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Rulings of the Court of Justice of the European Union – VAT

C-55/14 Régie communale autonome du stade Luc Varenne

Letting of immovable property

ECJ ruled that making available sport infrastructure, such as football stadium, for a fee which also covers additional services, in particular maintenance, cleaning, upkeep (mowing, grass sowing etc.) and ensuring regulatory compliance of the playing surface, does not qualify as VAT exempt letting of immovable property but rather as an agreement subject to VAT.

On 22 January 2015 ECJ ruled in the proceeding between Régie communale autonome du stade Luc Varenne, which runs Luc Varenne football stadium (“Corporation”), and the Kingdom of Belgium. The subject of discussion was nature of service of making available football stadium for a fee which also covers additional services such as maintenance, cleaning, upkeep and ensuring regulatory compliance of playing surface.

The Corporation runs Luc Varenne football stadium and it deducted input VAT upon procurement of the stadium. In 2003 the Corporation signed an agreement on the use of the stadium with local football club and charged VAT on the service provided. It was agreed that 20% of the service fee relates to the right of access to the football pitch (limited to 18 days per sport season) and 80% represents consideration for additional services - maintenance, cleaning, upkeep (mowing, grass sowing etc.) and ensuring regulatory compliance of the playing surface. The Belgian Tax Administration qualified this arrangement as letting of immovable property which is, under the Belgian VAT legislation, VAT exempt without credit. Consequently, the Belgian Tax Administration disputed input VAT the Corporation deducted upon procurement of the stadium.

ECJ was requested to rule if the arrangement between the Corporation and the football club can it be qualified as VAT exempt (without credit) letting of immovable property.

Ruling

ECJ ruled that contractually making available of football stadium for a fee of which 80% represents consideration for various other services, especially maintenance, cleaning, upkeep and ensuring regulatory compliance of the playing surface, generally does not qualify as letting of immovable property that is VAT exempt without credit.

In the ruling commentary ECJ asserts that the fundamental characteristic of the concept of ‘letting of immovable property’ lies in contractually conferring on the other party, for an agreed period and for payment, the right to occupy property as if that person were the owner and to exclude any other person from enjoyment of such a right. Upon consideration of the contract between the Corporation and the football club, ECJ concluded that the supply represents complex service consisting of granting access to the football stadium and related maintenance, cleaning, upkeep and ensuring regulatory compliance of the playing surface. Taking into consideration that only 20% of the fee relates to the right of access to the stadium ECJ concluded that the transaction does not constitute VAT exempt letting of immovable property.

Following the above, terms and conditions of the supply have to be considered when assessing its VAT treatment. In the event the service includes granting access to the immovable property for a limited number of days during a given period and related management, maintenance and cleaning services, while the major part of fee relates to those supporting services, the supply does not qualify as VAT exempt letting of immovable property but rather as regular supply on which the VAT should be charged.

Note that Croatia opted to limit the scope of the EU VAT Directive Article 135 (1) (l) which prescribes exemption for letting of immovable property. Croatia exempts only letting of immovable property for residential purposes - VAT should be charged to all other types of letting (tourist, business etc.).

Rulings of the Court of Justice of the EU - VAT

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