- Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, OJ L347 of 11 December 2006 (hereinafter ‘VAT Directive’).
- See eg OECD, Consumption Tax Trends 2012 (Measuring Performance of VAT: The VAT Revenue Ratio).
- See Art 135(1)(l) VAT Directive; Art 44, para 3, 2 Belgian VAT Code.
- According to Art 137(1)(d) VAT Directive.
- In that respect, it is interesting to note that the ‘betting’ exemption only authorises Member States to subject the exemption ‘to conditions laid down by each Member State' (Art 135(1)(i) VAT Directive), while the ‘management’ exemption grants Member States the right to define the management of investment funds (Art 135(1)(g) VAT Directive). Given the peculiarities in the language of each provision, caution is needed when trying to translate outcomes or findings applicable to one exemption to others.
- See eg point 2 of administrative circular 73–004/2 dated 12 January 1973, stating: ‘par location immobilière, on entend, pour l'application de la présente circulaire, la convention par laquelle une des parties s'engage à faire jouir l'autre d'un immeuble par nature pendant un certain temps et moyennant une rémunération que celle-ci s'oblige à lui payer' (translation: ‘a contract by which one of the parties undertakes to allow the other the enjoyment of a thing during a certain time, in exchange for a certain sum which the latter undertakes to pay to the former’). Although no reference is made there to civil law, this definition shares many of the characteristics provided in Art 1709 of the Belgian Civil Code relating to the civil law form of louage de chose (literally, the ‘letting of things'). A further reference to civil law concepts is made, although not yet explicitly and a contrario, in the abovementioned circular, under point 6. The provisions of the Belgian Civil Code dealing specifically with the letting of immovable property are to be found in Arts 1714 et seq (see, in particular, Art 1719 requiring that the landlord provide the tenant with ‘peaceful enjoyment’ (jouissance paisible).
- Case C-284/03 Etat belge v Temco [2004] ECR I-11256 (CJEU).
- See C Amand, Location immobilière en TVA belge, approche formelle, historique et prospective de l'arrêt de la cour de cassation du 4 juin 2010, Mons Expo’, TFR, 410, p 868: ‘La Belgique et l'Italie n'avaient pas les moyens administratifs de mettre en œuvre la TVA… [L]e Parlement européen a suggéré l'introduction rapide d'un système TVA et d'autoriser des exemptions de TVA à condition qu'elles ne concernent que des opérations n'ayant pas d'impact… sur le commerce intracommunautaire.’ See also, from the same author, Hervorming van het btw-stelsel van onroe-rende verrichtingen, AFT, 1993, pp 245–54.
- D Stas, Na 40 jaar btw nog steeds zoveel onzekerheden inzake onroerend goed, AFT, 2011/12, p 42.
- And in fact, the only one of the group of the first six countries that formed what is now the European Union (see C Amand, G Schellmann and R Vermeulen, ‘Immovable Property and VAT: Lessons from the Past and from New Member States [2005] International VAT Monitor). See also Case C-381/97 Belgocodex [1998] ECR I-8153 (CJEU).
- Such an item is not provided in the exemption at the EU level, which refers only to the leasing and letting of immovable property. It has however been confirmed by the CJEU that the concept of leasing or letting of immovable property under Community law encompasses the assignment of leases (see Case C-108/99 Cantor Fitzegerald International [2001] ECR I-7257 (CJEU)).
- The expression ‘by nature’ is a clear addition from Belgium compared to the provision of the VAT Directive.
- Art 44, para 3, 2°, a of the Belgian VAT Code exempting ‘l'affermage, la location et la cession de bail de biens immeubles par nature à l'exception des prestations de services suivantes: la mise à disposition d'emplacements pour véhicules; la mise à disposition d'emplacements pour l'entreposage de biens; la fourniture de logements meublés dans les hôtels, motels et établissements où sont hébergés des hôtes payants; la mise à disposition d'emplacements pour le camping’.
