F R v Finanzamt Österreich (T-413/25)

Contents

Judgment of the General Court (Fifth Chamber, sitting with five Judges)2 September 2026^note(Reference for a preliminary ruling — Taxation — Common system of VAT — Supply of goods for consideration — Article 2(1)(a) of Directive 2006/112/EC — Application of a business asset transferred free of charge or applied for purposes other than those of the business — Article 16 of Directive 2006/112 — Transfer of a totality of assets or part thereof — Article 19 of Directive 2006/112 — Contribution of developed properties — Option for the Member States to exclude the transfer of a totality of assets or part thereof from the scope of VAT — Direct effect)In Case T‑413/25 [Peckeger],^noteREQUEST for a preliminary ruling under Article 267 TFEU from the Verwaltungsgerichtshof (Supreme Administrative Court, Austria), made by decision of 28 May 2025, received at the Court of Justice on 10 June 2025, in the proceedingsFRvFinanzamt Österreich,THE GENERAL COURT (Fifth Chamber, sitting with five Judges),composed of M. Sampol Pucurull, President, T. Pynnä, J. Laitenberger, M. Stancu and W. Valasidis (Rapporteur), Judges,Advocate General: J. Martín y Pérez de Nanclares,Registrar: V. Di Bucci,having regard to the transmission of the request for a preliminary ruling to the General Court by the Court of Justice on 30 June 2025, pursuant to the third paragraph of Article 50b of the Statute of the Court of Justice of the European Union,having regard to the fact that the case concerns the area referred to in point (a) of the first paragraph of Article 50b of the Statute of the Court of Justice of the European Union and the fact that there is no independent question relating to interpretation within the meaning of the second paragraph of Article 50b of that statute,having regard to the written part of the procedure,after considering the observations submitted on behalf of:– FR, by M. Achatz and P. Pichler, acting as tax advisers,– the Austrian Government, by J. Schmoll and G. Kunnert, acting as Agents,– the European Commission, by P. Carlin and L. Hohenecker, acting as Agents,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following

Judgment

1This request for a preliminary ruling concerns the interpretation of Article 2(1)(a) and Articles 16 and 19 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’).

2The request has been made in proceedings between FR, a private person operating an individually owned undertaking, and the Finanzamt Österreich (Tax Office, Austria; ‘the tax authority’) concerning the treatment of a contribution of immovable properties with regard to value added tax (VAT).

Legal framework

European Union law

3According to recital 8 of the VAT Directive:‘… the budget of the European Communities is to be financed, without prejudice to other revenue, wholly from the Communities’ own resources. Those resources are to include those accruing from VAT and obtained through the application of a uniform rate of tax to bases of assessment determined in a uniform manner and in accordance with Community rules.’

4Article 2 of the VAT Directive provides:1.The following transactions shall be subject to VAT:(a) the supply of goods for consideration within the territory of a Member State by a taxable person acting as such;…’

5Article 14(1) of the VAT Directive provides:1. “Supply of goods” shall mean the transfer of the right to dispose of tangible property as owner.’

6Article 16 of the VAT Directive provides:‘The application by a taxable person of goods forming part of his business assets for his private use or for that of his staff, or their disposal free of charge or, more generally, their application for purposes other than those of his business, shall be treated as a supply of goods for consideration, where the VAT on those goods or the component parts thereof was wholly or partly deductible.However, the application of goods for business use as samples or as gifts of small value shall not be treated as a supply of goods for consideration.’

7Article 19 of the VAT Directive provides:‘In the event of a transfer, whether for consideration or not or as a contribution to a company, of a totality of assets or part thereof, Member States may consider that no supply of goods has taken place and that the person to whom the goods are transferred is to be treated as the successor to the transferor.Member States may, in cases where the recipient is not wholly liable to tax, take the measures necessary to prevent distortion of competition. They may also adopt any measures needed to prevent tax evasion or avoidance through the use of this Article.’

