Opinion of the Advocate General — ECLI:EU:C:2024:468
Date: 2024-06-06
Language of the case: Dutch
Procedure: Reference for a preliminary ruling
Origin: Belgium

Summary  C-243/23 – 1 
Case C-243/23 [Drebers] 1 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged:  
18 April 2023 
Referring court:  
Hof van Beroep te Gent (Belgium) 
Date of the decision to refer:  
28 June 2022 
Appellant: 
Belgian State / Federale Overheidsdienst Financiën 
Respondent: 
L BV 
  
Subject matter of the main proceedings 
The dispute in the main proceedings concerns the question whether L BV is 
entitled to deduct VAT in respect of certain renovation works carried out on a 
building used partly for professional purposes. 
Subject matter and legal basis of the request 
This application, based on Article 267 TFEU, concerns the question whether 
Articles 187 and 189 of Council Directive 2006/112/EC of 28 November 2006 on 
the common system of value added tax (‘the VAT Directive’) preclude legislation 
such as that at issue in the main proceedings (namely Article 48(2) and Article 49 
of the Wetboek BTW (the VAT Code, Belgium; ‘the WBTW’) in conjunction 
with Article 9 Koninklijk Besluit (the Royal Decree; ‘the KB’) No 3), according 
to which the extended 15-year adjustment period in the case of the renovation of 
 
1 This is a fictitious name which does not correspond to the real name of any party to the proceedings. 
EN 
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an existing building is applied only if, after the works, there is a ‘new building’ 
within the meaning of Article 12 of the VAT Directive, whereas the useful 
economic life of a substantially renovated building – which, however, does not 
qualify as a ‘new building’ on the basis of administrative criteria under national 
law – is identical to the useful economic life of a new building, which is 
significantly longer than the period of five years referred to in Article 187 of the 
VAT Directive, and whether the aforementioned Article 187 has direct effect. 
Questions referred for a preliminary ruling 
Do Articles 187 and 189 of Council Directive 2006/112/EC of 28 November 2006 
on the common system of value added tax preclude legislation such as that at issue 
in the main proceedings (namely Article 48(2) and Article 49 WBTW, read in 
conjunction with Article 9 KB No 3 of 10 December 1969, relating to the 
deduction facility for the application of value added tax), according to which the 
extended adjustment period (of 15 years) in the case of the renovation of an 
existing building is applied only if, after completion of the works, on the basis of 
the criteria under national law, there is a ‘new building’ within the meaning of 
Article 12 of the aforementioned Directive, whereas the useful economic life of a 
substantially renovated building (which, however, on the basis of the 
administrative criteria under national law does not qualify as a ‘new building’ 
within the meaning of the aforementioned Article 12) is identical to the useful 
economic life of a new building, which is considerably longer than the period of 
five years referred to in the aforementioned Article 187, which is shown, inter 
alia, by the fact that the works carried out are depreciated over a period of 
33 years, which is also the period over which new buildings are depreciated? 
Does Article 187 of Council Directive 2006/112/EC of 28 November 2006 on the 
common system of value added tax have direct effect, so that a taxable person 
who has carried out works on a building without those works leading to the 
renovated building being classified as a ‘new building’ within the meaning of 
Article 12 of that directive on the basis of criteria under national law, but where 
those works have a useful economic life which is identical to that of such new 
buildings to which a 15-year adjustment period does apply, may rely on the 
application of the 15-year adjustment period? 
Provisions of European Union law relied on 
Articles 12, 187 and 189 of the VAT Directive/Article 4(3) TEU 
Provisions of national law relied on 
Article 1(9)(1)(1), Article 48(2) and Article 49 WBTW/Article 9 KB No 3 
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Succinct presentation of the facts and procedure in the main proceedings 
1 L BV is a company in which the legal profession is exercised. For several years it 
has owned a property used partly privately and partly for its economic activity. 
2 From 2007 to 2015, substantial construction work was carried out on this 
immovable property: in the first phase, which lasted until July 2010, works were 
carried out on the three rear sections (the middle part of the building, the glass 
annexe and the lift shaft) and on the main building itself. In the second phase, the 
works in progress on the three rear sections were continued and several works 
needed to be redone; in the third phase, work on the main building was completed. 
