Preliminary questions to the ECJ in VAT case on the application of the transfer of a totality of assets

Project development versus investment: short-term exempt rental prior to the transfer of a residential apartment complex (Article 37d of the VAT Act)

Transaction facts: X BV redeveloped an office into apartments, briefly rented them out VAT‑exempt, then sold the complex in a rented state within two years of first occupation.
Legal dispute: Tax authority argued the short‑term rental was incidental to project development, while X BV claimed it was a transfer of a business unit under Article 37d VAT Act; the Court of Appeal sided with X BV.
Supreme Court referral: Found EU law unclear and asked the CJEU whether Article 19 VAT Directive applies to exempt rental without deduction rights, and whether the seller’s intention (development vs. investment) is decisive.

Source BTW jurisprudentie

Referral for Preliminary Ruling: The Supreme Court has referred questions to the Court of Justice of the European Union regarding the applicability of Article 37d of the VAT Act 1968 to the transfer of immovable property, specifically in the case involving X BV’s leasing and eventual sale of an apartment complex.
Background of the Case: X BV leased 77 apartments and entered into service contracts before selling the building to an investment company without charging VAT. The Arnhem-Leeuwarden Court of Appeal ruled that this constituted a transfer of a totality of assets, leading to an annulment of an additional VAT assessment imposed on X BV, which the State Secretary contested.
Key Questions for Clarification: The Supreme Court seeks clarity on whether certain provisions of the 2006 VAT Directive apply to the supply of immovable property used for exempt economic activities and whether the intention behind the property’s development and rental impacts the VAT treatment, pausing proceedings until the Court of Justice provides a ruling.

Source Taxlive