Comments on ECJ C-516/21: Leasing of immovable property including equipment and machinery – whether a single exempt supply or whether VAT is due on element relating to equipment and machinery

• The case concerns the application of Article 135(2)(c) of the VAT Directive, which excludes the letting of permanently installed equipment and machinery from the exemption for the leasing or letting of immovable property.
• The taxpayer leased turkey rearing sheds with permanently installed equipment and machinery and treated it all as exempt from VAT.
• The tax authority argued that 20% of the lease payment should be subject to VAT. The domestic court allowed the taxpayer’s appeal, but the case was referred to the European Court.
• The Court noted that a single supply should not be artificially split and that the tax treatment of the ancillary supply should follow that of the main supply. The referring court must determine whether there is a single economic supply, and if so, the exclusion under Article 135(2)(c) does not apply.

Source KPMG

See also

• Summary of ECJ C-516/21: The letting of permanently installed equipment and machinery if ancillary to the leasing a building (under the same leasing agreement) are exempt from VAT
• C-516/21 (Finanzamt X) – Judgment – Exemption for Leasing of immovable property including equipment and machinery
• Roadtrip through ECJ Cases – Focus on ”Exemption – The ”leasing or letting of immovable property” (Art. 135(1)(l))

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