Order;Summary — ECLI:EU:C:2021:394
Date: 2021-05-18
Language of the case: Swedish
Court formation: Eighth Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Sweden

Summary C-248/20 — 1 
Case C-248/20 
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:  
9 June 2020 
Referring court:  
Högsta förvaltningsdomstolen (Sweden) 
Date of the decision to refer:  
19 May 2020 
Appellant:  
Skatteverket 
Respondent:  
Skellefteå Industrihus Aktiebolag, Skellefteå 
Subject of the action in the main proceedings 
The refund of input value added tax (VAT) in respect of which a deduction was 
granted in the context of the option for taxation in connection with the 
construction of a building.  
Subject and legal basis of the reference for a preliminary ruling 
Request for a preliminary ruling under Article 267 TFEU concerning the 
interpretation of the provisions of Council Directive 2006/112/EC on the common 
system of value added tax (the VAT Directive) on the option for taxation of 
lettings of immovable property and adjustment of input tax deductions. 
Question referred 
Is it compatible with the VAT Directive, in particular with Articles 137, 168, 184 
to 187, 189 and 192 thereof, that a property owner, who opted for taxation of the 
construction of a building and who has deducted the input tax paid on the 
acquisitions relating to the building project, must immediately repay the total 
amount of input tax, together with interest, on the ground that the liability for tax 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-248/20 
 
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ceases by reason of the discontinuance of the construction project before the 
building is completed and that there is therefore no letting? 
Provisions of EU law and case-law of the Court of Justice relied upon 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax (OJ 2006 L 347, p. 1), Articles 137, 168, 184 to 187, 189 and 192 
Judgment of 29 February 1996, Inzo, C-110/94, EU:C:1996:67 
Judgment of 15 January 1998, Ghent Coal Terminal, C-37/95, EU:C:1998:1 
Judgment of 8 June 2000, Schloβstrabe, C-396/98, EU:C:2000:303 
Judgment of 8 June 2000, Breitsohl, C-400/98, EU:C:2000:304 
Judgment of 29 April 2004, Gemeente Leusden and Holin Groep, C-487/01 and 
C-7/02, EU:C:2004:263 
Judgment of 9 September 2004, Vermietungsgesellschaft Objekt Kirchberg, 
C-269/03, EU:C:2004:512 
Judgment of 12 January 2006, Tum- und Sportunion Waldburg, C-246/04, 
EU:C:2006:22  
Judgment of 30 March 2006, Uudenkaupungin kaupunki, C-184/04, 
EU:C:2006:214 
Judgment of 29 November 2012, Gran Via Moinești, C-257/11, EU:C:2012:759 
Judgment of 28 February 2018, Imofloresmira — Investimentos Imobiliários, 
C-672/16, EU:C:2018:134 
Relevant provisions of national law 
Mervärdesskattelagen (Law on value added tax; ‘the ML’) (1994:200), in 
particular Chapter 9, Paragraph 11 
‘Where an option for taxation in accordance with Paragraph 2 ceases before a 
taxable letting or other leasing occurs, an adjustment shall be made once and shall 
be valid for the remainder of the adjustment period. In addition, the input tax 
relating to the period between the option for taxation and the date on which it 
ceases shall be paid to the State. Interest shall be payable on the amounts of the 
adjustment and the tax. [...] 
[...]’ 
SKELLEFTEÅ INDUSTRIHUS 
 
