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Transfers of real property qualified as transfers of going concern for VAT purposes (court decisions)

Court decisions on transfers of real property as transfers of going concern for VAT purposes

The Arnhem-Leeuwarden Court of Appeals held in two recent cases—seemingly contrary to an earlier decision of 2018—that transfers of real property leased by a developer for a short term qualified as transfers of a going concern for value added tax (VAT) purposes.

In both cases, the property had been leased on a VAT-exempt basis. As a result of these decisions, the VAT due on the transfers of the property is limited to the non-recoverable VAT on the renovation costs, land costs, if any, and additional costs, rather than the non-recoverable VAT on the purchase price.

Source KPMG

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