On January 16, 2003, the ECJ issued its decision in the case C-315/00 (Maierhofer).
Context: Sixth VAT Directive – Exemptions – Letting of immovable property – Prefabricated building which can be dismantled and reassembled
Article in the EU VAT Directive
Article 13(B)(b) of the Sixth VAT Directive (Article 135(1)(l) and 135(2) of the EU VAT Directive 2006/112/EC.
Article 135
1. Member States shall exempt the following transactions:
(l) the leasing or letting of immovable property
2. 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.
Member States may apply further exclusions to the scope of the exemption referred to in point (l) of paragraph 1.
Facts
- Mr Maierhofer let to the Free State of Bavaria communal accommodation, with the necessary land, for the temporary housing of asylum-seekers. The lease was entered into for a five-year period with the possibility of extension.
- Some of the buildings were on land which a local authority had let to Mr Maierhofer and others were on land which the lessee of the buildings, the Free State of Bavaria, had rented itself. In both cases the sites were to be fully restored to their original condition once the lease came to an end.
- Mr Maierhofer had constructed on those sites single-storey and two-storey buildings similar to prefabricated houses using prefabricated components. The buildings stood on a concrete base erected on concrete foundations sunk into the ground. The walls, which were made of panels, were secured to the foundations by bolts. The roof framework was covered with tiles. The floors and walls of the bathrooms and kitchens were tiled. The construction system was such that the buildings could be dismantled at any time by eight persons in ten days and subsequently re-used.
- Mr Maierhofer did not deduct input tax in respect of the construction of the buildings in 1992. For the period 1993 to 1995, he declared exempt transactions for the letting of immovable property under the first sentence of Paragraph 4(12)(a) of the UStG.
- The Finanzamt none the less assessed Mr Maierhofer’s letting transactions at the normal rate of tax on the ground that the transactions related not to immovable property but merely to buildings which were not in reality the components of immovable property within the meaning of Paragraph 95 of the BGB. The Finanzamt took any deductible tax into account when assessing the tax due.
- The Finanzgericht (Finance Court, Germany) dismissed the action which Mr Maierhofer had brought against the decisions by which the Finanzamt had demanded that tax.
- Mr Maierhofer then appealed to the Bundesfinanzhof on a point of law. He claims that the first sentence of Paragraph 4(12)(a) of the UStG, read with the Sixth Directive, has been incorrectly applied
- The Bundesfinanzhof points out that Paragraph 4 of the UStG, which implements Article 13B(b) of the Sixth Directive, does not expressly exempt from turnover tax transactions such as Mr Maierhofer’s, which consist of letting buildings constructed on a temporary basis. However, if national case-law is applied, the first sentence of Paragraph 4(12)(a) of the UStG is to be interpreted in accordance with German civil law, and in particular with the first two sentences of Paragraph 95(1) of the BGB, which provides that tangible property, including buildings, which is attached to the ground only for a limited period is not a constituent part of immovable property. Looked at in that way, the letting of such buildings is a taxable transaction.
Questions
1. Does the term ”letting of immovable property” in Article 13B(b) of Directive 77/388/EEC cover the provision for consideration of a building constructed from prefabricated components which is to be removed following the termination of the contract and may be re-used on another site?
2. Is it of any significance in that connection whether the lessor makes available to the lessee both the building and the land on which it is erected, or merely the building, which he has erected on the lessee’s land?
AG Opinion
(1) The ”letting of immovable property” within the meaning of Article 13B(b) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment covers the letting of buildings constructed from prefabricated materials such as those in issue in the main proceedings if they are firmly fixed to or in the ground.
(2) It is not relevant to the question whether the letting of a building falls within the exemption in Article 13B(b) whether the lessor makes available to the lessee both the building and the land on which it is erected or merely the building which he has erected on the lessee’s land.
Decision
1. The letting of a building constructed from prefabricated components fixed to or in the ground in such a way that they cannot be easily dismantled or easily moved constitutes a letting of immovable property for the purposes of Article 13B(b) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, even if the building is to be removed at the end of the lease and re-used on another site;
2. Whether the lessor makes available to the lessee both the building and the land on which it is erected or merely the building which he has erected on the lessee’s land is irrelevant in determining whether a letting constitutes a letting of immovable property for the purposes of Article 13B(b) of the Sixth Directive 77/388.
Summary
The letting of a building constructed from prefabricated elements which is fixed to the ground so that it cannot be easily dismantled or moved is to be regarded as a letting of immovable property within the meaning of Article 13B(b) of the Sixth Directive, even if this building is to be removed at the end of the lease and reused on another plot of land.
The fact that the lessor makes the land and the building available, or only the building that he has erected on the basis of the lessee, is irrelevant for determining whether a lease is a lease of immovable property within the meaning of Article 13B(b) of the Sixth Directive.
Source
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