- Art 44 para 3, 2°, b of the Belgian VAT Code in conjunction with Royal Decree no 30 dated 29 December 1992.
- Such a system typically excludes from the benefit of the VAT exemption warehousing used exclusively for storage, although the presence of an office space within the warehouse has been included, provided certain conditions are met (see Decision no 84.364, 29 September 1995).
- The absence of a definition is a common factor that the Belgian provisions share with the VAT Directive.
- See eg preliminary ruling no 300.116 dated 21 August 2003.
- eg to distinguish between taxable provisions of accommodation and the mere letting of furnished housing, or the criteria to be used to consider whether the use of a room in a restaurant or similar provider should fall within the scope of taxation (see, for the former, point 91 of the circular—contra Cass, 22 June 2012, F.11.0090.F/1—and, for the latter, points 35 et seq).
- eg when parties to an agreement disregarded the application of the relevant provision of the Belgian Civil Code or introduced specific modalities to contradict the definition as set forth in the Belgian Civil Code. For more detail on such practices, see eg D Stas, Na 40 jaar btw nog steeds zoveel onzekerheden inzake onroerend goed, AFT, 2011/12, pp 38–47; W Panis, De BTW-vrijstelling voor onroerende verhuur: kenmerken, uitsluitingen en alternatieven, TFR, 275–60.
- This does not mean that such regimes were not subject to challenge by authorities. See, for example, the case law on the letting of premises and sites for parking vehicles (Case C-173/88 Morten Henriksen [ECR] 1989 I-2763 (CJEU) and, in Belgium, Antwerp, 21 March 2006, 2003/AR/2152).
- See eg D Stas, Gebruiksovereenkomst kantoren: onroerende verhuur?, TFR, 197–275.
- See Case C-358/97 Commission v Ireland [2000] ECR I-6301 (CJEU); Case C-359/97 Commission v United Kingdom [2000] ECR I-6355 (CJEU).
- Case C-358/97 Commission v Ireland [2000] ECR I-6301 (CJEU), point 22 (we should remind ourselves that the issue at stake was the VAT treatment of tolls collected as consideration for the use of toll roads and toll bridges).
- See, inter alia, Case C-409/98 Mirror Group plc [2001] ECR I-7175 (CJEU); Case C-108/99 Cantor Fitzegerald [2001] ECR I-7275 (CJEU); Case C-326/99 Goed Wonen [2001] ECR I-6831 (CJEU); Case C-275/01 Sinclair Collis [2003] ECR I-5965 (CJEU).
- Case C-326/99 Goed Wonen [2001] ECR I-6831, point 52 (CJEU); Case C-275/01 Sinclair Collis [2003] ECR I-5965, points 27–30.
- Case C-284/03 Temco Europe SA v Kingdom of Belgium [2004] ECR I-11256 (CJEU).
- ibid, point 6.
- Civ Bruxelles, 29 November 2000, RG no 97/7739/A.
- See, inter alia, the cases referred to in Temco (n 26) at point 16.
- Oral question no 5064 from Mr Goyvaerts dated 19 January 2005, Question no 731 from Mr Arens dated April 2005 and Question no 773 from Mr Fournaux dated May 2005 were left almost unanswered.
- Question no 1272 from Mr Wathelet dated 3 May 2006. In his reply, the Minister only confirmed that the passive character is the key factor in appreciating the concept of the letting of immovable property.
- Case C-174/06, CO.GE.P [2007] ECR I-09359 (CJEU). It is interesting to note that the Belgian ruling commission in a ruling dated May 2007, only a couple of months prior to the CO.GE.P case, ended up considering that constructions formalised under domain concessions could be considered as falling under the right to exercise an economic activity and, therefore, be subject to VAT (Preliminary Decision no 600.298, 29 May 2007).
- See eg Oral question no 4288 from Mr Verherstraeten dated 11 May 2011.
