- 2022-04-22 Legal case: ML’s special adjustment and refund rules when a construction phase ends are compatible with the VAT directive
The Supreme Administrative Court has ruled that it is not contrary to Union law to recover an amount corresponding to the previously made deductions for input tax and to demand interest on the amount when a property-owning company closes a construction project before any taxable rental has begun. In the case, the Supreme Administrative Court has obtained a preliminary ruling from the European Court of Justice, which the European Court of Justice answered by a reasoned decision in case C-248/20, Skellefteå Industrihus ( HFD 2022-04-08, case no. 6144-18 ).
The current construction project was discontinued as the company’s cost calculations showed that the project would not merge financially after one of the prospective tenants announced that it was no longer interested in renting premises in the building. As a result, the company no longer intended to use the acquisitions in a taxable business.
According to the Supreme Administrative Court, it follows from the European Court of Justice’s ruling that the company’s changed intention constitutes a basis for adjusting the previously made deductions for input tax. It also follows that Article 187 of the VAT Directive does not apply to such an adjustment, since the acquisitions never came into actual use. Instead, according to Article 186 of the VAT Directive, the detailed rules for making the adjustment are to be laid down in national law. This leaves the Member States a margin of discretion (HFD 2022-04-08, Case No 6144-18, paragraph 42). In the opinion of the Supreme Administrative Court, the provision in ch. § 11 ML within the discretion provided for in Article 186 of the VAT Directive.
The provisions on adjustment and repayment when voluntary tax liability during the construction phase ceases in Chapter 9. Section 11 ML is thus applicable both when the property begins to be used in an activity exempt from tax and when it will not be used at all.
Source: skatteverket.se
