CJEU on the VAT taxable base for contributions in kind

The ruling was analysed by Natalia Zborowska of Thedy & Partners. She points out that the case concerned a company to which in-kind contributions in the form of real estate were made in exchange for its shares issued in connection with a share capital increase. The contribution-in-kind agreement provided that the consideration was the company’s shares valued at their issue price. In order to determine this price, the parties relied on the value of the real estate contributed in kind.

The tax authorities took the view that it was the nominal value of the shares, and not their issue value, that constituted the VAT taxable base and consequently questioned the company’s deduction of VAT in the part corresponding to the excess of the issue value over the nominal value of the shares.

The CJEU pointed out that if, according to the agreement between the parties, the consideration for the in-kind contribution is the issue value of the shares, then it is this value that should constitute the taxable amount for VAT – not the nominal value of the shares.