The preliminary ruling for Case No. C-239/22, published in the European Union Official Gazette on May 8, provides clarification on the Belgian VAT exemption rules for sales of converted buildings.
In 2008, a Belgian company engaged in a purchase arrangement involving a sale contract for a building and a separate contract for renovation work. The tax authority deemed the transaction to be artificially divided in order to gain an improper tax advantage and reclassified the property as a single sale of new apartments subject to a 21 percent VAT.
Following a request for a preliminary ruling, the ECJ determined that, according to the EU VAT Directive, the VAT exemption for sales of new buildings and land also applies to properties that were previously occupied prior to conversion, even in cases where domestic legislation does not explicitly address the application of the criterion of first occupation to building conversions.
The ruling provides important guidance and clarity on the application of VAT rules for sales of converted buildings in Belgium.