The VAT treatment of the sale of immovable property will be decided by the CJEU
The WSA in Wrocław referred questions to the CJEU for a preliminary ruling, and in one of them asked: does a person who sells real estate not previously used for business activities, commissioning the preparation of the sale to a professional entrepreneur who then, as that person's proxy, undertakes a series of organised actions with a view to dividing it up and selling it for a higher price, carry out an economic activity on his own?
Before the case reached the WSA in Wrocław, a dispute arose between the party and the tax authorities regarding the VAT taxation of the sale of landed property. The party argued that it was selling its personal property and the transaction was not subject to VAT. According to the tax authorities, the sale of the real estate constituted a business activity and should be subject to VAT.
Significantly, prior to the sale of the real estate, the party had concluded, with a professional entity (a contractor), a contract of mandate to assist in the development and sale of the land. The contractor was granted a power of attorney to appear before the competent authorities with respect to the subject matter of the contract.
The WSA expressed doubts (i) whether the use, in this type of transaction, of the assistance of a professional proxy to prepare the property for sale in order to maximise the price achieved can be deemed tantamount to the organisation of a permanent establishment (ii) whether the fact that the contractor is acting within the framework of his enterprise and his remuneration is in fact the surplus of the price earned by him over the price expected by the seller is of significance?
In view of the doubts that had arisen in the case, the WSA issued an order (ref. I SA/Wr 92/23) suspending the proceedings and asking the CJEU to rule on the case.