Austrian law

8Paragraph 1 of the Umsatzsteuergesetz 1994 (1994 Law on Turnover Tax) of 23 August 1994 (BGBl. 663/1994), in the version applicable to the dispute in the main proceedings (‘the UStG 1994’), provides:(1)The following transactions shall be subject to turnover tax:1. supplies of goods or services effected for consideration within the national territory by a trader in the course of his or her business. …’

9Paragraph 3 of the UStG 1994 provides:‘…(2)The application, by a trader, of goods forming part of his or her business assets:– for purposes other than those of his or her business,– for the use of his or her staff, except for small gifts, or– for any other transfer free of charge, except for gifts of small value and the giving of samples for business purposes, shall be treated as supplies made for consideration.The transaction shall be taxable only where the VAT on those goods or the component parts thereof was wholly or partly deductible.…’

10Paragraph 6 of the UStG 1994 is worded as follows:(1)The following transactions falling under Paragraph 1(1)(1) shall be exempt:…9.(a) property transactions within the meaning of Paragraph 2 of the [Grunderwerbsteuergesetz 1987 (1987 Law on Land Transfer Tax)];…(2) The trader may waive the exemption provided for in Paragraph 6(1)(9)(a) ……’

11Paragraph 12 of the UStG 1994 provides:‘…(3)The following shall not be deductible:1. tax for supplies and imports of goods, where the trader uses those goods for effecting exempt transactions;…(10) Where, in the case of goods used or utilised by a trader as a fixed asset in his or her business, the circumstances material to the deduction of input tax in the calendar year of its first use (subparagraph 3) should change during the four calendar years following the year of its first use, compensation shall be effected for each year to which the change applies by adjusting the deduction of input tax.…In the case of properties within the meaning of Paragraph 2 of the [1987 Law on Land Transfer Tax] (including expenditure to be capitalised and the cost of major repairs), the period of four calendar years shall be replaced by a period of nine calendar years.…’

12Paragraph 12 of the Umgründungssteuergesetz (Law on Reorganisation Tax) of 30 December 1991 (BGBl. 699/1991), in the version applicable to the dispute in the main proceedings (‘the UmgrStG’), provides:(1) A contribution within the meaning of this Federal Law shall exist where a totality of assets (subparagraph 2) are actually transferred to an acquiring legal entity (subparagraph 3) on the basis of a written contribution agreement (in-kind contribution agreement) and a contribution balance sheet (Paragraph 15) in accordance with Paragraph 19. That contribution shall be subject to the condition that the totality of assets have a positive market value on the contribution date, or in any event on the date of conclusion of the contribution agreement. In case of doubt, the transferor shall provide evidence of the positive market value by means of a reasoned expert opinion.(2)The totality of assets which may be contributed comprises only1. businesses or parts of businesses which are used to generate income pursuant to Paragraph 2(3)(1) to (3) of the [Einkommensteuergesetz 1988 (1988 Law on Income Tax)], ……(3)Only the following may constitute acquiring companies:1. capital companies with unlimited tax liability or trading and business cooperatives (Paragraph 1(2) of the [Körperschaftsteuergesetz 1988 (1988 Law on Corporation Tax)]).…’

13Paragraph 22 of the UmgrStG provides:‘…(3) Contributions under Paragraph 12 shall not be regarded as taxable transactions within the meaning of the UStG 1994; the acquiring legal entity shall directly succeed to the legal position of the transferor for the purposes of turnover tax…’

14Paragraph 2 of the 1988 Law on Income Tax of 7 July 1988 (BGBl. 400/1988) provides:‘…(3)Only the following shall be subject to income tax:1. income from agriculture and forestry (Paragraph 21);2. income from self-employment (Paragraph 22);3. income from commercial activity (Paragraph 23);…6. income from letting and leasing (Paragraph 28);…’

The dispute in the main proceedings and the questions referred for a preliminary ruling

15FR managed an individually owned undertaking, the assets of which included several buildings that were let subject to VAT and which had on that basis been eligible for deduction of the input VAT.

16By a 2007 contribution-in-kind contract, FR contributed the properties referred to in paragraph 15 above, without receiving new shares, to a limited liability company, R GmbH, of which he was the sole shareholder and manager (‘the contribution’). Subsequently, R GmbH continued to let the buildings, that letting remaining subject to VAT.

17The contract relating to the contribution stipulated that it was carried out under the scheme laid down by the UmgrStG, which leads to the exclusion of any charge to VAT by classifying the transaction as a transfer of a totality of assets, within the meaning of Article 19 of the VAT Directive. FR drew the inference therefrom by declaring the contribution as not having to be considered a taxable transaction.

