VATLP07200 - Exceptions to the land exemption: what is the European basis for the exclusions from the land exemption?
Exclusions from 鈥榣easing or letting鈥� exemption
Article 135(2) of the Principal VAT Directive makes it compulsory for member states to exclude the following types of supplies from the exemption for 鈥榣easing or letting of immovable property鈥�:
(a) provision of accommodation in the hotel sector or in sectors with a similar function
(b) premises and sites for the parking of vehicles
(c) permanently installed equipment and machinery, and
(d) hire of safes
The 鈥榯ailpiece鈥� to Article 135(2) gives Member States the discretion to apply additional exclusions to the 鈥榣easing or letting鈥� exemption. The ECJ has ruled that the discretion granted under this tailpiece is a wide one.
Exclusions from 鈥榮upply of buildings鈥� and 鈥榮upply of land鈥� exemptions
Article 135(1) (j) indicates that the exemption for the 鈥榮upply of buildings鈥� does not apply to the supply of 鈥榥ew buildings鈥� (also see Article 12).
Article 135(1)(k) indicates that the exemption for the 鈥榮upply of land鈥� does not apply to 鈥榖uilding land鈥�. However, Article 371 and Annex X, Part B(9) allows member states to continue to exempt the supply of building land if the exemption was in force on 1 January 1978.
Note: 鈥楽upply鈥� in the above context will normally mean freehold sale.