Opinion of the Advocate General — ECLI:EU:C:2021:413
Date: 2021-05-20
Language of the case: French
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: France

summary appeal, supplementary pleading, reply and fresh pleadings, registered 
on 20 December 2017, 20 March, 21 September and 16 November 2018 and 
7 June 2019 at the secretariat of the judicial section of the Conseil d’Etat, the 
company Icade Promotion Logement claims that the Conseil d’Etat should:  
1. set aside the second judgment;  
2. ruling on the substance of the case, uphold its appeal; 
3. in the alternative, request a preliminary ruling from the Court of Justice of 
the European Union on the interpretation of Article 392 of Council Directive 
2006/112/EC on the common system of value added tax [OJ 2006 L 347, p. 1]; 
… 
… Icade Promotion Logement claims that the Administrative Court of Appeal: 
‒ distorted the facts in holding that it had not provided any details on the 
precise nature of the work it had carried out on each of the parcels of land in 
question prior to their sale and that, consequently, it had no grounds to claim that 
the sale of those parcels of land had contributed to the production of new 
buildings within the meaning of Article 257(7) of the code général des impôts 
(General Tax Code; ‘the Tax Code’); 
‒ failed to state sufficient reasons for its decision and erred in law in holding 
that its transactions involving the sale of parcels of land to individuals fell not 
within the scope of the VAT scheme for immovable property provided for in 
Article 257(7) of the … ‘Tax Code’ but within the scope of the scheme of the 
VAT on profit margin provided for by Article 257(6); 
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‒ erred in law in holding that French legislation, in making land subdivision 
operations carried out by local authorities exempt from VAT, pursuant to 
Article 261(5) of the Tax Code, while those same operations when carried out by 
private actors remained subject to the VAT margin scheme, did not infringe the 
principle of VAT neutrality; 
‒ erred in law in relying on the fact that land purchase transactions are not 
subject to VAT to infer that the application of the margin taxation scheme 
provided for by Article 257(6) of the Tax Code to transactions for the sale of land 
was in conformity with Article 392 of Directive 2006/112 …; 
‒ erred in law in holding that, to the extent that it provides that the VAT 
margin scheme may apply to supplies of buildings and building land purchased for 
resale, Article 392 of Directive 2006/112 … is neither intended to exclude – nor 
has the effect of excluding – from the VAT margin scheme purchases of 
undeveloped land before it is resold as building land. 
By three statements of defence, registered on 3 August and 10 October 2018 and 
24 March 2020, the ministre de l’action et des comptes publics (the Minister for 
Action and Public Accounts) contends that the appeal should be dismissed. The 
Minister maintains that the grounds put forward by the appellant company are 
unfounded and that there is no need to request a preliminary ruling from the Court 
of Justice of the European Union. 
Having regard to the documents in the file; 
Having regard to: 
‒ Directive 2006/112 …; 
‒ the Tax Code and the livre des procédures fiscales (the Book on Tax 
Procedures; ‘the LPF’); 
‒ the code de justice administrative (Code of Administrative Justice) and 
Order No 2020-305 of 25 March 2020; 
… 
And having regard to the following facts: 
1. It is apparent from the documents in the file submitted to the court dealing with 
the substance of the case that Icade Promotion Logement, whose business consists 
in land development, applied to the transactions for the sale of building land to 
individuals which it carried out between 1 January and 31 December 2007 and 
between 1 January and 31 December 2008 the VAT margin scheme resulting from 
the combined provisions of Article 257(6) and Article 268 of the Tax Code. On 
the basis of Article L. 190 of the LPF, it applied to the tax authorities for the 
restitution of the tax it had accordingly paid, amounting, according to its own 
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calculations, to EUR 2 826 814 in respect of the period 1 January to 31 December 
2007 and to EUR 2 369 881 in respect of the period 1 January to 31 December 
2008. The tax authorities having dismissed its application, Icade Promotion 
Logement brought the dispute before the Tax Court. It brought an appeal in 
cassation against the second judgment delivered by the Administrative Court of 
Appeal in that dispute, by which that court, without ruling on the question of 
admissibility, dismissed the company’s claim for restitution as unfounded. 
