VAT: Business Transfer via Donations and Partnerships Not a Single Transaction

• The EU General Court in Case T-366/25 considered whether Article 19 of the VAT Directive (transfer of a total/partial business as a going concern) can apply when a business is first gifted to two individuals and only then contributed to a partnership they own.
• The Court emphasized the purpose of Article 19: to simplify transfers of undertakings, but not to let non-deductible persons avoid VAT contrary to fiscal neutrality.
• A transfer can be treated as a single VAT transaction only if the acts are so closely linked that they form one inseparable economic transaction; otherwise, each transaction is separate and autonomous.
• Here, each daughter received a separate 50% share and could act independently, so the gift and any later contribution were distinct operations.
• Result: the business transfer is not disregarded for VAT merely because the assets later reach a company; the lack of direct intermediation means Article 19 should not automatically apply.

Source: eutekne.info

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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