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The CJEU assessed the scope of the VAT exemption for the transfer of land

In its judgment C-594/23, the CJEU ruled that the supply of land on which only the foundations of a residential building are located constitutes a taxable supply of "building land" within the meaning of the VAT Directive.

The Directive is intended to exempt from VAT only the supply of undeveloped land which is not intended for development or, conversely, land on which a building or part of a building is already standing, within a certain period of completion or first occupation. On the other hand, land on which a building is yet to be constructed is taxable as building land. Although the Directive defines a building very broadly as "any structure firmly attached to the ground", the foundations alone are not sufficient to be considered a (completed) building or part of a building for VAT purposes. The building, which could be occupied (in the words of the CJEU, put into use), has yet to be constructed on the land. Such land must therefore continue to be regarded as building land.

The judgment provides further clarification in assessing the taxation or exemption of the transfer of land. It is also important to bear in mind the amendment to the VAT Act 2025 which alters the existing definition of building land with effect from 1 July 2025.

If you have any questions, please contact the author of this article or the EY team you are working with.

Author:

Ivana Krylová