CJEU – Recent Developments in Value Added Tax 2021

S. 1941. C-604/19 (Gmina Wroclaw)

A municipality collecting fees for the Transformation of the right of perpetual usufruct into full immovable property ownership rights by operation of the law.

In its analysis of case C-604/19 (Gmina Wroclaw III), the Court looked at Art. 14(2), and has again put forward the same arguments of case C-665/16 (Gmina Wroclaw II), that Art. 14(2)(a) of the VAT Directive is a lex specialis, and therefore, the constitutive elements of the concept of supply of goods for ‘consideration’ in Art. 2(1)(a) are irrelevant.

The Court reiterated that a “supply of goods”, in Art. 14(2)(a), requires that three cumulative conditions must be satisfied; that is, there has to be a transfer of a right to ownership; that transfer has to be by order made by, or in the name of, a public authority or in pursuance of the law; and, there has to be payment of compensation.

The Court found that these three conditions were fulfilled, and therefore, decided that the transformation of the right of perpetual usufruct into full immovable property ownership rights, against a payment of a fee, constitutes a supply of goods.

The Court may have adopted a consistent approach in both cases involving Gmina Wroclaw II