European Court T-413/25 (Peckeger) – Judgment – Article 19 VAT Directive precludes income-based TOGC restrictions and has direct effect

Slide deck  Peckeger T-413-25

On 2 September 2026, the General Court released the judgment in case T-413/25 (FR v Finanzamt Österreich, Peckeger).

Context

Reference for a preliminary ruling under Article 267 TFEU concerning the interpretation of Article 2(1)(a), Article 14(1), the first paragraph of Article 16 and Article 19 of Council Directive 2006/112/EC on the common system of value added tax, in proceedings concerning the VAT treatment of the contribution, without the issue of additional shares, of developed properties previously let subject to VAT by an individual undertaking to a limited liability company whose sole shareholder and manager was the transferor. The dispute concerned whether that contribution constituted a supply of goods for consideration, an application of business assets to be treated as such a supply, or a transfer of a totality of assets or part thereof falling under the no-supply rule in Article 19 of Directive 2006/112. It also concerned whether Austrian legislation, in particular Paragraphs 1, 3, 6 and 12 of the Umsatzsteuergesetz 1994 and Paragraphs 12 and 22 of the Umgründungssteuergesetz, could restrict the no-supply rule to businesses or parts of businesses generating specified categories of income under Paragraph 2(3) of the Einkommensteuergesetz 1988, thereby excluding assets used to generate rental and leasing income, and whether the first paragraph of Article 19 of Directive 2006/112 had direct effect where Austria had exercised the Article 19 option before its accession to the European Union but had implemented it in a manner more restrictive than permitted by the second paragraph of that article.

Questions Referred

1. Is Article 2(1)(a) of Directive 2006/112 to be interpreted as meaning that the contribution of developed properties by a taxable person who previously used those properties, through rental, for deductible taxable transactions, to a company of which that person is the sole shareholder, without the issue of additional company shares in return for the contribution, is to be regarded as a supply of goods for consideration?
2. If the first question is answered in the negative, is the first paragraph of Article 16 of Directive 2006/112 to be interpreted as meaning that the transaction described in the first question gives rise to the disposal free of charge by a taxable person, preceding the contribution, of goods forming part of that person’s business assets or, more generally, their application for purposes other than those of that person’s business?
3. Does Article 19 of Directive 2006/112 preclude a national provision under which, in the event of a transfer of a totality of assets or part thereof, consisting of businesses or parts of businesses, it is considered that no supply of goods has taken place only in cases of reorganisation, which exists under national law only where those assets are used to generate certain categories of income under national law on tax on profits?
4. Does Article 19 of Directive 2006/112 have direct effect, such that a taxable person may rely on the no-supply rule before a national court against the competent tax authority where, before the Member State acceded to the European Union, the national legislature introduced and subsequently retained a provision applicable only to certain cases, but not to business assets used to generate rental and leasing income under national law on tax on profits?

AG Opinion

None.

Decision / Order of the Court

The General Court delivered a Judgment and ruled as follows:

1. Article 19 of Directive 2006/112 precludes national legislation that restricts the rule that no supply of goods has taken place upon the transfer of a totality of assets or part thereof to a taxable person solely to transfers of certain business assets or parts of a business intended to generate certain types of income, unless that restriction is justified by one of the grounds set out in the second paragraph of Article 19.
2. The first paragraph of Article 19 of Directive 2006/112 has direct effect. A taxable person may therefore rely before a national court, against the competent tax authority, on the rule that no supply of goods has taken place upon the transfer of a totality of assets or part thereof to a taxable person where the national legislature, before the Member State’s accession to the European Union, opted to apply that rule but restricted its scope to specific cases not covered by the second paragraph of Article 19.
3. Article 2(1)(a) of Directive 2006/112 does not treat the transaction as a supply for consideration. The contribution by a taxable person of developed properties let subject to VAT, in respect of which VAT was deductible, to an undertaking of which that person is the sole shareholder, without the issue of new shares as consideration, does not constitute a supply of goods for consideration.
4. The first paragraph of Article 16 of Directive 2006/112 treats the transaction as a supply for consideration. Such a contribution constitutes an application of goods forming part of the taxable person’s business assets which that person transfers free of charge or, more generally, applies for purposes other than those of the business. It must therefore be treated as a supply of goods for consideration under Article 16.

