Keywords
Summary

Keywords

1. Tax provisions - Harmonisation of laws - Turnover taxes - Common system of value added tax - Exemptions provided for by the Sixth Directive - Exemption for the letting of immovable property - Meaning - Payment of a sum of money by the landlord to the future tenant - Excluded

(Council Directive 77/388, Art. 13B(b))

2. Tax provisions - Harmonisation of laws - Turnover taxes - Common system of value added tax - Exemptions provided for by the Sixth Directive - Exemption for the letting of immovable property - Meaning - Option agreement in relation to leases of immovable property in return for a sum of money paid by the landlord - Excluded

(Council Directive 77/388, Art. 13B(b))

Summary

1. The letting of immovable property for the purposes of Article 13B(b) of the Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes essentially involves the landlord of property assigning to the tenant, in return for rent and for an agreed period, the right to occupy his property and to exclude other persons from it. It is thus the landlord who makes a taxable supply of services and the tenant who, in return for the supply, pays consideration. Therefore, a person who does not initially have any interest in the immovable property and who enters into an agreement for lease of that immovable property with a landlord and/or accepts the grant of a lease of the property in return for a sum of money paid by the landlord does not make a supply of services falling within Article 13B(b) cited above.

( see paras 31-32, 36 and operative part 1 )

2. A person who does not initially have any interest in the immovable property and who enters into an option agreement in relation to leases of that immovable property in return for a sum of money paid by the landlord, on terms that the money will remain in a special account as security for its obligations under the option agreement, and who subsequently exercises the options under the option agreement and accepts the grant of leases of the immovable property in return for the release of the money in its special account, at no time makes a supply of services falling within Article 13B(b) of the Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes.

( see para. 39 and operative part 2 )