Skatteministeriet v KPC Herning.
Date: 2019-09-04
20


Before the referring court, the Ministry of Taxation argued that, in accordance with the judgment of 19 November 2009, Don Bosco Onroerend Goed (C‑461/08, EU:C:2009:722, paragraph 43), it was for the Member States to define the concept of ‘building land’. That power should be exercised within the limits resulting from the exemptions provided for in Article 135(1)(j) and (k) of Directive 2006/112 as regards immovable property consisting of a building and the land on which it stands and land which has not been built on and is not intended to support a building.
21


Under Danish law, the concept of ‘building land’ covers land which has not been built on, bearing in mind that the economic reality and, therefore, the issue of whether the immovable property is intended to support a new building are decisive in that regard. That interpretation would not render Article 135(1)(j) of Directive 2006/112 meaningless, since it does not lead to the classification of any supply of an existing building and the land on which that building stands as a supply of building land. Furthermore, it is consistent with the judgment of 20 February 1997, DFDS (C‑260/95, EU:C:1997:77, paragraph 23), in accordance with which consideration of the economic reality is a fundamental criterion for the application of the common system of VAT.
24


KPC Herning also claimed that it was necessary to distinguish the supply of the buildings from the supply of immovable property not yet built on within the meaning of Article 12(2) and Article 135(1)(k) of Directive 2006/112 respectively. The terms used in those provisions should be given an independent interpretation which does not deprive them of their effects, as confirmed by the case-law of the Court (judgments of 8 June 2000, Breitsohl, C‑400/98, EU:C:2000:304, paragraph 48; of 11 June 2009, RLRE Tellmer Property, C‑572/07, EU:C:2009:365, paragraph 15; and of 17 January 2013, Woningstichting Maasdriel, C‑543/11, EU:C:2013:20, paragraph 25).
26


Moreover, for the purposes of assessing a transaction in the light of Directive 2006/112, it is for the national authorities, in accordance with the case-law of the Court, to take account of the objective nature of the transaction and not the subjective intention of the parties (judgment of 27 September 2007, Teleos and Others, C‑409/04, EU:C:2007:548, paragraph 39).
35


In that regard, it is clear from the Court’s case-law that, where a transaction comprises a bundle of elements and acts, regard must be had to all the circumstances in which the transaction in question takes place in order to determine whether that operation gives rise, for the purposes of VAT, to two or more distinct supplies or to one single supply (judgment of 18 October 2018, Volkswagen Financial Services (UK), C‑153/17, EU:C:2018:845, paragraph 29).
36


The Court has also held, first, that it follows from the second subparagraph of Article 1(2) of Directive 2006/112 that every transaction must normally be regarded as distinct and independent and, second, that a transaction which comprises a single supply from an economic point of view should not be artificially split, so as not to distort the functioning of the VAT system (judgment of 18 October 2018, Volkswagen Financial Services (UK), C‑153/17, EU:C:2018:845, paragraph 30).
37


Accordingly, in certain circumstances, several formally distinct services, which could be supplied separately and thus give rise, separately, to taxation or exemption, must be considered to be a single transaction when they are not independent (judgment of 19 December 2018, Mailat, C‑17/18, EU:C:2018:1038, paragraph 32).
38


A supply must be regarded as a single supply where two or more elements or acts supplied by the taxable person are so closely linked that they form, objectively, a single, indivisible economic supply, which it would be artificial to split (judgment of 28 February 2019, Sequeira Mesquita, C‑278/18, EU:C:2019:160, paragraph 30). That is also the case where one or more supplies constitute a principal supply and the other supply or supplies constitute one or more ancillary supplies which share the tax treatment of the principal supply. In particular, a supply must be regarded as ancillary to a principal supply if it does not constitute, for customers, an end in itself but a means of better enjoying the principal service supplied (judgment of 19 December 2018, Mailat, C‑17/18, EU:C:2018:1038, paragraph 34).
39