Argumentation

(Scope of the Article 19 Option)

The first paragraph of Article 19 of Directive 2006/112 permits Member States to treat the transfer, whether for consideration, free of charge or as a contribution to a company, of a totality of assets or part thereof as involving no supply of goods. Where a Member State exercises that option, a qualifying transfer is not a supply for VAT purposes and is consequently not taxable under Article 2 of the VAT Directive. The recipient is treated as the successor to the transferor.

(Exhaustive Nature of the Permitted Restrictions)

The second paragraph of Article 19 exhaustively identifies the circumstances in which a Member State may restrict the no-supply rule. Those circumstances relate to preventing distortion of competition where the recipient is not wholly liable to tax and to preventing tax evasion or avoidance. A Member State that has exercised the option in the first paragraph must therefore apply the no-supply rule to all transfers falling within the autonomous EU-law concept of a transfer of a totality of assets or part thereof, unless a restriction is justified under the second paragraph.

(Restriction by Reference to National Income Categories)

National legislation may not restrict Article 19 solely by reference to whether the transferred assets generate particular categories of income under national legislation on tax on profits. Such a restriction risks fragmenting an autonomous concept of EU VAT law and producing divergences between Member States. It is for the referring court to determine whether the Austrian restriction is nevertheless justified by one of the grounds expressly identified in the second paragraph of Article 19.

(Purpose of the No-Supply Rule)

Article 19 is intended to facilitate transfers of undertakings or parts of undertakings, simplify their VAT treatment and prevent the recipient’s resources from being temporarily overburdened by a disproportionate VAT charge that would ultimately be recovered through input VAT deduction. The rule is not a derogation from a tax obligation requiring restrictive interpretation. It operates in circumstances in which the VAT otherwise charged would generally be deductible and requires the recipient to continue the transferor’s position as successor.

(Conditions for Direct Effect)

A provision of a directive may have direct effect where it is unconditional and sufficiently precise. A provision may satisfy those requirements even where it leaves Member States a margin of discretion, provided that it establishes a framework sufficiently precise to identify the rights conferred on individuals. The first paragraph of Article 19 clearly identifies the relevant transfers and the consequence that no supply is to be regarded as having taken place.

(Incorrect Exercise of National Discretion)

The discretion available under the second paragraph of Article 19 does not allow a Member State to introduce restrictions outside the grounds laid down in that provision. Where a Member State has exercised its discretion in a manner contrary to EU law, it may not invoke the unlawful restriction against a taxable person whose transaction falls within Article 19. The fact that the Austrian legislation was adopted before Austria’s accession to the European Union did not alter that conclusion, particularly because the legislation did not appear to be protected by a standstill clause in the VAT Directive.

(Absence of Consideration under Article 2(1)(a))

A supply is made for consideration only where there is a legal relationship between the supplier and recipient involving reciprocal performance and where the amount received by the supplier represents the value actually given in return for the goods supplied. Subject to verification by the referring court, FR transferred the properties to R GmbH without receiving additional shares or any other actual countervalue. The transaction therefore lacked reciprocal performance and was not a supply of goods for consideration under Article 2(1)(a).

(Free Transfer under Article 16)

Article 16 treats as a supply for consideration the application by a taxable person of goods forming part of the taxable person’s business assets where those goods are transferred free of charge or applied for private or other non-business purposes, provided that the VAT on the goods or their component parts was wholly or partly deductible. The contribution was made without consideration, and FR had deducted the input VAT relating to the properties. The conditions for treatment as a supply for consideration under Article 16 were therefore satisfied.

