Don Bosco Onroerend Goed BV v Staatssecretaris van Financiën.
Date: 2009-11-19
25. It should be noted at the outset that, according to consistent case-law, the terms used to specify an exemption such as that set out in Article 13 of the Sixth Directive are to be interpreted strictly, since that exemption constitutes an exception to the general principle that VAT is to be levied on all goods and services supplied for consideration by a taxable person. Nevertheless, the interpretation of those terms 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. Thus, the requirement of strict interpretation does not mean that the terms used to specify the exemptions referred to in Article 13 should be construed in such a way as to deprive the exemptions of their intended effect (see, to that effect, Case C‑445/05 Haderer  [2007] ECR I‑4841, paragraph 18; Case C‑407/07 Stichting Centraal Begeleidingsorgaan voor de Intercollegiale Toetsing  [2008] ECR–I0000, paragraph 30; and Case C‑357/07 TNT Post UK  [2009] ECR I–0000, paragraph 31).
31. In this respect, interpretation of that provision cannot be based on the Commission’s initial proposal or its amended proposal for the Sixth Directive. Those proposals embodied exhaustive rules as regards the supply of immovable property and, in particular, a common definition of building land. Moreover, the exemption from VAT was not limited to the supply of land which has not been built on. The Council of the European Union, however, did not accept either of those proposals and opted for a different approach. Notably, as regards the term ‘building land’, the Council finally referred to the Member States’ definitions (see, to that effect, Case C‑468/93 Gemeente Emmen  [1996] ECR I‑1721, paragraph 21).
34. Accordingly, it must be decided whether, for VAT purposes, and in particular the interpretation of the provisions governing the questions referred by the national court, the supply of the property and the demolition of the buildings are to be considered to be two distinct and independent transactions requiring separate assessment or as a single complex transaction comprising several elements (see, to that effect, Case C‑41/04 Levob Verzekeringen and OV Bank  [2005] ECR I‑9433, paragraphs 18 and 20, and Case C‑425/06 Part Service  [2008] ECR I‑897, paragraphs 48 and 49).
35. It is true that it follows from Article 2 of the Sixth Directive that every supply or transaction must normally be regarded as distinct and independent (see, to that effect, particularly Part Service , paragraph 50 and the case-law cited, as well as Case C‑572/07 RLRE Tellmer Property  [2009] ECR I–0000, paragraph 17).
36. In certain circumstances, however, several formally distinct transactions, which could be supplied separately and thus give rise, in turn, to taxation or exemption, must be considered to be a single transaction when they are not independent (see, to that effect, Part Service , paragraph 51, and RLRE Tellmer Property , paragraph 18).
37. This is particularly true where two or more elements or acts supplied by the taxable person to the customer are so closely linked that they form, objectively, a single, indivisible economic supply, which it would be artificial to split (see, to that effect, Case C‑111/05 Aktiebolaget NN  [2007] ECR I‑2697, paragraph 23; Part Service , paragraph 53; and RLRE Tellmer Property , paragraph 19).
38. According to the Court’s case-law, where a transaction comprises a bundle of features and acts, regard must be had to all the circumstances in which the transaction in question takes place in order to determine whether there were two or more distinct transactions or one single transaction (see, to that effect, in particular Levob Verzekeringen and OV Bank , paragraph 19, and Aktiebolaget NN , paragraph 21). Therefore, contrary to what Don Bosco and the Netherlands Government claim, account must be taken of additional supplies, such as the ones described in the second and third questions referred for a preliminary ruling, by the vendor of the immovable property, in order to determine whether the transaction at issue is exempt from VAT.
39. In a situation such as that at issue in the case in the main proceedings, it must be held that, for VAT purposes, the actions undertaken by the vendor are closely linked. The demolition work and the supply of the plot of land as such actually overlapped. The economic purpose of those actions was to supply land ready for construction. In this respect, it is not possible, without undue contrivance, to take the view that Don Bosco acquired from the same person first an old building and the ground it stood on which, as it happened, was of no economic use to him, and, only subsequently, the supplies in connection with the demolition of the buildings, which alone could render the land economically useful (see, by analogy, Aktiebolaget NN , paragraph 25).
40. Consequently, the supply of land on which a dilapidated building still stands, which must be demolished so that a new building can be constructed in its place and demolition of which had already begun before that supply took place, and also the demolition of that building must, in circumstances such as those described by the referring court, be considered to form a single transaction for VAT purposes, having, taken as a whole, the aim of supplying not the existing building but land that had not been built on.
43. In that respect, it must be recalled that, taking into account the express reference, in Article 4(3)(b) of the Sixth Directive, to the Member States’ definitions of building land, it is for the Member States to define what land is to be regarded as being building land, for the purposes of the application both of Article 4(3)(b) and of Article 13B(h) of the Sixth Directive, while having regard to the objective pursued by Article 13B(h), which seeks to exempt from VAT only supplies of land which has not been built on and is not intended to support a building (see, to that effect, Gemeente Emmen , paragraphs 20 and 25).
44. In the light of the foregoing, the answer to the questions referred must be that Article 13B(g) of the Sixth Directive in conjunction with Article 4(3)(a) of that directive must be interpreted as meaning that the exemption from VAT provided for in Article 13B(g) does not cover the supply of land still occupied by a dilapidated building that is to be demolished and replaced by a new building and whose demolition, paid for by the vendor, had already begun before the actual supply took place. For VAT purposes, such supply and such demolition form a single transaction, given that, taken as a whole, the aim of the transactions was not to supply the existing building and the land it stands on but land that has not been built on, regardless of how far demolition of the old building had progressed at the moment the land was actually supplied.
Costs