In order to determine whether the services supplied constitute independent services or a single service, it is necessary to examine the characteristic elements of the transaction concerned. However, there is no absolute rule for determining the extent of a service for VAT purposes and in order to determine the extent of a service, all the circumstances in which the transaction concerned takes place must, therefore, be taken into account (judgment of 17 January 2013, BGŻ Leasing, C‑224/11, EU:C:2013:15, paragraph 32).
40


In the course of an overall assessment of the circumstances of a transaction, the declared intention of the parties concerning the VAT liability of a transaction must be taken into consideration, provided that it is supported by objective evidence (judgment of 12 July 2012, J.J. Komen en Zonen Beheer Heerhugowaard, C‑326/11, EU:C:2012:461, paragraph 33).
42


Thus, in the judgment of 19 November 2009, Don Bosco Onroerend Goed (C‑461/08, EU:C:2009:722, paragraphs 39, 40 and 44), the Court held, first, that the economic object pursued by the seller and by the purchaser of the immovable property was the supply of land ready for construction. To that end, it noted that the vendor was responsible for the demolition of the existing building on the land in question and that the cost of that demolition had been borne, at least in part, by the purchaser. Similarly, it noted that, at the date of the supply of the immovable property, the demolition of the building had already begun. In the light of those circumstances, the Court classified the supply of the immovable property in question and the demolition of the existing building as a single supply of land which had not been built upon.
43


It is clear from the case-law of the Court that the relevant objective factors to be taken into consideration for the purposes of classifying a given transaction as regards VAT include the state of advancement, at the date of the supply of a property composed of land and a building, of the demolition or transformation works carried out by the vendor, the use of that immovable property on the same date and the undertaking by the vendor to carry out demolition work in order to enable future construction (see, to that effect, judgments of 12 July 2012, J.J. Komen en Zonen Beheer Heerhugowaard, C‑326/11, EU:C:2012:461, paragraph 34, and of 17 January 2013, Woningstichting Maasdriel, C‑543/11, EU:C:2013:20, paragraph 33).
44


Moreover, in its judgment of 8 July 1986, Kerrutt (73/85, EU:C:1986:295, paragraphs 12 and 15), the Court, hearing the question of whether the supply of building land and the subsequent construction on that land of a new building, as provided for in a framework contract, were to be classified as a single transaction, took account of the fact that, first, the transaction relating to the land and, second, supplies of property and services constituted legally distinct transactions carried out by different contractors. In the light of those factors, it held that, despite the economic links between all the transactions at issue and their common purpose, which consisted of the construction of a building on the land acquired, it was not appropriate, in the circumstances of that case, to classify them as a single transaction.
53


The Member States, when defining what land is to be regarded as being ‘building land’, must have regard to the objective pursued by Article 135(1)(k) of Directive 2006/112, which seeks to exempt from VAT only supplies of land which has not been built on and is not intended to support a building (judgment of 17 January 2013, Woningstichting Maasdriel, C‑543/11, EU:C:2013:20, paragraph 30).
56


Thus, those provisions, read together, make a distinction between old and new buildings, the sale of an old building not being, as a rule, subject to VAT (judgment of 16 November 2017, Kozuba Premium Selection, C‑308/16, EU:C:2017:869, paragraph 30).
57


The ratio legis of those provisions is the relative lack of added value generated by the sale of an old building. Indeed, the sale of a building following its first supply to a final consumer, which marks the end of the production process, does not generate any significant added value and must therefore, as a rule, be exempt (judgment of 16 November 2017, Kozuba Premium Selection, C‑308/16, EU:C:2017:869, paragraph 31).
60


Such an interpretation would be contrary to that provision. The interpretation of the terms used to describe the exemptions envisaged by Article 135(1) of Directive 2006/112 must be consistent with the objectives pursued by those exemptions and comply with the requirements of the principle of fiscal neutrality inherent in the common system of VAT. Accordingly, those terms must not be construed in such a way as to deprive the exemptions of their intended effects (see, to that effect, judgment of 16 November 2017, Kozuba Premium Selection, C‑308/16, EU:C:2017:869, paragraphs 39 and 40).