No newly manufactured good in the event of conversion of office building into hotel: concurrence exemption does not apply

• Ruling on VAT Directive Compliance: The Court of Appeal of ‘s-Hertogenbosch confirmed that the Supreme Court’s ‘essentially new construction’ criterion is in line with the VAT Directive, indicating that there is no need to refer questions to the Court of Justice of the EU for a preliminary ruling.
• Case Background: The case involved B’s purchase of a former office building for renovation into a hotel, which was later sold to X BV under a ‘sale and lease back’ arrangement. X BV claimed the concurrence exemption and argued that the building should be classified as newly manufactured goods under the VAT Directive.
• Rejection of Exemption Claim: The Court upheld the District Court’s ruling that the concurrence exemption did not apply, as the renovations did not constitute an ‘essentially new construction’ under Article 11(3)(b) of the VAT Act 1968, reaffirming that the renovations were not significant enough to qualify as a newly manufactured good.

Source Taxlive

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Court Confirms ‘In Essence New Construction’ Criterion Aligns with VAT Directive; Appeal Dismissed

• The court ruled that the ‘essentially new construction’ criterion aligns with the VAT directive.
• The appeal was dismissed.
• The legal framework involves both EU and national tax laws.
• The case focused on whether a building’s renovation constitutes a new construction for tax purposes.
• The decision was based on established legal interpretations and construction changes.

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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