(Interaction between Articles 16 and 19)

Although the absence of reciprocal consideration prevented the contribution from being taxable under Article 2(1)(a), its free-of-charge character brought it within Article 16. That treatment remains subject to Article 19 where the transaction constitutes a transfer of a totality of assets or part thereof. If the conditions of Article 19 are met, Austria must apply the no-supply rule unless a restriction is validly justified under the second paragraph of that article.

References to Other ECJ Case Law

• C-444/10, Schriever – Cited for the principle that, where a Member State exercises the Article 19 option, a transfer of a totality of assets or part thereof is not regarded as a supply and is not subject to VAT; for the exhaustive nature of the permitted restrictions; and for the objective of facilitating transfers of undertakings and preventing a disproportionate temporary VAT burden.
• C-497/01, Zita Modes – Cited for the principle that a Member State exercising the Article 19 option must apply the no-supply rule to every qualifying transfer of a totality of assets or part thereof, subject only to the permitted restrictions; and that the concept must be interpreted autonomously and uniformly under EU law, having regard to its context and purpose.
• C-17/18, Mailat – Cited for the principle that the no-supply rule is not a derogation requiring restrictive interpretation and that its application entails the recipient’s succession to the transferor in the continuation of the economic activity.
• 8/81, Becker – Cited for the principle that directives may have direct effect in so far as they are binding on Member States as to the result to be achieved, even where Member States retain discretion regarding implementation.
• 255/81, Grendel – Cited for the applicability of the principle of direct effect to directives notwithstanding a degree of national discretion concerning implementation.
• 70/83, Kloppenburg – Cited for the principle that binding provisions of directives may be relied upon by individuals where the conditions for direct effect are met.
• C-592/15, British Film Institute – Cited for the settled principle that individuals may rely against a Member State on provisions of a directive that are unconditional and sufficiently precise where the directive has not been implemented, or has been implemented incorrectly.
• C-45/01, Dornier – Cited for the principle that a provision may have direct effect even where it leaves Member States a margin of discretion, provided that it establishes a sufficiently precise and unconditional framework.
• C-363/05, JP Morgan Fleming Claverhouse Investment Trust and The Association of Investment Trust Companies – Cited for the principle that the existence of national discretion does not necessarily prevent a directive provision from having direct effect where the content of the individual right can be determined with sufficient precision.
• C-194/08, Gassmayr – Cited for the definitions of unconditionality and sufficient precision: an obligation is unconditional where it is not subject to any further EU or national measure and sufficiently precise where it is expressed unequivocally.
• C-205/20, Bezirkshauptmannschaft Hartberg-Fürstenfeld (Direct effect) – Cited for the conditions under which a provision of EU law is unconditional and sufficiently precise for direct effect.
• Joined Cases C-6/90 and C-9/90, Francovich and Others – Cited for the principle that a Member State’s freedom to choose among several means of achieving the result required by a directive does not prevent individuals from enforcing rights whose content can be determined sufficiently precisely from the directive.
• C-138/07, Cobelfret – Cited for the principle that rights conferred by a directive may be enforced before national courts where their content can be established with sufficient precision, despite a degree of national discretion.
• C-226/07, Flughafen Köln/Bonn – Cited for the principle that discretion granted to Member States to ensure correct and straightforward application or to prevent evasion, avoidance or abuse does not necessarily prevent a provision from being unconditional, and that a Member State may not rely on its own failure to implement EU law correctly against a taxable person falling within the directive.
• C-48/97, Kuwait Petroleum – Cited for the principle that a supply is made for consideration only where a legal relationship involving reciprocal performance exists and the consideration received represents the actual value given in return for the goods supplied.
• C-494/12, Dixons Retail – Cited for the requirement of a direct legal relationship and reciprocal performance in determining whether a supply of goods is effected for consideration under Article 2(1)(a) of Directive 2006/112.

Source

• Curia