AG Dutch Supreme Court: When Does Brick Paving Qualify as Developed Land in Dutch Law?

VAT qualification of parking lots with clinker paving (Opinion of the Advocate General)

• Land Classification Dispute: The case revolves around whether six plots, derived from a divided car park with clinker paving, qualify as ‘undeveloped land’ for VAT purposes. The Tax and Customs Administration deemed them undeveloped, while the District Court classified them as built-up land due to the difficulty of removing the paving.
• Court of Appeal Ruling: The Arnhem-Leeuwarden Court of Appeal assessed the plots individually, determining that most plots were undeveloped land since the clinker paving was not permanently connected to the ground. However, plot 8 was classified as built land because it contained additional infrastructure, making it exempt from VAT.
• AG’s Conclusion on Complaints: The Advocate General concluded that all four complaints by X BV regarding the Court of Appeal’s rulings were unfounded, affirming that the Court correctly applied VAT criteria for assessing each plot separately and determined the connection of the clinker paving according to existing legal standards.

Source BTW jurisprudentie

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According to the AG, clinker paving of the car park without site lighting does not qualify as a building

• Advocate General Ettema determined that clinker paving of a car park without site lighting does not meet the definition of a building, leading to the conclusion that the transfer of apartment rights is subject to VAT.
• The Arnhem-Leeuwarden Court of Appeal had previously ruled that the absence of site lighting on most plots, except for Plot 8, means that those plots do not qualify as built-up land, hence the VAT applicability.
• Ettema’s analysis highlighted that the clinker paving is not permanently affixed to the ground, being loose on a sand bed, and that legislative references pertain to structures rather than buildings, recommending the Supreme Court dismiss X BV’s appeal.

Source Taxlive

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• The case concerns whether six plots with a parking area qualify as undeveloped land and thus as building land under Dutch VAT law.
• The court ruled that paving, drainage, and lighting on the plots do not form a building as they are not permanently attached to the ground, except for plot 8.
• The taxpayer appealed, but all complaints were dismissed except for a partially valid reasoning complaint, which did not lead to annulment.
• In 2018, the taxpayer bought a plot with a paved parking area, later split into six plots intended for housing.
• The tax inspector classified these plots as building land, subject to VAT, while the taxpayer argued they were developed land due to existing structures.
• The court initially sided with the taxpayer, but the Court of Appeal disagreed, except for plot 8, which was considered developed land based on the Real Estate Decision 2023.
• The taxpayer’s appeal included four complaints, arguing the paving should be considered a building and that the court should have considered the Real Estate Decision 2013.
• The Secretary of State argued that both national and EU laws require a structure to be fixed to the ground to be considered a building.
• The core issue is whether the plots are undeveloped land, which would make them building land subject to VAT.
• EU case law requires a structure to be fixed to the ground to qualify as a building.
• The Court of Appeal found that loose brick paving on sand is not fixed to the ground and does not constitute a building under VAT regulations.
• The taxpayer’s argument that similar constructions were considered buildings misinterprets legislative intent.
• The court’s decision that loose paving does not meet the fixed to ground requirement is legally sound.

Source: uitspraken.rechtspraak.nl

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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