18However, by decision of 8 June 2009, the tax authority subjected the contribution to VAT for 2007, classifying it as an exchange in return for the grant of shares. It found, in that regard, that no contribution of a totality of assets could be recognised within the meaning of Paragraph 12(1) and (2)(1) of the UmgrStG, on the ground that the transferor carried on an asset management activity, generating letting, leasing and management income, and not a commercial letting activity, generating income from commercial activities, within the meaning of Paragraph 2(3) of the 1988 Law on Income Tax. The tax authority also adjusted the corresponding deductions, on the basis of Paragraph 12(10) and (11) of the UStG 1994, on the ground that the transaction carried out concerning the immovable properties at issue was deemed to be exempt from VAT without the right to deduct input tax.

19FR brought an action against that decision before the Bundesfinanzgericht (Federal Finance Court, Austria), which upheld the action only in so far as the amount of the adjustment. The Bundesfinanzgericht (Federal Finance Court) held that there was no totality of assets that could be transferred. Nevertheless, in so far as the letting of the immovable properties was subject to VAT, it took the view that the in-kind contribution of the immovable properties at issue to the company had altered the circumstances relied on to determine the deduction of input tax, in the light of Paragraph 12(10) and (11) of the UStG 1994, on the ground that the contribution at issue was not subject to VAT.

20FR brought an appeal on a point of law against that judgment before the referring court, namely the Verwaltungsgerichtshof (Supreme Administrative Court, Austria).

21The referring court has doubts as to the interpretation of several provisions of the VAT Directive applicable to the dispute in the main proceedings.

22In the first place, the referring court asks whether the in-kind contribution of immovable property to a company is a transaction subject to VAT, on the ground that it constitutes either a supply of goods for consideration within the meaning of Article 2(1)(a) of the VAT Directive or an application of the taxable person’s business asset, to be treated as such a supply, on the basis of Article 16 of the VAT Directive. In the second place, the referring court queries whether the rule laid down in Article 19 of the VAT Directive, according to which, for VAT purposes, no supply of goods has taken place upon the transfer of a totality of assets or part thereof to a taxable person (‘the no-supply rule’), may be limited by a Member State to situations in which the goods transferred are used to generate certain categories of income. In the third place, the referring court is uncertain as to whether Article 19 of the VAT Directive has direct effect.

23In those circumstances, the Verwaltungsgerichtshof (Supreme Administrative Court) decided to stay the proceedings and to refer the following questions to the Court of Justice under Article 267 TFEU:(1) Is Article 2(1)(a) of [the VAT Directive] to be interpreted as meaning that the contribution of developed properties by a taxable person who has previously used those properties, through rental, for the purposes of (deductible) taxable transactions, to a company of which he or she is the sole shareholder (with the result that no additional company shares are issued for that contribution) is to be regarded as the supply of goods for consideration?(2) If the first question is answered in the negative: Is the first paragraph of Article 16 of the VAT Directive to be interpreted as meaning that the transaction described in the first question gives rise to the disposal free of charge by a taxable person, preceding the contribution, of goods forming part of his or her business assets or, more generally, their application for purposes other than those of his or her business?(3) Does Article 19 of the VAT Directive preclude a national provision under which, in the event of a transfer of a totality of assets or part thereof (businesses or parts of businesses), it is considered that no supply of goods has taken place only in cases of reorganisation (which exists under national law only where those assets are used to generate certain kinds of income under national law on tax on profits)?(4) Does Article 19 of the VAT Directive have direct effect such that a taxable person may rely on the no-supply rule before a national court against the competent tax authority if, before the Member State acceded to the European Union, the national legislature introduced a provision, retained since then, which is applicable only to certain cases, but not to business assets which are used to generate income (under national law on tax on profits) from rental and leasing?’

Consideration of the questions referred

The third question

24By its third question, which it is appropriate to examine at the outset, the referring court seeks to ascertain whether Article 19 of the VAT Directive must be interpreted as precluding national legislation which restricts the rule, laid down in that article, that no supply of goods has taken place upon the transfer of a totality of assets or part thereof to a taxable person, solely to contributions of certain business assets or parts of a business intended to generate certain kinds of income.

