Comments on ECJ C-516/21: Rental of a building and permanently fixed tools: operation exempt from VAT?

• The Court of Justice of the European Union issued a judgment regarding the VAT treatment of the rental of permanently fixed tools and machinery in the context of leasing an agricultural building.
• The case involved a German taxpayer who rented out a building used for rearing turkeys, including permanently fixed machinery and tools. The lessor received a single rent for the provision of the building and machinery,
• and the German tax authorities disputed whether the entire service was exempt from VAT as property rental.
• The CJEU ruled that the provision of permanently fixed machinery at the same time as the building to which they relate is capable of being classified as a single economic operation, exempted from VAT for everything. The referring court must determine whether or not this is the case.
• The judgment confirms that a single transaction made up of distinct services must not be artificially broken down so as not to alter the functionality of the VAT system.

Source Aurelie Soldai

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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