- New provision of Art 44, para 3, 2°, a of the Belgian VAT Code excludes from the exemption the ‘letting’ of immovable property by nature in the exploitation of ports, navigable channels and airports (introduced in 2009).
- Administrative circular 73–004/2 dated 12 January 1973 provides that the VAT treatment of such transactions depends on the contractual framework: either the parties consider that they fall under the definition of letting of immovable property (and are, therefore, VAT exempt) or they consider that it is a taxable supply of goods to be extracted (see also Administrative Decision ET 33.856 dated 8 February 1980).
- See eg Gent, 9 January 2007, FJF, no 2007/201; Civ Bruxelles, 3 September 2007, FJF, no 2008/95.
- Antwerp, 13 May 2008, no 2006/AR/2069.
- See the conditions set out in administrative circular no 39/2005 (ET 108.816) dated 27 September 2005. The development of a such regime is not linked to the Temco case, as it was introduced after the NV Becolab case heard by the Brussels Court of Appeal on 3 March 2005 (no 2002/AR/79), which had to distinguish between the VAT exempted letting of immovable property (defined by reference to the conditions provided by the Belgian Civil Code) and the taxable right to exercise an economic activity. The regime was further confirmed by recent ruling decisions (see eg Decision no 2010.392, 21 December 2010). One may find some benefit in the application of such a regime, at least for those operating such business centres. It is still unclear whether it will apply in situations where, for example, the operator is, by nature, a VAT exempt taxpayer. One may think of situations such as where lawyers (who are still considered as VAT exempt taxpayers in Belgium—see Art 44, para 1, 1°) who own a property let spare office space, together with ancillary services complying with those required under the business centres circular: should such situations be captured by the circular and be subject to VAT (and in practice, is this done, and even more importantly audited consistently?) or would other exemptions provisions come into play (eg the cost-sharing exemption or even VAT unity mechanisms)? This is one practical issue but potentially involves three different tax regimes (and associated compliance).
- Cass, 4 June 2010 (C.09.0285.F), FJF, no 2011/50.
- For the avoidance of doubt, this does not mean that the authors believe it was the right one.
- Bruxelles, 15 June 2011, no 2011/AR/20.
- Amand's comment that such a transaction did not fall under the Belgian Civil Code definition of what should constitute the letting of immovable property is interesting as it fosters a debate on whether Belgian policymakers have put too much emphasis on a particular decision of the Court of Justice (see Amand (n 8) 873; Stas (n 9) 42).
- Cass, 6 June 2013, no F.12.0005.F (not yet published).
- The recent administrative circular published to address the particular situation of shopping malls should be noted (administrative circular no 34/2012 (ET 99.377) dated 29 October 2012): it provides many derogations and discretionary powers for the authorities in a sector where practices have often lacked consistency.
- As the CJEU stated in the MacDonald Resorts case, when assessing time-sharing arrangements, these may well fall within the definition of (exempted) letting of immovable property but Member States have the opportunity to exclude them from the exemption should they be willing to do so (Case C-270/09 MacDonald Resorts Ltd [2010] ECR I-13179, point 52).
- In that respect, the recent decision (22 June 2012) of the Belgian Supreme Court dealing with the VAT treatment of furnished houses should be noted (Cass, 22 June 2012, F.11.0090.F, p 20). The Court suggested that the criteria provided under the Belgian administrative circular of 1973 (ie whether the services are of the same nature as those developed in the hotel sector) should be disregarded and replaced by the Community law definition. Should this interpretation be correct, the effectiveness of the discretionary power granted to Member States to reduce the scope of the exemption would be significantly reduced.
- See Amand (n 8) 873; Stas (n 9) 42.
- Case C-346/10 BLM (CJEU, 29 March 2012), not yet published.
- Case C-392/11 Field Fisher Waterhouse LLP (CJEU, 27 September 2012), not yet published.
World Journal of VAT/GST Law
Volume 2, 2013 - Issue 2