25First of all, it should be observed that the first paragraph of Article 19 of the VAT Directive provides that the Member States may, in the event of a transfer of a totality of assets or part thereof, consider that no supply of goods has taken place and that the recipient is to be treated as the successor to the transferor. It follows that, where a Member State has exercised that option, the transfer of a totality of assets or part thereof is not regarded as a supply of goods for the purposes of the VAT Directive and, accordingly, is not subject to VAT under Article 2 of that directive (see, to that effect and by analogy, judgment of 10 November 2011, Schriever, C‑444/10, EU:C:2011:724, paragraph 20 and the case-law cited).

26Under the second paragraph of Article 19 of the VAT Directive, the Member States may exclude from the application of the no-supply rule transfers of a totality of assets in favour of a recipient who is not a taxable person within the meaning of that directive or who acts as a taxable person only in relation to some of his or her activities, if that is necessary to prevent distortion of competition and to prevent tax evasion or avoidance through the application of that article.

27The second paragraph of Article 19 of the VAT Directive must be regarded as exhaustive in relation to the conditions under which a Member State which makes use of the option provided for in the first paragraph may restrict the application of the no-supply rule (see, to that effect and by analogy, judgment of 10 November 2011, Schriever, C‑444/10, EU:C:2011:724, paragraph 21 and the case-law cited).

28It follows that a Member State which makes use of the option granted in the first paragraph of Article 19 of the VAT Directive must apply the no-supply rule to any transfer of a totality of assets or part thereof and may not therefore restrict the application of the rule to certain transfers only, save under the conditions laid down in the second paragraph of that article (see, to that effect and by analogy, judgment of 27 November 2003, Zita Modes, C‑497/01, EU:C:2003:644, paragraph 31).

29This interpretation is consistent with the purpose of the VAT Directive, which is to determine the basis of VAT in a uniform manner according to EU rules. The no-supply rule laid down in the first paragraph of Article 19 of that directive constitutes an independent concept of EU law whose purpose is to prevent divergences in the application of the VAT system from one Member State to another (see, to that effect and by analogy, judgment of 27 November 2003, Zita Modes, C‑497/01, EU:C:2003:644, paragraph 32 and the case-law cited).

30In order to clarify the scope of the no-supply rule, Article 19 of the VAT Directive should be examined in the light of its context and the purpose which it pursues (see, by analogy, judgments of 27 November 2003, Zita Modes, C‑497/01, EU:C:2003:644, paragraphs 32 and 34, and of 10 November 2011, Schriever, C‑444/10, EU:C:2011:724, paragraph 22).

31It is apparent from the context formed by Articles 14 to 19 of the VAT Directive that Article 19 of that directive is part of a set of provisions aimed at ascertaining the transactions which are taxable and those which are not taxable.

32Examination of the context of Article 19 of the VAT Directive and of the purpose pursued by that provision reveals that that provision is intended to enable the Member States to facilitate transfers of undertakings or of parts of undertakings by making such transfers simpler and by preventing the resources of the recipient from being overburdened by a disproportionate charge to tax which, in any event, would ultimately be recovered through deduction of the input VAT paid (see, to that effect and by analogy, judgment of 10 November 2011, Schriever, C‑444/10, EU:C:2011:724, paragraph 23).

33The interpretation of the no-supply rule set out in paragraph 28 above is, moreover, supported by the fact that that rule, laid down in the first paragraph of Article 19 of the VAT Directive, cannot be regarded as a derogation from a tax obligation justifying a restrictive interpretation. It is applicable only where the VAT charged on the transaction, where appropriate, would have been deductible and it also implies that the recipient is to be regarded as the successor to the transferor in the pursuit of the activity (see, to that effect, judgment of 19 December 2018, Mailat, C‑17/18, EU:C:2018:1038, paragraph 29; see also, to that effect and by analogy, judgment of 27 November 2003, Zita Modes, C‑497/01, EU:C:2003:644, paragraph 43).