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Brief summary of the facts and the procedure in the main proceedings 
1 Skellefteå Industrihus Aktiebolag intended to construct an office building on a 
property which the company owned. The company applied to opt for taxation and 
was already granted the option during construction of the building, in accordance 
with the provisions of the ML concerning the option for taxation in respect of the 
leasing of immovable property. The company then deducted the input VAT in the 
sum of SEK 966 508 in respect of the acquisition of certain supplies of services 
relating to the planned building. After, inter alia, one of the prospective tenants 
advised that it was no longer interested in leasing premises in the building, it 
became apparent that the project would not be profitable and the company decided 
to halt the construction work. Thereupon the option for taxation relating to the 
property came to an end. 
2 The ML contains provisions on the adjustment and refund of input tax where an 
option for taxation comes to an end. In accordance with those provisions, the 
company repaid in full the input tax deducted during the period in which it had 
opted to be liable for taxation on the property. Three years later, it applied for a 
review and claimed that a deduction should be granted in respect of the input tax. 
In support of that claim, the company submitted that the requirement laid down in 
the ML that input tax must be repaid is incompatible with the VAT Directive. The 
Skatteverket (Swedish Tax Agency) rejected that application. 
3 The company appealed against that decision in an action before the 
Förvaltningsrätten i Umeå (Administrative Court, Umeå, Sweden), which upheld 
its claim. The Skatteverket appealed to the Kammarrätten i Sundsvall 
(Administrative Court of Appeal, Sundsvall, Sweden), which dismissed the 
appeal. The Skatteverket appealed against the judgment of the Kammarrätten and 
claims that the Högsta förvaltningsdomstolen (Supreme Administrative Court, 
Sweden) should vary the judgment and find that the company is liable to repay the 
input tax at issue. 
Principal arguments of the parties in the main proceedings 
4 The Skatteverket argues that the entire Swedish system of option for taxation in 
respect of the letting of immovable property was created in the context of the 
discretion which the Member States have pursuant to Article 137 of the VAT 
Directive. 
5 There is no obligation on the Member States to reconcile the option for taxation in 
respect of the letting of immovable property with provisions giving an ongoing 
right to deduct input tax during the period of construction of a building. The 
Swedish provisions on the option for taxation during the construction stage thus 
go beyond what is necessary to satisfy the requirements of the directive as regards 
the right to deduct. Consequently, the right to deduct, on the basis of decision to 
opt to be liable for taxation during the construction stage, is not comparable to the 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-248/20 
 
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right to deduct tax on acquisitions for a new business activity of a type which 
carries compulsory tax liability. 
6 Since the right to deduct can be definitively established only when the building is 
complete and the letting has commenced, a decision that the option for taxation 
during the construction stage is to come to an end before the building is complete 
does not entail a withdrawal of a right to deduct which was previously acquired. 
Application of Chapter 9, Paragraph 11, of the ML therefore does not have the 
effect of limiting the right to deduct in a manner contrary to the directive. 
7 If the input tax cannot be recovered where the option for taxation which existed 
during the construction stage comes to an end, the property owner to whom that 
tax liability was granted will be treated more favourably than a property owner 
who did not apply for that option or whose application was refused. There is 
therefore a material difference in the right to deduct according to whether 
deductions are made as retroactive deductions, an adjustment or ongoing 
deductions under an option for taxation during the construction stage. Similar 
situations would therefore be treated differently. 
8 In addition, the fact that the tax liability ends entails in itself a change in the 
factors determining the right to deduct which, under Articles 184 and 185 of that 
directive, must lead to an adjustment of the deduction of input tax. In accordance 
with Article 186, the Member States are to lay down the detailed rules for making 
the adjustment provided for in Articles 184 and 185. The obligation to repay and 
adjust deductions, laid down in Chapter 9, Paragraph 11, of the ML, falls within 
the decision-making powers of the Member States provided for in those articles. 
9 Skellefteå Industrihus Aktiebolaget states that the discretion which the Member 
States have under Article 137 of the VAT Directive relates to the extent of the 
liability for taxation and to the conditions for admission to the option for taxation 
scheme. However, the Member States are not entitled, under that provision, to 
restrict or reinstate the right to deduct where the conditions governing liability to 
taxation are satisfied. 
10 The fact that there may be a difference in the right to deduct according to whether 
the deductions are made as retroactive deductions, an adjustment or ongoing 
deductions under the option for taxation during the construction stage is explained 
by the fact that purchases are made in the latter case, unlike in the first two cases, 
for an activity which is taxable at the time of acquisition. That difference therefore 
does not mean that similar situations are treated differently, since those situations 
are different. 
11 The company properly entered into the option for taxation scheme and deducted 
input tax only during the period in which the intention still was that its 
acquisitions would be used in connection with future taxable transactions. 
However, for reasons beyond the company’s control, no letting ever came into 
being. The investment in respect of which the deduction was made could not 
SKELLEFTEÅ INDUSTRIHUS 
 
