25 February 2021 (*1)

25 February 2021 (*1)

(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)

(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,

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

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

Dyrektor Krajowej Informacji Skarbowej,

Dyrektor Krajowej Informacji Skarbowej,

THE COURT (First Chamber),

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,

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,

Advocate General: J. Kokott,

Registrar: A. Calot Escobar,

Registrar: A. Calot Escobar,

having regard to the written procedure,

having regard to the written procedure,

after considering the observations submitted on behalf of:

after considering the observations submitted on behalf of:

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

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

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

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

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

–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,

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

gives the following

gives the following

1This 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’).

1This 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’).

2The 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.

2The 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

Legal context

EU law

EU law

3Under 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.

3Under 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.

4Article 9(1) of that directive provides:

4Article 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.’

‘“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.’

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

5Article 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.

‘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.’

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.

6Article 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:

6Article 14 of the VAT Directive provides:

(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;

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

…’

Polish law

(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;

The Civil Code

…’

7Article 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:

Polish law

‘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.’

The Civil Code

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

7Article 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:

‘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.’

‘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.’

9Article 234 of that code states:

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

‘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.’

‘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.’

10Under Article 236 §1 of that code:

9Article 234 of that code states:

‘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.’

‘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.’

11Article 238 of the Civil Code provides:

10Under Article 236 §1 of that code:

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

‘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.’

The Law on immovable property management

11Article 238 of the Civil Code provides:

12Article 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:

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

‘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.’

The Law on immovable property management

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

12Article 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:

‘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.’

‘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.’

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

13Article 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.’

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

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

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

15Article 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.’

15Article 69 of that law provides:

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

‘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.’

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

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

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.

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

The Law on VAT

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.

18Article 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 Law on VAT

‘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.’

18Article 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:

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

‘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.’

‘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:

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

(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;

‘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:

…

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 leasing of land in perpetual usufruct.’

The Law on transformation

The Law on transformation

20Article 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:

20Article 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.’

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

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

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

‘The certificate confirming the transformation (“the certificate”) issued by … the competent mayor (town or city mayor, Lord Mayor), district council or regional council – where the land belongs to a local authority – forms the basis for the entry of the right of ownership in the land register.’

‘The certificate confirming the transformation (“the certificate”) issued by … the competent mayor (town or city mayor, Lord Mayor), district council or regional council – where the land belongs to a local authority – forms the basis for the entry of the right of ownership in the land register.’

Paragraph 2(1) of that article states that the bodies referred to in paragraph 1 of that article must issue the certificate of their own motion within a period not exceeding 12 months from the day of transformation. Under paragraph 4 of that article, the certificate is to confirm the transformation and mention the obligation to pay an annual transformation fee, the amount of that fee and the time at which it is payable.

Paragraph 2(1) of that article states that the bodies referred to in paragraph 1 of that article must issue the certificate of their own motion within a period not exceeding 12 months from the day of transformation. Under paragraph 4 of that article, the certificate is to confirm the transformation and mention the obligation to pay an annual transformation fee, the amount of that fee and the time at which it is payable.

23Article 5(1) of that law states:

23Article 5(1) of that law states:

‘The court shall register of its own motion ownership of land and the right to payment in the land registers.’

‘The court shall register of its own motion ownership of land and the right to payment in the land registers.’

Article 6(1) of that law provides that the new owner may challenge the information included in the certificate referred to in Article 4 of that law. An application submitted using this procedure results in the amount and deadline for payment of the transformation fee being set by way of an administrative decision.

Article 6(1) of that law provides that the new owner may challenge the information included in the certificate referred to in Article 4 of that law. An application submitted using this procedure results in the amount and deadline for payment of the transformation fee being set by way of an administrative decision.

25Article 7 of the Law on transformation provides:

25Article 7 of the Law on transformation provides:

‘1. The new owner of the land shall pay a fee to the current owner of the land for the transformation.

‘1. The new owner of the land shall pay a fee to the current owner of the land for the transformation.