34Therefore, the scope of the no-supply rule cannot be limited beyond what is provided for in the second paragraph of Article 19 of the VAT Directive, without unduly restricting the scope of the first paragraph of that article and of disregarding the general objective pursued by that directive, namely to ensure a uniform determination of the basis of assessment for the tax, as stated in recital 8 of the VAT Directive. It is for the referring court to carry out that assessment, on the basis of the circumstances specific to the dispute before it, the national provisions restricting the application of the no-supply rule to the transfers of totalities of assets comprising businesses or parts of a business intended to generate certain kinds of income.

35Accordingly, in the light of the foregoing considerations, the answer to the third question is that Article 19 of the VAT Directive must be interpreted as precluding national legislation which restricts the rule, laid down in that article, that no supply of goods has taken place upon the transfer of a totality of assets or part thereof to a taxable person, solely to transfers of certain business assets or parts of a business intended to generate certain types of income, unless such a restriction is justified by one of the grounds set out in the second paragraph of Article 19 of that directive.

The fourth question

36By its fourth question, the referring court asks, in essence, whether the first paragraph of Article 19 of the VAT Directive has direct effect, with the result that a taxable person may rely, before a national court, on the rule that no supply of goods has taken place upon the transfer of a totality of assets or part thereof to a taxable person, against the competent tax authority, where the national legislature, before the accession of the Member State concerned to the European Union, opted to apply that rule, but restricted the scope of that rule to certain specific cases not covered by the second paragraph of Article 19 of the VAT Directive.

37As a preliminary point, it should be noted, first, that, should the referring court consider that the restrictive application, resulting from the Austrian legislation, of Article 19 of the VAT Directive, referred to in the third question, is justified in the light of the second paragraph of that provision, the question relating to the direct effect of that provision does not arise.

38Second, the UStG 1994 was adopted in 1994 and the UmgrStG in 1991. It follows that the national legislation relating to the no-supply rule predates the Republic of Austria’s accession to the European Union in 1995, bearing in mind that it does not appear that that legislation is covered by one of the standstill clauses laid down by the VAT Directive, which would have allowed the Republic of Austria to maintain its own interpretation of the no-supply rule.

39Next, it should be recalled that the principle of direct effect applies to directives in so far as they are binding on the Member States as to the result to be achieved, even where they leave the Member States a margin of discretion as to how to implement some of their provisions (see, to that effect, judgments of 19 January 1982, Becker, 8/81, EU:C:1982:7, paragraph 29; of 10 June 1982, Grendel, 255/81, EU:C:1982:225, paragraph 11; and of 22 February 1984, Kloppenburg, 70/83, EU:C:1984:71, paragraphs 3 and 14).

40In particular, it is settled case-law that, where the provisions of a directive are, by their subject matter, unconditional and sufficiently precise, individuals are entitled to rely on them against a Member State before the national courts. That applies both where the Member State has failed to implement the directive within the period prescribed or where it has failed to implement the directive correctly (see judgment of 15 February 2017, British Film Institute, C‑592/15, EU:C:2017:117, paragraph 13 and the case-law cited).

41That is the case in particular where a provision, whilst leaving to the Member States a margin of discretion, nevertheless establishes a framework which is sufficiently precise and unconditional to have direct effect (see, to that effect and by analogy, judgments of 6 November 2003, Dornier, C‑45/01, EU:C:2003:595, paragraphs 80 and 81, and of 28 June 2007, JP Morgan Fleming Claverhouse Investment Trust and The Association of Investment Trust Companies, C‑363/05, EU:C:2007:391, paragraphs 59 to 62).

42A provision of EU law is unconditional where it sets forth an obligation which is not qualified by any condition, or subject, in its implementation or effects, to the taking of any measure either by the institutions of the European Union or by the Member States. It is sufficiently precise where the obligation that it lays down is set out in unequivocal terms (see judgments of 1 July 2010, Gassmayr, C‑194/08, EU:C:2010:386, paragraph 45 and the case-law cited, and of 8 March 2022, Bezirkshauptmannschaft Hartberg-Fürstenfeld (Direct effect), C‑205/20, EU:C:2022:168, paragraph 18 and the case-law cited).

43As regards the first condition referred to in paragraph 42 above, clearly the first paragraph of Article 19 of the VAT Directive, in that it states that Member States may consider that, in the event of a transfer, whether for consideration or not or as a contribution to a company, of a totality of assets or part thereof, no supply of goods has taken place and that the person to whom the goods are transferred is to be treated as the successor to the transferor, is sufficiently precise, since it clearly determines the conditions under which such a transfer is not to be regarded as a supply of goods for the purposes of the VAT Directive.

