Gmina Wrocław v Dyrektor Krajowej Informacji Skarbowej.

• Jurisdiction: European Union
• ECLI: ECLI:EU:C:2021:132
• Docket Number: C-604/19
• Date: 25 February 2021
• Celex Number: 62019CJ0604
• Court: Court of Justice (European Union)

Provisional text

JUDGMENT OF THE COURT (First Chamber)

25 February 2021 (*)

(Reference for a preliminary ruling – Taxation – Value added tax (VAT) – Directive 2006/112/EC – Article 2(1)(a) – Article 9(1) – Article 13(1) – Article 14(1) and (2)(a) – Concept of ‘supply of goods’ – Transformation of the right of perpetual usufruct into full immovable property ownership rights by operation of law – Municipality collecting fees for the transformation – Concept of ‘compensation’ – Concept of ‘taxable person acting as such’ – Exception – Bodies governed by public law which engage in activities or transactions as public authorities)

In Case C‑604/19,

REQUEST for a preliminary ruling under Article 267 TFEU from the Wojewódzki Sąd Administracyjny we Wrocławiu (Regional Administrative Court, Wrocław, Poland), made by decision of 19 June 2019, received at the Court on 9 August 2019, in the proceedings

Gmina Wrocław

v

Dyrektor Krajowej Informacji Skarbowej,

THE COURT (First Chamber),

composed of J.-C. Bonichot, President of the Chamber, L. Bay Larsen, C. Toader, M. Safjan and N. Jääskinen (Rapporteur), Judges,

Advocate General: J. Kokott,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

– the Gmina Wrocław, by E. Mroczko and T. Straszkiewicz, radcowie prawni,

– the Polish Government, by B. Majczyna, acting as Agent,

– the European Commission, by J. Jokubauskaitė and M. Siekierzyńska, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 3 September 2020,

gives the following

Judgment

1 This request for a preliminary ruling concerns the interpretation of Article 2(1)(a), Article 9(1), Article 13(1) and Article 14(1) and (2)(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1; ‘the VAT Directive’).

2 The request has been made in proceedings between the Gmina Wrocław (Municipality of Wrocław, Poland; ‘the Municipality of Wrocław’) and the Dyrektor Krajowej Informacji Skarbowej (Director of the National Tax Information Bureau, Poland; ‘the tax authority’) concerning the tax ruling addressed to that municipality in relation to the levying of value added tax (VAT) on fees which have been paid to it on account of the transformation of the right of perpetual usufruct into full immovable property ownership rights.

Legal context

EU law

3 Under Article 2(1)(a) of the VAT Directive, the supply of goods for consideration within the territory of a Member State by a taxable person acting as such is subject to VAT.

4 Article 9(1) of that directive provides:

‘“Taxable person” shall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity.

Any activity of producers, traders or persons supplying services, including mining and agricultural activities and activities of the professions, shall be regarded as “economic activity”. The exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis shall in particular be regarded as an economic activity.’

5 Article 13(1) of that directive is worded as follows:

‘States, regional and local government authorities and other bodies governed by public law shall not be regarded as taxable persons in respect of the activities or transactions in which they engage as public authorities, even where they collect dues, fees, contributions or payments in connection with those activities or transactions.

However, when they engage in such activities or transactions, they shall be regarded as taxable persons in respect of those activities or transactions where their treatment as non-taxable persons would lead to significant distortions of competition.

…’

6 Article 14 of the VAT Directive provides:

‘1. “Supply of goods” shall mean the transfer of the right to dispose of tangible property as owner.

2. In addition to the transaction referred to in paragraph 1, each of the following shall be regarded as a supply of goods:

(a) the transfer, by order made by or in the name of a public authority or in pursuance of the law, of the ownership of property against payment of compensation;

…’

Polish law

The Civil Code

7 Article 232 § 1 of the Ustawa z dnia 23 kwetnia 1964 r. – Kodeks cywilny (Law of 23 April 1964 establishing the Civil Code) (Dziennik Ustaw (Journal of Laws) of 1964, No 16, item 93), in the version applicable to the dispute in the main proceedings (‘the Civil Code’), provides:

‘Land belonging to the State and within the administrative limits of the cities, land belonging to the State outside those limits but incorporated into a city’s spatial development plan and used to achieve its economic objectives, as well as land belonging to a local authority or an association of local authorities, may be leased in perpetual usufruct to natural and legal persons.’

