Case C‑331/14

Petar Kezić s.p. Trgovina Prizma

v

Republika Slovenija

(Request for a preliminary ruling from the Vrhovno sodišče Republike Slovenije)

‛Reference for a preliminary ruling — Taxation — Value added tax — Sixth Directive 77/388/EEC — Articles 2(1) and 4(1) — Tax liability — Immovable property transactions — Sale of lands assigned to the private assets of a natural person exercising the profession of sole trader — Taxable person acting as such’

Summary — Judgment of the Court (Second Chamber), 9 July 2015

Harmonisation of fiscal legislation — Common system of value added tax — Taxable transactions — Sale of plots of land assigned to a sole trader’s private assets — Included — Condition

(Council Directive 77/388, Arts 2(1) and 4(1) and (2))

Articles 2(1) and 4(1) of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes must be interpreted as meaning that, where a taxable person has acquired plots of land, some of which have been assigned to his private assets and others to his business and, where he has built, in his capacity as a taxable person, upon all of those plots of land, a shopping centre which was then sold together with the plots of land on which the building was erected, the sale of the plots of that land which were assigned to that taxable person’s private assets must be made subject to value added tax since that taxable person, at the time of that transaction, acted as such.

Since transactions effected for consideration by a taxable person are in principle subject to value added tax where that taxable person acted as such, the sale of land is not subject to value added tax solely due to the fact that land is assigned to the private assets of that taxable person. It is also necessary, in addition to there being an assignment to those private assets, that such a sale be made by the taxable person concerned not in the course of his economic activity, but in the course of the management and the administration of his private assets.

In this respect it is true that the mere exercise of the right of ownership by its holder cannot, in itself, be regarded as constituting an economic activity. However, as regards the sale of building land, a relevant assessment criterion is the fact that the party has taken active steps to market property by mobilising resources similar to those deployed by producers, traders or persons supplying services within the meaning of Article 4(2) of the Sixth Directive, such as, in particular, the carrying out on that land of preparatory work to make development possible, and the deployment of proven marketing measures. Such initiatives do not normally fall within the scope of the management of private assets so that the sale of land designated for development in such a situation cannot be regarded as the mere exercise of the right of ownership by its holder.

(see paras 22-24, 28, operative part)

Case C‑331/14

Petar Kezić s.p. Trgovina Prizma

v

Republika Slovenija

(Request for a preliminary ruling from the Vrhovno sodišče Republike Slovenije)

‛Reference for a preliminary ruling — Taxation — Value added tax — Sixth Directive 77/388/EEC — Articles 2(1) and 4(1) — Tax liability — Immovable property transactions — Sale of lands assigned to the private assets of a natural person exercising the profession of sole trader — Taxable person acting as such’

Summary — Judgment of the Court (Second Chamber), 9 July 2015

Harmonisation of fiscal legislation — Common system of value added tax — Taxable transactions — Sale of plots of land assigned to a sole trader’s private assets — Included — Condition

(Council Directive 77/388, Arts 2(1) and 4(1) and (2))

Articles 2(1) and 4(1) of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes must be interpreted as meaning that, where a taxable person has acquired plots of land, some of which have been assigned to his private assets and others to his business and, where he has built, in his capacity as a taxable person, upon all of those plots of land, a shopping centre which was then sold together with the plots of land on which the building was erected, the sale of the plots of that land which were assigned to that taxable person’s private assets must be made subject to value added tax since that taxable person, at the time of that transaction, acted as such.

Since transactions effected for consideration by a taxable person are in principle subject to value added tax where that taxable person acted as such, the sale of land is not subject to value added tax solely due to the fact that land is assigned to the private assets of that taxable person. It is also necessary, in addition to there being an assignment to those private assets, that such a sale be made by the taxable person concerned not in the course of his economic activity, but in the course of the management and the administration of his private assets.

In this respect it is true that the mere exercise of the right of ownership by its holder cannot, in itself, be regarded as constituting an economic activity. However, as regards the sale of building land, a relevant assessment criterion is the fact that the party has taken active steps to market property by mobilising resources similar to those deployed by producers, traders or persons supplying services within the meaning of Article 4(2) of the Sixth Directive, such as, in particular, the carrying out on that land of preparatory work to make development possible, and the deployment of proven marketing measures. Such initiatives do not normally fall within the scope of the management of private assets so that the sale of land designated for development in such a situation cannot be regarded as the mere exercise of the right of ownership by its holder.

(see paras 22-24, 28, operative part)