Sale of building plots used for VAT-exempt business or made available free of charge

SKM2023.72.SR
The Danish Tax Agency
21-0421553
Binding answer

Questioner 1 and Questioner 2 each own a part of an agricultural property. The questioners have owned the property since 1978 and ownership is split 50/50. Questioner 1 has made his part of the agricultural property available free of charge to Questioner 2. Questioner 2 originally used the agricultural property for agricultural purposes under his own auspices, but he has since let the agricultural property be leased out. Questioners 1 and 2 each intend to sell a portion of their portion of the agricultural property when that portion transitions to urban zoning.

The Tax Council can confirm that Questioner 1 is not selling the property as a taxable person, as Questioner has made the property available free of charge to Questioner 2.

The Tax Council can also confirm that Questioner 2’s sale of the property is exempt from VAT according to Section 13, subsection of the VAT Act. 2, on the condition that Questioner 2, during its ownership period until the transfer to the buyer, has been invoiced for VAT-liable costs, which the Questioner has not been able to deduct for the reason that the costs have had a direct and immediate connection to the VAT-exempt rental.

Source: skat.dk

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