Judgment;Summary — ECLI:EU:C:2020:785
Date: 2020-10-01
Language of the case: Dutch
Court formation: Eighth Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Belgium

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:  
24 May 2019 
Referring court:  
Hof van Cassatie (Court of Cassation, Belgium) 
Date of the decision to refer:  
26 April 2019 
Appellant in cassation:  
Vos Aannemingen BVBA 
Respondent in cassation:  
Belgische Staat 
  
Subject matter of the main proceedings 
The appeal in cassation concerns a dispute between Vos Aannemingen BVBA 
(appellant in cassation, ‘the appellant’) and the tax administration (Belgische Staat 
(Belgian State), respondent in cassation) concerning the deductibility of value 
added tax (VAT) on advertising and administrative costs and on estate agents’ 
fees. The appeal has been brought against a judgment of the Hof van beroep Gent 
(Court of Appeal, Ghent, Belgium), upholding the tax administration’s appeal and 
declaring the appellant’s original claim to be well founded only in part, that is 
only as regards repayment of the administrative fine imposed. At first instance, the 
appellant had also claimed a refund of the VAT which it had paid in the sum of 
EUR 92 313.99, plus interest. 
Subject matter and legal basis of the request 
Request pursuant to Article 267 TFEU for a preliminary ruling on the 
interpretation of Article 17 of Sixth Council Directive 77/388/EEC of 17 May 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-405/19 
 
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1977 on the harmonisation of the laws of the Member States relating to turnover 
taxes — Common system of value added tax: uniform basis of assessment  
Questions referred for a preliminary ruling 
‘1. Is Article 17 of Directive 77/388/EEC to be interpreted as meaning that the 
fact that expenditure also benefits a third party — as is the case where, in 
connection with the sale of apartments, a project promoter pays advertising costs, 
administrative costs and estate agents’ commission, which also benefit the 
landowners — does not preclude the value added tax (VAT) charged on those 
costs from being fully deductible, provided that it is established that there is a 
direct and immediate link between the expenditure and the economic activity of 
the taxable person and that the advantage to the third party is of secondary 
importance compared to the requirements of the taxable person’s business? 
2. Does that principle apply also where the costs in question are not general costs 
but costs attributable to specific output transactions which may or may not be 
subject to VAT, such as in this case the sale, on the one hand, of apartments and, 
on the other, of land? 
3. Does the fact that the taxable person is able/entitled to pass on part of the 
expenditure to the third party whom the expenditure benefits, but does not do so, 
have any impact on the question of the deductibility of the VAT on those costs?’ 
Provisions of EU law relied on 
Article 17 of Sixth Council Directive 77/388/EEC of 17 May 1977 on the 
harmonisation of the laws of the Member States relating to turnover taxes — 
Common system of value added tax: uniform basis of assessment (‘the Sixth 
Directive’) 
Provisions of national law relied on 
Article 149 of the Grondwet (Belgian Constitution); 
Articles 1319, 1320 and 1322 of the Burgerlijk Wetboek (Belgian Civil Code); 
Article 19(1) and (2), Article 1068(1) and point 3 of Article 1138 of the 
Gerechtelijk Wetboek (Belgian Judicial Code);  
Article 45(1) of the Wet van 3 juli 1969 tot invoering van het Wetboek van de 
belasting over de toegevoegde waarde (Law of 3 July 1969 on the implementation 
of the Value Added Tax Code; ‘VAT Code’); 
Article 1(2) of the Koninklijk Besluit nr. 3 van 10 december 1969 met betrekking 
tot de aftrekregeling voor de toepassing van de belasting over de toegevoegde 
VOS AANNEMINGEN 
 
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waarde (Royal Decree No 3 of 10 December 1969 on deductions for the 
application of VAT), in the version applicable before amendment by the Royal 
Decree of 24 January 2015. 
Succinct presentation of the facts and procedure in the main proceedings 
1 The appellant’s sole economic activity is the construction and sale of apartment 
buildings. It builds apartments on land owned by third parties and subsequently 
offers the apartments for sale, in connection with which it incurs advertising and 
administrative costs and pays commission to estate agents. The appellant appears 
in the deeds of sale of the apartments as the seller of the building, while the 
landowner appears as the seller of the land. 
2 The appellant deducted in full the VAT on the advertising and administrative costs 
and estate agents’ fees. 
3 After initiating a review, the tax administration took the view, in respect of the 
period from 1 January 1999 to 30 September 2001 inclusive, that VAT was 
deductible only in so far as it related to the sale of the buildings and not in so far 
as it related to the sale of the land. According to the tax administration, the right of 
deduction applies only to a percentage determined by a fraction in which the price 
of the building is the numerator and the price of the building plus the price of the 
land is the denominator. 
4 The administration issued an order for payment, pursuant to which the appellant, 
reserving all rights, paid VAT in the amount of EUR 92 313.99, together with 
interest and fines. 
5 The appellant subsequently lodged an objection to the order for payment and 
claimed a refund of the sums it had paid. 
By decision of 21 March 2016, the rechtbank van eerste aanleg Oost-Vlaanderen, 
afdeling Gent (East Flanders Court of First Instance, Ghent Division, Belgium) 
upheld the appellant’s claim. The Court of First Instance considered in that 
respect, in essence, that the sale of the building and of the land constitutes a single 
supply, so that the advertising and estate agency services paid for by the appellant 
can be regarded in their entirety as forming part of the general costs of its sole 
economic activity. Furthermore, the Court of First Instance considered that the 
fact that the landowner may derive an advantage from the advertising costs and 
commission must be regarded as being of secondary importance compared to the 
appellant’s requirements. 
6 The administration appealed against that decision to the Court of Appeal, Ghent. 
By judgment of 28 November 2017 the appeal was allowed and the appellant’s 
original claim upheld only in part, that is to say, only as regards the administrative 
fine imposed. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-405/19 
 
