ECJ Case: Clarification on Polish VAT deduction rules

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In the case of Case No. C-729/21, a Polish company acquired a shopping center, encompassing the land, building, and leases, and sought to deduct VAT on the transaction. However, the tax authority denied the company’s right to deduct VAT, arguing that the transaction fell outside the scope of VAT. The administrative court upheld this decision, creating a need for further clarification.




Upon a request for a preliminary ruling, the European Court of Justice (ECJ) provided the following determinations related to the EU Directive 2006/112/EC on the common system of VAT:

  1. National Law Provision: The ECJ affirmed that national law can stipulate that a transfer of all or part of the property is not subject to VAT unless the recipient becomes the legal successor of the transferor. This allows for the possibility of VAT exemption based on the specific conditions set by national legislation.
  2. Valid Transfer of Assets: The ECJ clarified that a transfer of all or part of the assets, including a partial transfer of an enterprise, can be considered valid for VAT purposes. As long as the components transferred are sufficient to enable the enterprise to conduct independent economic activity, the VAT treatment is applicable.



Source: Europe.eu

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