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ECJ C-182/23 (Makowit) – Questions – Expropriation of plot of land from farmer, previously used for agricultural activities subject to VAT

The ECJ released teh facts & questions in the case C-182/23 (Makowit).


Article in the EU VAT Directive

Article 9(1), 14(1) and 14(2) of the EU VAT Directive 2006/112/EC

Article 9 (Taxable person)
1. ‘Taxable person’ shall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity.
Any activity of producers, traders or persons supplying services, including mining and agricultural activities and activities of the professions, shall be regarded as ‘economic activity’. The exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis shall in particular be regarded as an economic activity.

Article 14 (Taxable transaction)
1. ‘Supply of goods’ shall mean the transfer of the right to dispose of tangible property as owner.
2. In addition to the transaction referred to in paragraph 1, each of the following shall be regarded as a supply of goods:
(a) the transfer, by order made by or in the name of a public authority or in pursuance of the law, of the ownership of property against payment of compensation;
(b) the actual handing over of goods pursuant to a contract for the hire of goods for a certain period, or for the sale of goods on deferred terms, which provides that in the normal course of events ownership is to pass at the latest upon payment of the final instalment;
(c) the transfer of goods pursuant to a contract under which commission is payable on purchase or sale.


  • J.S. (‘the applicant’ or ‘the complainant’) requested the Director of the National Tax Information Centre (‘the DIKS’, ‘the interpretative body’) to issue an individual interpretation of provisions of tax law concerning value added tax. In the application for the issuance of an individual interpretation, he presented  the following position in the case.
  • Since 8 December 2001, the applicant has been running a farm with an area of approximately […] hectares. Since October 2015, he has been running the farm together with his wife. The object of the farming activity is the production of milk and the breeding of dairy cattle. The applicant has been registered as an  active VAT taxpayer since January 2013. Plots No. […], […] were purchased by the applicant on 17 June 2003, while plots No. […], […] and […] were also purchased by the applicant on 11 May 2015. Both the purchase of 17 June 2003 and the purchase of 11 May 2015 were made with a view to expanding agricultural activities. There was no value added tax on the purchase of the plots, with the result that no VAT deduction was made. The purchased land was  used exclusively for agriculture as part of agricultural economic activity. The applicant and his wife do not carry out any economic activity other than farming.
  • As a result of the final decision of the Wojewoda (Regional Governor) to carry out a road construction project, pursuant to Article 12(4)(1) of ustawa z dnia 10 kwietnia 2003 r. o szczególnych zasadach przygotowania i realizacji inwestycji w zakresie dróg publicznych (Law of 10 April 2003 on special rules for the preparation and implementation of projects in the field of public roads (Dz. U. 2015, item 2031 (‘the Law on Roads’)), the properties taken over for the project,
    by operation of law, were surveyed and parcelled out, and transferred to the State Treasury. In the light of the above, in the course of the proceedings by  egional Governor M. to issue permission to carry out a road construction project, road plots No. […] and […] were parcelled out from plots No. […] and […],  and road plots No. […], […] and […] were parcelled out from plots No. […], […] and […], and which, on the date when the decision of Regional Governor M. No. […] of 6 March 2017 became final, became the property of the State Treasury, intended for road construction.
  • In the light of the above, the Regional Governor initiated proceedings to determine the compensation due the applicant for the plots compulsorily purchased by the State Treasury, and issued corresponding decisions granting compensation. However, the compensation has not yet been paid.
  • Until the plots were taken over by the State Treasury, they were used for agricultural purposes as grazing and pasture land; however, in connection with the administrative proceedings initiated by Regional Governor M. regarding permission to carry out a road construction project and the related survey and parcelling out of the plots and their planned purchase by the State Treasury for road construction, the applicant did not prepare those plots for harvesting  rass for the following year.
  • Prior to the initiation of the abovementioned proceedings by the Regional Governor, these plots had not been divided into smaller plots, developed with utilities or improved in any other way. They have never been rented, leased or lent to third parties. The applicant did not apply for the conversion of those plots or non-agricultural purposes, in particular, for road purposes, and did not apply for a change in the spatial development plan for these plots, did not seek to  determine the route of a road through these plots, and has never been involved in real-estate activities.
  • Furthermore, the applicant and his wife did not purchase any building plots. The plots compulsorily purchased by the State Treasury were covered by direct subsidies, but as their intended use was for the construction of a road, they were withdrawn from the subsidies. The applicant and his wife are registered in  RUS (the Kasa Rolniczego Ubezpiecenia Społeczenia (Social Insurance Fund for Farmers)) and pay agricultural tax.
  • In addition, the applicant did not divide up the land. The parcelling-out took place by operation of law and irrespective of the owner’s will as a result of an administrative body issuing a decision to carry  out a road construction project under the Law on Roads. In the same manner, irrespective of the owner’s
    intention, there was a loss of ownership.
  • The local development plan has not changed in any way, whether as a result of parcelling out the land intended for the road or as a result of the road’s construction. The acquisition of land for the construction of a road in accordance with the law described above takes place irrespective of the intended use  specified in the local spatial development plan.
  • According to the local spatial development plan, plots … (before division) were located in the village of G., district G. […], commune G. and had the following
    – from the regional road … for the widening of the road, the remaining areas are areas of single-family housing development and commercial services marked on the plan with the symbol […].
  • The applicant also indicated that plots … (before division) were marked in the land register as agricultural land and ditches, and that the district authority  office had made no changes to the allocation of plots in the land register until the date of the application.
  • In the light of these facts, the Applicant posed the following questions in the application for interpretation:
    (1) Is the applicant, as a result of the State Treasury’s compulsory purchase of the land of plots No. … for road construction under Article 12(4)(1) of the Law on
    Roads of 10 April 2003 in exchange for compensation, regarded as a person liable to pay VAT?
    (2) Will the compensation for the above be subject to value added tax?
  • At the same time, in the application for an individual interpretation, the applicant presented his own position on the matter, claiming that he should not be deemed liable to pay VAT in the case of the State Treasury’s compulsory purchase order for land of plots No. … for the construction of a road pursuant to  article 12(4)(1) of the Law on Roads of 10 April 2003 in return for compensation, and thus, any compensation paid to him should not be subject to value added tax.
  • In the individual interpretation of 31 October 2017, the DKIS considered the applicant’s position to be incorrect. It found that the transfer of the ownership of the plots of land specified in application … to the State Treasury under an expropriation procedure, in connection with their intended use for a public road construction project, should be regarded as a supply made by the applicant as an entity conducting business activity within the meaning of Article 15(2) of the  Law on Roads, namely as a VAT taxpayer. In the opinion of the authority, the applicant’s supply does not, in this case, constitute an exercise of the right to dispose of private property. The DKIS submitted that, as shown in the application, plots of land … were used by the applicant, who was a registered active VAT taxpayer, in his business activity. It found that the transfer of ownership of the agricultural land referred to in the application in return for compensation constituted – contrary to what the applicant claimed – a paid delivery of goods, which is subject to the provisions of the Law on VAT based on the cited Article 7(1)(1) of that Law, that is to say, it is subject to taxation. Thus, the DKIS found the position of the applicant to be incorrect.


Do the provisions of Article 9(1) of Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1, as amended), in conjunction with Article 14(2)(a) thereof, allow a farmer who is liable to pay VAT under general rules and who transfers the ownership of a plot of land to the State Treasury under an expropriation procedure in exchange for compensation related to the change of its intended use for non-agricultural purposes to be regarded as a taxpayer obliged to pay VAT on that compensation due solely to the fact that the plot was earlier used for agricultural activities subject to VAT?

AG Opinion







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