April 23
Anjum Shabbir
Anjum Shabbir
1st March 2021

Analysis: “Does a Municipality act as a VAT taxable person when charging fees for the transformation of the right of perpetual usufruct into immovable property ownership rights by operation of law?” by Jordi Sol

On 25 February 2021, the Court of Justice ruled that the transformation of the right of perpetual usufruct into full immovable property ownership rights provided by operation of law against payment of a fee constitutes a supply of goods for VAT purposes. More pertinently, it also ruled that when the owner of the immovable property is a municipality, and as this transformation enables it to obtain income on a continuing basis, that municipality acts as a taxable person and not as a public authority.

The facts in the judgment, Gmina Wroclaw (C-604/19), can be found here.

In the first and second questions which were answered together, the Court confirms the nature of the transaction (transformation of the right of perpetual us


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