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therefore be used as part of an activity. The investment is no longer of any value 
and must therefore be deemed to have been consumed (see Article 185(2) of the 
directive). 
Brief summary of the reasons for the referral 
12 The case concerns the compatibility with the VAT Directive of the application of 
the provisions of Chapter 9, Article 11, of the ML, where the liability for taxation 
comes to an end, as a result of the halting of the construction project before the 
building was completed, and, consequently, there is no letting. 
13 The effect of the Swedish provisions is that all the input VAT relating to the 
construction project and deducted by the owner of the property must be repaid to 
the State. Repayment is to be made immediately in the full amount. In addition, 
interest is payable on the amount. 
14 The provisions of Chapter 9, Article 11, of the ML have no direct equivalent in 
the VAT Directive. The Skatteverket is of the view, however, that those 
provisions fall within the discretion which the Member States have with regard to 
the detailed rules for the option for taxation of lettings of immovable property. If 
that is not deemed to be the case, it is necessary to determine in addition whether 
those provisions may nevertheless be allowed on the basis of the rules in the 
directive relating to the adjustment of deductions. 
15 It is clear from the case-law of the Court of Justice that Article 137 of the directive 
confers a broad discretion on the Member States. They may, for example, exclude 
certain transactions or categories of taxable persons from the right of option for 
taxation and make the option subject to a prior approval procedure (see, for 
example, Vermietungsgesellschaft Objekt Kirchberg, C-269/03, EU:C:2004:512, 
paragraphs 21 to 23, and Tum- und Sportunion Waldburg, C-246/04, 
EU:C:2006:22, paragraphs 27 to 30). That discretion also includes the possibility 
of providing that taxation will be effective only after an application for taxation 
has been made and that only after that date will deduction of input VAT be 
possible (Uudenkaupungin kaupunki, C-184/04, EU:C:2006:214, paragraph 45). 
16 However, it is also clear from the case-law of the Court that such rules must not 
result in a restriction of the right to deduct in connection with taxable transactions 
where the right of option has been properly exercised in accordance with the 
national rules. The Court has held that the rules in the directive on the right of 
option for taxation do not permit Member States to restrict the right to deduct 
provided for therein or to withdraw a right of deduction which has already been 
acquired. Such restrictions do not, in fact, affect the scope of the right of option 
for taxation, which the Member States may restrict, but affect the consequences of 
exercising that right (Uudenkaupungin kaupunki, paragraphs 45 and 46, and 
Imofloresmira − Investimentos Imobiliários, C-672/16, EU:C:2018:134, 
paragraphs 48 and 49). 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-248/20 
 
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17 The question then arises whether the Swedish provisions in Chapter 9, 
Paragraph 11, of the ML are such as to fall within the scope of the discretion 
conferred in Article 137. In support of its assertion that that is the case, the 
Skatteverket submits that that article does not lay down any requirement that the 
liability for taxation and, therefore, the right to deduct, must be granted during the 
construction stage. According to the Skatteverket, in so far as the Swedish 
legislation goes beyond that which is required under the directive as regards the 
time from which deduction of input tax is allowed, it must also be compatible with 
the directive to withdraw the deduction granted if the situation proves to be one in 
which a taxable letting never comes into being. 
18 The company, for its part, is of the view that, in so far as the provisions of Chapter 
9, Article 11, apply to the deduction of input tax made during the period in which 
the company had opted for taxation, those provisions are not such as to fall within 
the scope of the discretion conferred by Article 137.  
19 If the Swedish provisions are not deemed to be such as to fall within the scope of 
the discretion which the Member States have pursuant to Article 137, it is 
necessary to determine whether they may nevertheless be allowed in the light of 
the directive’s rules on the adjustment of deductions. 
20 Under Article 168 of the directive, a taxable person is to be entitled to deduct the 
VAT which is paid on goods and services used for the purposes of taxable 
transactions. In Inzo (C-110/94, EU:C:1996:67, paragraphs 18 and 19), the Court 
held that there is also a right to deduct in respect of acquisitions made during the 
start-up stage of an activity, provided that those acquisitions are intended to be 
used for taxable transactions. 
21 It is also clear from that ruling that the right to deduct is retained even if the 
activity envisaged is never undertaken and therefore does not give rise to taxable 
transactions (Inzo, paragraph 20). That is also confirmed by recent case-law (see, 
for example, Ghent Coal Terminal, C-37/95, EU:C:1998:1, paragraph 19; 
Schloβstrabe, C-396/98, EU:C:2000:303, paragraph 42; Breitsohl, C-400/98, 
EU:C:2000:304, paragraph 41; and Gran Via Moinești, C-257/11, 
EU:C:2012:759, paragraph 29). 
22 However, in some of those cases, the Court stated the reservation that the 
retention of the right to deduct exists ‘subject to adjustments’ (see Schloßstrabe, 
paragraph 42; Breitsohl, paragraph 41; and Gran Via Moinești, paragraph 29). 
Furthermore, in the cases of Gemeente Leusden and Holin Groep (C-487/01 and 
C-7/02, EU:C:2004:263), the Court pointed out, in particular, that the questions 
referred to it in the cases of Schloßstrabe and Breitsohl did not concern the 
possibility of adjustment of deductions (see paragraph 63). 
23 Against that background, according to the Högsta förvaltningsdomstolen 
(Supreme Administrative Court), it is not entirely clear how the principle laid 
down in the case of Inzo, that is to say, that the right to deduct is retained even if 
SKELLEFTEÅ INDUSTRIHUS 
 