44As regards the second condition, it is consistent case-law of the Court of Justice that the right given to Member States to choose among several possible means of achieving the result required by a directive does not preclude the possibility for individuals to enforce before the national courts rights the content of which can be determined with sufficient precision on the basis of the provisions of the directive alone (see, to that effect, judgments of 19 November 1991, Francovich and Others, C‑6/90 and C‑9/90, EU:C:1991:428, paragraph 17, and of 12 February 2009, Cobelfret, C‑138/07, EU:C:2009:82, paragraph 61).

45In particular, the margin of discretion left to the Member States by a provision, for the purpose of ensuring the correct and straightforward application and of preventing any evasion, avoidance or abuse does not preclude that provision from being unconditional. In addition, a Member State may not rely on its failure to adopt the provisions which are intended to apply the rule at issue, as against a taxpayer who is able to show that his or her tax position actually falls within one of the cases laid down in a directive (see, to that effect and by analogy, judgment of 17 July 2008, Flughafen Köln/Bonn, C‑226/07, EU:C:2008:429, paragraph 31 and the case-law cited).

46The same is true where the margin of discretion conferred on the Member States by a provision of the VAT Directive for the purpose of limiting the scope of that provision has been used by a Member State in a manner which is contrary to EU law, and the provision at issue is then unconditional.

47The first paragraph of Article 19 of the VAT Directive therefore has direct effect where the margin of discretion conferred by the second paragraph of Article 19 of that directive, for the purpose of restricting the no-supply rule laid down by the first paragraph, has been used by a Member State in a manner that is contrary to EU law. Accordingly, a Member State which has restricted, contrary to Article 19 of the VAT Directive, the scope of the no-supply rule cannot rely on that restriction against a taxable person who is able to establish that his or her transaction does in fact constitute a transfer of a totality of assets or part thereof within the meaning of that provision.

48Therefore, in the light of the foregoing considerations, the answer to the fourth question is that the first paragraph of Article 19 of the VAT Directive must be interpreted as having direct effect, with the result that a taxable person may rely on, before a national court, the rule that no supply of goods has taken place upon the transfer of a totality of assets or part thereof to a taxable person, against the competent tax authority, where the national legislature, before the accession of the Member State concerned to the European Union, has opted for the application of that rule, but restricted the scope of that rule to certain specific cases not covered by the second paragraph of Article 19 of that directive.

The first question

49By its first question, the referring court asks, in essence, whether Article 2(1)(a) of the VAT Directive must be interpreted as meaning that the contribution, by a taxable person, of developed properties, let subject to VAT, in respect of which VAT is deductible, to an undertaking of which the taxable person is the sole shareholder, without any new shares being granted to that taxable person as consideration for that contribution, must be regarded as a supply of goods for consideration.

50Article 2(1)(a) of the VAT Directive includes, among the transactions subject to VAT, the supply of goods for consideration within the territory of a Member State by a taxable person acting as such.

51As regards the condition concerning whether the supply is for consideration, it should be recalled that a supply of goods is effected ‘for consideration’ within the meaning of Article 2(1)(a) of the VAT Directive only if there is a legal relationship between the supplier of the goods and the recipient pursuant to which there is reciprocal performance, the price received by the supplier of the goods constituting the value actually given in return for the goods supplied (judgments of 27 April 1999, Kuwait Petroleum, C‑48/97, EU:C:1999:203, paragraph 26, and of 21 November 2013, Dixons Retail, C‑494/12, EU:C:2013:758, paragraph 32).

52Subject to verification by the referring court, it appears that the legal relationship existing between, on the one hand, a taxable person such as FR, who, pursuant to an in-kind contribution agreement, transferred the ownership of the immovable properties concerned to an undertaking of which a taxable person is the sole shareholder without receiving any actual value, and, on the other, that undertaking, does not involve reciprocal performance within the meaning of the case-law recalled in paragraph 51 above.

53It follows that the contribution, by a taxable person, of developed properties, let with a charge to VAT to an undertaking of which he or she is the sole shareholder, without any new shares being granted to him or her as consideration, does not constitute a supply of goods for consideration within the meaning of Article 2(1)(a) of the VAT Directive.

