of ‘compulsory sale procedure’
Article in the EU VAT Directive
Article 199(1)(g) in EU VAT Directive 2006/112/EC
Article 199
1. Member States may provide that the person liable for payment of VAT is the taxable person to whom any of the following supplies are made:
(g) the supply of immovable property sold by a judgment debtor in a compulsory sale procedure.
Facts
- By order of 22 February 2010, Promociones y Construcciones was declared insolvent and voluntary insolvency proceedings (‘proceso concursal voluntario’) were instituted.
- During the general stage of those proceedings, the insolvency administrator provided a report on the assets and liabilities of Promociones y Construcciones to its creditors and to the referring court.
- The opportunity to sell two of the company’s properties subsequently arose. On 31 January 2012, the company, on the basis of a favourable report from the insolvency administrator and with the consent of the purchaser, Banesto SA, requested authorisation to carry out that sale under Law 22/2003 on insolvency proceedings (Ley 22/2003, Concursal), of 9 July 2003 (BOE No 164 of 10 July 2003, p. 26905).
- By order of 1 February 2012, which has become final and has not been challenged, the Juzgado de lo Mercantil No 1 de Granada (Granada No 1 Commercial Court) declared that that sale was timely and conducive to the interests of the general body of creditors and consequently authorised it.
- The authorisation of that sale, which is an integral part of Promociones y Construcciones’s commercial activity, gave rise to a chargeable event for purposes of VAT, triggering the obligation to pay to the Agencia Estatal de Administracíon Tributaria (State tax administration) the corresponding sum owed in respect of VAT.
- The referring court expresses doubts as to the identity of the debtor liable for payment of that tax debt, namely whether it is Promociones y Construcciones or the purchaser of the properties. The referring court considers that that question is relevant for the purposes of determining precisely the terms on which the sale, as authorised, is to be carried out.
Questions
AG Opinion
None
Decision
Article 199(1)(g) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that every sale of immovable property by a judgment debtor carried out not only in the course of the liquidation of the debtor’s assets but also in the course of insolvency proceedings occurring before such liquidation comes within the concept of a compulsory sale procedure, provided that such a sale is necessary in order either to settle creditors’ claims or to enable the debtor to re-establish its economic or professional activities.
Summary
Article 199(1)(g) of the VAT Directive must be interpreted as meaning that the concept of a public sale under an enforceable order covers any sale of immovable property by the enforceable debtor, not only in the context of proceedings for the winding up of its assets, but also in the context of insolvency proceedings that take place before those liquidation proceedings, to the extent that such sale is necessary for the payment of the creditors or for the restoration of the economic or professional activity of that debtor.
Source:
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