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an activity is discontinued before it gives rise to taxable transactions, relates to the 
rules on the adjustment of deductions. 
24 One interpretation of the case-law could be that the right to deduct may be 
restricted in the event of the coming to an end of the liability for taxation as a 
result of the halting of the intended activity, provided that that restriction is made 
in accordance with the rules on the adjustment of deductions. Viewed in that light, 
the fact that the liability for taxation comes to an end when there is no longer an 
intention to carry out taxable transactions could be such a ‘change ... in the factors 
used to determine the amount to be deducted’, which, in accordance with 
Article 185(1), entails an adjustment of the deduction. The Skatteverket takes the 
view that that is the case and that the provisions of Chapter 9, Paragraph 11, of the 
ML are within the discretion which the Member States have pursuant to 
Article 186 for implementation of the adjustment. 
25 If, instead, since the acquisition relates to capital goods, the view is taken that, in 
such a case, the deduction must be adjusted in accordance with the specific 
provisions of Article 187 et seq., it is, however, only the adjustment of the part of 
the deduction which relates to the tax in respect of the period after the liability for 
taxation came to an end that finds express support in the directive. Yet under the 
Swedish legislation, the proportion of input tax relating to the period before that 
liability came to an end must also be repaid. Moreover, both the adjustment and 
the repayment must be made immediately, that is to say not by instalments during 
the adjustment period, and interest is payable on the amounts due. Therefore, if 
those are the articles which must apply, it is also necessary to determine whether 
the wording of the Swedish legislation remains within the framework of the 
measures which the Member States may adopt under Articles 189 and 192. 
26 However, another interpretation of the case-law is that the reservation of any 
adjustments made in the cases referred to in paragraph 22 above is merely a 
reminder that the right to deduct is not always free from adjustments such as those 
which arise as a result of a situation other than one where the intended activities 
do not come into being. On that interpretation, the fact that the liability for 
taxation comes to an end once there is no longer an intention to carry out taxable 
transactions is not, in itself, an event such as to give rise to the obligation to adjust 
deductions previously granted. 
27 That interpretation is supported by the judgment in Ghent Coal Terminal. After 
having found that the right to deduct is retained even if the intended economic 
activity has not given rise to taxable transactions, the Court pointed out that the 
supply of capital goods during the adjustment period, such as that at issue in the 
proceedings before the national court, may, in the present case, give rise to an 
adjustment of the deduction (see paragraph 23). In that regard, the Court referred 
to the provision now contained in Article 188 of the VAT Directive. It was thus 
the tax-free disposal of the property and not the fact that the intended activity on 
the property did not come into being which gave rise to the requirement for an 
adjustment. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-248/20 
 
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28 Moreover, it should be noted that the Court, in stating, in paragraph 29 of the 
Gran Via Moinești case, that the right to deduct is retained ‘subject to 
adjustments’, referred to paragraph 23 of the Ghent Coal Terminal case. 
29 Further support is to be found in Article 185(2) of the directive for the premiss 
that the fact that an intended activity does not come into being does not, in itself, 
lead to an adjustment of a previously granted deduction. That article states that no 
adjustment is to be made in the case of destruction or loss of property. In the event 
of the halting of a construction project, the investments previously made in the 
project may be deemed to have been lost. 
30 The Högsta förvaltningsdomstolen (Supreme Administrative Court) requests that 
the Court rule, should it hold that the Swedish provisions are not such as to fall 
within the scope of the discretion which the Member States have pursuant to 
Article 137, on whether they may nevertheless be allowed, in whole or in part, on 
the basis of the provisions of the directive relating to the adjustment of deductions.