EGC T-859/25 (Kabakum 3808) – Questions – Non-cash contributions and the conditions for VAT registration and liability

The General Court issued the preliminary ruling request in the case T-859/25 (Kabakum 3808).

Articles in the EU VAT Directive 2006/112/EC

Article 9 – Defines the concept of taxable persons and economic activities.
Article 19 – Addresses the transfer of a totality of assets or part thereof and the related tax treatment.
Article 213 – Establishes the obligation for taxable persons to register for VAT.
Article 214 – Discusses the conditions for registration of taxable persons.
Article 288 – Pertains to the calculation of taxable turnover.

Facts and Background

Company Establishment: ‘Kabakum 3808’ EOOD was established on 14 July 2014, with a capital contribution consisting of three offices contributed by its sole owner, ‘BUILDINGS GROUP’ EOOD, which was registered under Bulgarian VAT law at the time.
Tax Assessment: The Bulgarian National Revenue Agency issued a tax assessment notice on 15 May 2025, claiming that ‘Kabakum 3808’ owed VAT debts totaling BGN 336,706.69 for tax periods in June, October, and November 2023, alongside interest.
Disputed Registration: The central issue revolves around whether ‘Kabakum 3808’ was required to register for VAT by 28 July 2014 due to the non-cash contribution and whether VAT could be levied on supplies made before its actual registration on 6 December 2023.
Lack of Economic Activity: Between the contribution and the invoiced sales in November 2023, ‘Kabakum 3808’ did not engage in any economic activity, leading to questions about its status as a taxable person and whether it was obliged to charge VAT.
Legal Interpretation: The case raises significant questions regarding the compatibility of Bulgarian VAT provisions with EU VAT Directive articles, particularly concerning the treatment of non-cash contributions and the conditions for VAT registration and liability.

Is the contribution of individual assets to a newly established company considered a transfer of a totality of assets under Article 19 of the VAT Directive, even if the assets cannot be used for taxable supplies?
Does Article 19 allow national legislation to treat non-cash contributions as a “non-supply” and mandate VAT registration without assessing the contribution’s nature?
Is it lawful for a person deemed registered by law, who has not pursued economic activity, to be treated as a taxable person upon reaching a certain turnover?
Should the sale of assets contributed as a non-cash contribution be taxed under the ordinary VAT regime regardless of the time elapsed since the contribution?
If the contribution does not fall under Article 19, can subsequent sales of those assets be taxable turnover under Article 288 without requiring VAT for supplies made before registration?

Source

Other ECJ Cases Referred to

Zita Modes (C-497/01) – Clarifies the concept of a transfer of a totality of assets.
SKF (C-29/08) – Discusses the interpretation of VAT registration and liability.
Schriever (C-444/10) – Addresses the conditions for recognizing a transfer of a business or part thereof.
Legafact (C-122/23) – Related to the special scheme for small enterprises and administrative simplifications in VAT.