2. On the one hand, according to Article 12 of Directive 2006/112 …: ‘1. Member 
States may regard as a taxable person anyone who carries out, on an occasional 
basis, a transaction relating to the activities referred to in the second 
subparagraph of Article 9(1) and in particular one of the following 
transactions: … (b) the supply of building land …’. Article 135 of the directive 
provides that: ‘1. Member States shall exempt the following transactions: … (k) 
the supply of land which has not been built on other than the supply of building 
land as referred to in point (b) of Article 12(1) …’. According to Article 392 of 
the directive: ‘Member States may provide that, in respect of the supply of 
buildings and building land purchased for the purpose of resale by a taxable 
person for whom the VAT on the purchase was not deductible, the taxable amount 
shall be the difference between the selling price and the purchase price.’ 
3. On the other hand, Article 257 of the Tax Code, in the version applicable to the 
tax periods at issue, provides: ‘The following shall also be subject to value added 
tax: … (6) Without prejudice to the provisions of paragraph 7: (a) Transactions 
relating to immovable property … the income from which must be included in the 
taxable amount for the purposes of income tax on industrial or commercial 
profits; … (7) Transactions contributing to the production or supply of buildings. 
Such transactions are taxable even when of a private nature. 1. The following, in 
particular, are included: (a) The sale … of building land, of property treated as 
building land in accordance with point (A) of Article 1594-0 G …; The first 
subparagraph shall apply, in particular, to land in respect of which, within four 
years of the date of the relevant deed of purchase, the purchaser … obtains a 
building permit or commences the necessary works for the construction of a 
building or group of buildings or for the construction of new premises above 
existing buildings. The present provisions shall not apply to land purchased by a 
natural person for the purpose of the construction of a building which that person 
is to use for residential purposes. …’. Article 268 of the Tax Code, in the version 
applicable to the tax periods at issue, provides: ‘In relation to the transactions 
referred to in Article 257(6), the taxable amount for value added tax purposes 
shall be the difference between: (a) the price charged together with relevant 
associated charges, or the market value of the property if greater than the price 
charged together with relevant associated charges, and (b) … the amount which 
the seller has paid for any reason for the purchase of the property …’. 
4. It follows from the provisions of paragraph 7 of Article 257 of the Tax Code cited 
above that that paragraph was not applicable to the sale of building land purchased 
by a natural person for the purpose of the construction of a building which the 
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latter was to use for residential purposes. Consequently, such transactions were 
subject to VAT on the basis of the provisions of paragraph 6 of the same article, 
when they were carried out by persons falling within the scope of that paragraph. 
In such cases, pursuant to Article 268 of the Tax Code, the tax was levied not on 
the sale price of the land but on the margin achieved by the seller. 
5. Icade Promotion Logement maintained before the Administrative Court of Appeal 
that it had made purchases of land that had not been built on, which fell outside 
the scope of VAT, for the purpose of reselling it without having constructed 
buildings on it. It had then divided the land it had purchased into parcels and 
carried out works to install various services for each of the parcels (roads, 
drinking water, electricity, gas, sewage, telecommunications), before selling the 
serviced parcels to natural persons, as building land, for the construction of 
residential buildings. In disputing the application to those sales of VAT on the 
margin, Icade Promotion Logement argued, on the basis of the combined 
provisions of Article 257(6) and Article 268 of the Tax Code, that the application 
of the margin taxation scheme to those transactions was incompatible with 
Article 392 of Directive [2006/112], in two respects.  
6. In the first place, according to Icade Promotion Logement, Article 392 of 
Directive [2006/112] permits the Member States to make the supply of building 
land subject to a margin taxation scheme only where the taxable person that 
carries out the supply has paid VAT when purchasing the land without having any 
right to deduct it. In response to that argument, the Administrative Court of 
Appeal found that the absence of a ‘right of deduction’ during the purchase 
mentioned by Article 392 of Directive [2006/112] covers cases where the 
purchase has not been subject to VAT. Icade Promotion Logement maintains that 
the Administrative Court of Appeal erred in law on this point, arguing in 
particular that the English-language version of Article 392 of Directive [2006/112] 
clearly restricts the option of applying a margin taxation scheme to cases where 
the purchase of the property subsequently resold has been subject to VAT, without 
the person who resells the property being able to deduct that tax. 