8 Article 233 of the Civil Code is worded as follows:

‘Within the limits laid down by the laws and rules of social conduct and by a contract leasing land belonging to the State or land belonging to a local authority or an association of local authorities in perpetual usufruct, the usufructuary may use the land to the exclusion of any other person. Within the same limits, the perpetual usufructuary may dispose of its right.’

9 Article 234 of that code states:

‘The provisions relating to the transfer of ownership of immovable property shall apply mutatis mutandis to the leasing in perpetual usufruct of land belonging to the State, to a local authority or to an association of local authorities.’

10 Under Article 236 §1 of that code:

‘Land belonging to the State, to a local authority or to an association of local authorities shall be leased in perpetual usufruct for a period of 99 years. In exceptional cases, where the economic objective of perpetual usufruct does not require the land to be leased for a period of 99 years, the period may be shorter but must be at least 40 years.’

11 Article 238 of the Civil Code provides:

‘The perpetual usufructuary shall pay an annual fee for the duration of its right.’

The Law on immovable property management

12 Article 12a(1) of the ustawa o gospodarce nieruchomościami (Law on immovable property management) of 21 August 1997 (Dziennik Ustaw (Journal of Laws) of 2018, item 2204), in the version applicable to the dispute in the main proceedings (‘the Law on immovable property management’), provides:

‘Amounts payable in respect of the management of immovable property which are governed by private law and are collected by the State, represented by the mayor in the performance of his or her public administrative tasks or by the Minister responsible for Construction, Planning, Spatial Development and Housing, may be wholly or partly redeemed, or may be deferred or paid in instalments.’

13 Article 27 of the Law on immovable property management is worded as follows:

‘The sale of immovable property, or the leasing of land in perpetual usufruct, must be the subject of a contract concluded in the form of a notarial act. The leasing of land in perpetual usufruct and the transfer of that right by contract must be entered in the land register.’

14 Article 32(1) and (2) of that law states:

‘1. Land leased in perpetual usufruct may be sold only to a perpetual usufructuary …

2. Previously established rights of perpetual usufruct shall expire by operation of law on the day that a contract for the sale of the property is concluded. …’

15 Article 69 of that law provides:

‘An amount equivalent to the value of the right of perpetual usufruct of the land, determined on the day of its sale, shall be included in the price of the land being sold to its perpetual usufructuary.’

16 Article 71(1) of that law is worded as follows:

‘An initial fee and an annual fee shall be payable for the leasing of land in perpetual usufruct.’

17 Under Article 72(1) of the Law on immovable property management, fees for perpetual usufruct are to be calculated as a percentage of the price of the land, which price is, in turn, to be determined under Article 67(1) of that law, on the basis of the value of the land. Article 72(3)(4) of that law states that, in the case of immovable property leased for residential purposes, the rate of the annual fee for perpetual usufruct is to be 1% of the price of the land.

The Law on VAT

18 Article 5(1)(1) of the ustawa o podatku od towarów i usług (Law on the tax on goods and services) of 11 March 2004 (Dziennik Ustaw (Journal of Laws) of 2004, No 54, item 535; ‘the Law on VAT’), provides:

‘The following shall be subject to the tax on goods and services …: the supply of goods or services for consideration within the territory of the country.’

19 Article 7(1) of the Law on VAT is worded as follows:

‘The supply of goods referred to in Article 5(1)(1) shall mean the transfer of the right to dispose of goods as owner, including:

(1) a transfer by order made by a public authority or by a person acting in the name of that public authority or a transfer in pursuance of the law of the ownership of goods against payment of compensation;

…

(6) the leasing of land in perpetual usufruct.’

The Law on transformation

20 Article 1(1) of the ustawa o przekształceniu prawa użytkowania wieczystego gruntów zabudowanych na cele mieszkaniowe w prawo własności tych gruntów (Law on the transformation of the right of perpetual usufruct of land developed for residential purposes into ownership rights over that land) of 20 July 2018 (Dziennik Ustaw (Journal of Laws) of 2018, item 1716; ‘the Law on transformation’), provides:

‘On 1 January 2019, the right of perpetual usufruct of land developed for residential purposes shall be transformed into ownership rights over that land.’

21 Article 4(1)(3) of the Law on transformation is worded as follows:

‘The certificate confirming the transformation (“the certificate”) issued by …...