54In the light of the foregoing considerations, the answer to the first question is that Article 2(1)(a) of the VAT Directive must be interpreted as meaning that the contribution, by a taxable person, of developed properties, let subject to VAT, in respect of which VAT is deductible, to an undertaking of which the taxable person is the sole shareholder, without any new shares being granted to that taxable person as consideration for that contribution, does not constitute a supply of goods for consideration.

The second question

55By its second question, the referring court seeks to ascertain whether the first paragraph of Article 16 of the VAT Directive must be interpreted as meaning that the contribution, by a taxable person, of developed properties let subject to VAT, in respect of which VAT is deductible, to an undertaking of which he or she is the sole shareholder, without any new shares being granted to him or her as consideration for that contribution, constitutes an application of goods forming part of his or her business assets which he or she transfers free of charge or, more generally, applies for purposes other than those of his or her business, to be treated as a supply of goods for consideration within the meaning of that provision.

56The first paragraph of Article 16 of the VAT Directive provides that the application by a taxable person of goods forming part of his or her business assets for his or her private use or for that of his or her staff, which he or she transfers free of charge or, more generally, which he or she applies for purposes other than those of his or her business, is to be treated as a supply of goods for consideration where the VAT on those goods or the component parts thereof was wholly or partly deductible.

57It is apparent from the evidence submitted to the General Court that, in the present case, first, the contribution of developed properties by a taxable person who had, by letting those properties, put those properties to a use subject to VAT, was made free of charge, with the result that the condition relating to the transaction being free of charge is satisfied.

58Second, the applicant in the main proceedings deducted the input VAT paid in respect of the immovable properties at issue, with the result that the condition relating to the existence of a right to deduct wholly or partly the VAT in respect of that taxable person appears to be satisfied.

59In the light of the foregoing considerations, the answer to the second question is that the first paragraph of Article 16 of the VAT Directive must be interpreted as meaning that the contribution, by a taxable person, of developed properties let subject to VAT, in respect of which VAT is deductible, to an undertaking of which he or she is the sole shareholder, without any new shares being granted to him or her as consideration for that contribution, constitutes an application of goods forming part of his or her business assets which he or she transfers free of charge or, more generally, he or she applies for purposes other than those of his or her business, within the meaning of that provision, which is to be treated as a supply of goods for consideration.

Costs

60Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds,THE GENERAL COURT (Fifth Chamber, sitting with five Judges)hereby rules:

1.Article 19 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added taxmust be interpreted as precluding national legislation which restricts the rule, laid down in that article, that no supply of goods has taken place upon the transfer of a totality of assets or part thereof to a taxable person, solely to transfers of certain business assets or parts of a business intended to generate certain types of income, unless such a restriction is justified by one of the grounds set out in the second paragraph of Article 19 of that directive.

2.The first paragraph of Article 19 of Directive 2006/112must be interpreted as having direct effect, with the result that a taxable person may rely on, before a national court, the rule that no supply of goods has taken place upon the transfer of a totality of assets or part thereof to a taxable person, against the competent tax authority, where the national legislature, before the accession of the Member State concerned to the European Union, has opted for the application of that rule, but restricted the scope of that rule to certain specific cases not covered by the second paragraph of Article 19 of that directive.

3.Article 2(1)(a) of Directive 2006/112must be interpreted as meaning that the contribution, by a taxable person, of developed properties, let subject to VAT, in respect of which VAT is deductible, to an undertaking of which the taxable person is the sole shareholder, without any new shares being granted to that taxable person as consideration for that contribution, does not constitute a supply of goods for consideration.

4.The first paragraph of Article 16 of Directive 2006/112must be interpreted as meaning that the contribution, by a taxable person, of developed properties let subject to VAT, in respect of which VAT is deductible, to an undertaking of which he or she is the sole shareholder, without any new shares being granted to him or her as consideration for that contribution, constitutes an application of goods forming part of his or her business assets which he or she transfers free of charge or, more generally, he or she applies for purposes other than those of his or her business, within the meaning of that provision, which is to be treated as a supply of goods for consideration.

Delivered in open court in Luxembourg on 2 September 2026.