7. The response to this ground alleging an error of law depends on whether 
Article 392 of Directive [2006/112] – which, as a derogating provision, must be 
applied strictly – must be interpreted as reserving the application of the margin 
taxation scheme to transactions for the supply of immovable property the purchase 
of which has been subject to VAT, without the taxable person who subsequently 
resells the property having the right to deduct that tax, or whether it permits, more 
broadly – as the French-language version of the provision suggests – the 
application of such a scheme to transactions for the supply of immovable property 
the purchase of which has not been subject to VAT, either because the purchase 
falls outside the scope of VAT or because, though falling within the scope of 
VAT, it is exempt from it. 
8. In the second place, according to Icade Promotion Logement, Article 392 of 
Directive [2006/112] permits the Member States to make the supply of building 
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land subject to a margin taxation scheme only where the taxable person who 
carries out the supply does no more than purchase and resell the land as it is. In 
response to that argument, the Administrative Court of Appeal held that the 
reference in Article 392 of Directive [2006/112] to the supply of building land 
‘purchased for the purpose of resale’ is neither intended to exclude, nor has the 
effect of excluding, purchases of land that has not been built on before the resale 
of such land as building land. Icade Promotion Logement maintains that the 
Administrative Court of Appeal erred in law on this point, arguing in particular 
that the margin taxation scheme may not be applied to transactions for the sale of 
immovable property that has been developed following its acquisition. 
9. The response to this second plea depends on whether Article 392 of Directive 
[2006/112], which, as a derogating provision, must be applied strictly, must be 
interpreted as excluding the application of the margin taxation scheme to 
transactions for the supply of building land in the following two cases: either 
where the land, purchased as land that has not been built on, becomes building 
land in the time between it is purchased and resold by the taxable person; or 
where, in the time between being purchased and resold by the taxable person, it is 
developed, in the sense that it is divided into parcels or works are carried out in 
order to install services (roads, drinking water, electricity, gas, sewage, 
telecommunications). 
10. The issues mentioned in paragraphs 7 and 9 are decisive to the resolution of the 
present dispute and exhibit serious difficulties of interpretation, in the absence of 
case-law of the Court of Justice of the European Union shedding light on the 
purpose and scope of the provisions at issue. Consequently, it is necessary to refer 
the matter to the Court pursuant to Article 267 [TFEU] and, pending the Court’s 
ruling, to stay the proceedings on the appeal brought by Icade Promotion 
Logement. 
D E C I D E S: 
Article 1: The appeal proceedings brought by Icade Promotion Logement are 
stayed pending a ruling by the Court of Justice of the European Union on the 
following questions: 
‘1. Is Article 392 of [Council] Directive [2006/112/EC] of 28 November 2006 
[on the common system of value added tax] to be interpreted as reserving the 
application of the margin taxation scheme to transactions for the supply of 
immovable property the purchase of which has been subject to VAT, without the 
taxable person who subsequently resells the property having the right to deduct 
that tax, or does it permit that scheme to be applied to transactions for the supply 
of immovable property the purchase of which has not been subject to VAT, either 
because that purchase falls outside the scope of VAT or because it falls within the 
scope of VAT but is exempt from it? 
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2. Is Article 392 of Directive [2006/112] to be interpreted as excluding the 
application of the margin taxation scheme to transactions for the supply of 
building land in the following two cases: 
(a) where that land, purchased as land that has not been built on, becomes 
building land in the time between it is purchased and resold by the taxable person; 
(b) where that land, in the time between it is purchased and resold by the taxable 
person, is developed, in the sense that it is divided into parcels or works are 
carried out in order to install services (roads, drinking water, electricity, gas, 
sewage, telecommunications)?’ 
…