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Essential arguments of the parties in the main proceedings 
7 According to the appellant, the advertising and administrative costs and estate 
agents’ commission have a direct and immediate link with the operation of its 
economic activity, so that deduction in full of the input tax is justified. 
In its view, the appeal court could not lawfully deny the right to full deduction of 
the input tax on that expenditure on the grounds that the appellant’s submission 
that, in order for the VAT to be deducted, it was sufficient for there to be a direct 
and immediate link with its taxable transactions could not be accepted, that the 
appellant had disregarded the fact that it is legally possible to sell land and 
buildings separately, and that, although there was a certain link between the sale 
of the buildings and the sale of the land, this did not constitute the direct and 
immediate link referred to. 
8 Furthermore the appellant claims that when an input transaction is, objectively, 
carried out for the subsequent performance of certain or all of the taxable person’s 
taxable activities, that taxable person can deduct the input tax in full, even if the 
transaction is for the benefit of a third party and the third party would normally 
have had to bear part of the expenditure, provided that the personal advantage to 
the third party is secondary to the requirements of the taxable person’s business. 
According to the appellant, the appeal court did not address the appellant’s 
argument that the indirect advantage afforded to the landowners is secondary to 
the requirements of its business, and so the court was not entitled to justify its 
decision merely by finding that the appellant could pass on part of the costs to the 
landowners and that the costs in question would normally have to be borne by 
them. 
9 Finally, the appellant submits that a taxable person acting as such at the time when 
it obtains a service and who uses the service for specific transactions in the 
context of its economic activities may deduct the VAT due or paid in respect of 
that service, even if the costs involved are not general but specific costs. 
In the appellant’s view, the appeal court should not therefore have refused to 
allow the deduction in full of the input tax on the aforementioned expenditure on 
the ground that the costs in question were incurred for the purpose of selling 
specific buildings and land. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
10 According to point 1 of Article 45(1) of the VAT Code, which transposed 
Article 17(2) of the Sixth Directive, every taxable person may deduct from the tax 
which he is liable to pay the tax charged in respect of goods delivered to him and 
services supplied, in so far as he uses the goods and services for the purposes of 
carrying out taxable transactions. 
VOS AANNEMINGEN 
 
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11 According to settled case-law of the Court of Justice of the European Union, the 
existence of a direct and immediate link between a particular input transaction and 
a particular output transaction or transactions giving rise to entitlement to deduct 
is, in principle, necessary before the taxable person is entitled to deduct input 
VAT and in order to determine the extent of such entitlement. The right to deduct 
VAT charged on the acquisition of input goods or services presupposes that the 
expenditure incurred in acquiring them was a component of the cost of the output 
transactions that gave rise to the right to deduct (see, in particular, judgment of 
29 October 2009, SKF, C-29/08, paragraph 57). 
It is, however, also accepted that a taxable person has a right to deduct even where 
there is no direct and immediate link between a particular input transaction and an 
output transaction or transactions giving rise to the right to deduct, where the costs 
of the services in question are part of his general costs and are, as such, 
components of the price of the goods or services which he supplies. Such costs do 
have a direct and immediate link with the entirety of the taxable person’s 
economic activities (see, in particular, judgment of 29 October 2009, SKF, 
C-29/08, paragraph 58). 
12 In its judgment in AES-3C of 18 July 2013 (C-124/12) the Court of Justice ruled, 
referring to its judgment in Fillibeck of 16 October 1996 (C-258/95), that the 
Sixth Directive must be interpreted as meaning that transport provided for 
employees free of charge by the employer between their homes and the workplace 
serves, in principle, the employees’ private purposes and thus serves purposes 
other than those of the business, and that there is therefore in principle no right to 
deduction of the VAT charged in respect of those transport services. However, 
where, having regard to certain circumstances, such as the difficulty of finding 
other suitable means of transport and changes in the place of work, the 
requirements of the business make it necessary for the employer to provide 
transport for employees, the supply of those transport services is not effected for 
purposes other than those of the business, in which case the VAT charged on 
those services can be deducted (paragraph 29). The Court of Justice further 
recalled that the fact that personal benefit may be derived by employees from such 
transport must be regarded as being of only secondary importance compared to the 
needs of the business (paragraph 33). 
13 In its judgment in Iberdrola of 14 September 2017 (C-132/16), the Court of 
Justice determined that Article 168(a) of Council Directive 2006/112/EC of 
28 November 2006 on the common system of value added tax, which corresponds 
to Article 17(2)(a) of the Sixth Directive, must be interpreted as meaning that a 
taxable person has the right to deduct input VAT in respect of a supply of services 
consisting of the construction or improvement of a property owned by a third 
party when that third party enjoys the results of those services free of charge and 
when those services are used both by the taxable person and by the third party in 
the context of their economic activity, in so far as those services do not exceed 
that which is necessary to allow that taxable person to carry out the taxable output 
transactions and where their cost is included in the price of those transactions. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-405/19 
 
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14 According to the referring court, although those judgments also concern situations 
in which a third party gains an advantage from an input service, they do not 
establish with any certainty whether the appellant’s legal analysis is correct and 
whether, in a situation such as that of the case in the main proceedings, the VAT 
on the advertising  and administrative costs and estate agents’ commission paid by 
the appellant in connection with the sale of the apartments can be deducted in full, 
even where those expenses also benefit the landowners and could in part be 
passed on to them, provided that it is established that the advantage to those 
landowners is of secondary importance compared to the requirements of the 
appellant’s business. 
15 The referring court thus considers it necessary to put the aforementioned questions 
to the Court of Justice for a preliminary ruling.