After the works, the market value of the building was estimated at 
EUR 2 750 000, based on the assumption that 40% was for private occupation and 
60% for professional use. 
3 In January 2014, the VAT exemption for the economic activity of the profession 
of lawyer was lifted, so that L BV has since been registered as a party subject to 
VAT. 
4 After August 2015, the Algemene Administratie van de Bijzondere 
Belastinginspectie (General Administration of the Special Tax Inspectorate, 
Belgium) carried out an unannounced tax inspection at the registered office of L 
BV for the period from 1 January 2014 to 30 September 2015. Following that 
inspection, the Federale Overheidsdienst Financiën (the Federal Public Service for 
Finance, Belgium; ‘the FPS Finance’) took the view that L BV had committed 
several breaches of VAT legislation during that period. 
In the final report of the FPS Finance of 21 September 2017, EUR 163 756.24 of 
VAT was considered to be due, and the FPS Finance accused L BV of, inter alia, 
the wrong application of the adjustment period. L BV had taken into account a 15-
year adjustment period for the costs of the abovementioned construction works, 
whereas the FPS Finance took the view that the works in question did not 
constitute constructing a building, so that the adjustment period was limited to 
five years. 
5 In October 2017, a writ of execution was issued to L BV for, inter alia, 
EUR 163 756.24 for VAT and tax fines of EUR 16 375.63 on account of the 
unlawful deduction of VAT. 
6 L BV brought an action against that decision before the rechtbank van eerste 
aanleg Oost-Vlaanderen, afdeling Gent (Court of First Instance, East Flanders, 
Ghent Division, Belgium) in October 2018. By the judgment of 10 March 2020, 
that court declared the action admissible and partially well founded. 
7 In June 2020, the FPS Finance brought an appeal against that judgment before the 
referring court. The FPS Finance claims, inter alia, that Article 9(1)(1) KB No 3 is 
applicable and that the adjustment period should therefore be five years for the 
VAT charged on the business assets and that the amounts claimed should be 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-243/23 
 
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awarded. L BV, which lodged a cross-appeal, contends in particular that the 
appeal brought by the FPS Finance should be dismissed as unfounded. 
The essential arguments of the parties in the main proceedings 
8 The FPS Finance did not accept the 15-year adjustment period because the 
construction works would not have resulted in the ‘construction of a building’, but 
only in the improvement and renovation of the existing building. The legal and 
regulatory provisions therefore do not allow the 15-year adjustment period to be 
applied to the concrete facts. 
9 L BV disputes that there are reasons why an adjustment period of only five years 
should be applied. In its view, the Belgian legislation is incompatible with the 
VAT Directive; the underlying idea is that VAT adjustment may be subject to a 
longer period in the case of immovable property which is generally used and 
depreciated over a longer period and which has a (considerably) longer economic 
life. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
10 In accordance with the first and second subparagraphs of Article 187(1) of the 
VAT Directive, the adjustment period for capital goods is, in principle, five years. 
However, on the basis of the third subparagraph of Article 187(1), Member States 
may extend the adjustment period to a maximum of 20 years for ‘immovable 
property acquired as capital goods’. Article 189 of the VAT Directive allows 
Member States, inter alia, to define the concept of ‘capital goods’ and to 
determine the amount of VAT to be taken into consideration for the adjustment. 
That article also states that Member States are to ‘adopt any measures needed to 
ensure that adjustment does not give rise to any unjustified advantage’, which 
means that the VAT Directive grants Member States a certain degree of 
discretion. 
L BV submits, with good reason, that that discretion is not absolute and that 
Member States may not exceed the limits of their discretion, which means they 
must respect the terms used in the VAT Directive. 
11 In accordance with Article 4(3) TEU, Member States must take all measures 
necessary to ensure compliance with the obligations under EU law and refrain 
from any measures that could jeopardise the attainment of the European Union’s 
objectives. 
12 Furthermore, Member States must exercise their power bearing in mind the 
objectives of the VAT Directive as well as the principle of fiscal neutrality 
inherent in the Community VAT regime. It is necessary to uphold L BV’s 
argument where it refers to the principle of neutrality as a specific expression of 
the principle of equality, under which similar goods or services, which are thus in 
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competition with each other, must be treated equally for VAT purposes and a 
taxable person may rely on the VAT Directive in order to challenge national 
legislation that is incompatible with that directive and its underlying principles. 
13 The Belgian legislature has laid down the rules on adjustments relating to property 
and other business assets in, inter alia, Article 1(9)(1)(1), Article 48(2) and 
Article 49 WBTW and KB No 3. 
In a judgment dated 30 April 2021, the Hof van Cassatie (the Court of Cassation, 
Belgium) inferred from those provisions that transactions the object or effect of 
which is to convert or improve a building or part thereof are subject to an 
adjustment period of five years, whereas transactions concerning or contributing 
to the construction of a building or part thereof are subject to the 15-year 
adjustment period. 
Similarly, in response to a parliamentary question of May 2017, the Minister of 
Finance confirmed that, at the time of the conversion or improvement of a 
building, the adjustment period is, in principle, five years, unless the works carried 
out are of such significance that a new building is in fact created. 
Thus, under Belgian law, where an existing building is renovated, the 15-year 
adjustment period is applied to VAT on those works if, after the works have been 
carried out, there is a ‘new building’ for VAT purposes. 
14 L BV submits, with good reason, that, under the Belgian legislation, the extended 
15-year adjustment period does not apply to significant works carried out on 
buildings where, as a result of the work carried out, they have an economic life 
which is the same as that of newly constructed buildings – which is apparent in 
particular from the depreciation period of those works, which is identical to that of 
newly constructed buildings, despite the nature and importance of the works 
carried out for the durability of the building as economic inputs – those buildings 
do not qualify as ‘new buildings’ for VAT purposes. 
15 L BV takes the view that Article 9 KB No 3, by transposing the concept of 
‘immovable property acquired as capital goods’ used in the VAT Directive in such 
a strict manner into national law (by applying the 15-year adjustment period only 
to works resulting in a building that can be sold with the application of VAT, 
without applying the same period to works which have resulted in a building with 
an economic life equivalent to that of a new building, on the sole ground that, 
according to the FPS Finance, the renovated building could not be sold with 
VAT), infringes the VAT Directive and that the King has not exercised the powers 
conferred by Article 48(2) WBTW in a manner consistent with the Directive. 
16 L BV submits, in the first place, that Articles 187 or 189 of the VAT Directive 
make no reference whatsoever to ‘new buildings’ and/or to Article 12 of the VAT 
Directive, which interprets what must be regarded, for the purposes of VAT 
legislation, as a ‘new building’ that can be transferred with the application of 
VAT. 
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17 On the other hand, according to L BV, the concept of ‘capital goods’ 
unquestionably refers to goods which are used over a long period of time and are 
generally depreciated. In its view, ‘immovable property acquired as capital goods’ 
should be understood to mean immovable property which has an economic life 
(significantly) longer than the standard five-year adjustment period, which is 
demonstrated, inter alia, by the fact that they are depreciated over a much longer 
period. 
In order for works on immovable property to be regarded as immovable capital 
goods within the meaning of the VAT Directive, L BV contends that it is the 
useful economic life of the building, on account of the works or renovations 
carried out on it, rather than the time of its first occupation that matters. It takes 
the view that this is logical because the adjustment period is intended to verify and 
correct the deduction relating to the manufacture or creation of a means of 
production. 
18 L BV refers to the principle of fiscal neutrality, which requires, in its view, that all 
immovable property acquired as capital goods with the same or a comparable 
useful economic life should benefit from the same VAT treatment, which means 
that they must be subject to one and the same VAT adjustment period. It submits 
that, where buildings, as in the present case, undergo substantial renovations and 
therefore have a useful economic life equivalent to that of new buildings, which is 
demonstrated by the fact that the works are depreciated over a period of 33 years, 
they are comparable to new buildings, as a means of production created as a result 
of the works, and should benefit from the same VAT treatment. 
19 The referring court submits that, since L BV is asking it to interpret the directive 
differently from what is permitted under Belgian law and there is reasonable doubt 
as to the conformity of Belgian law with Community law, it is appropriate to 
submit questions for a preliminary ruling on this matter to the Court of Justice.