April 23
Trajan Shipley
25th February 2021

Court of Justice rules that an ope legis transformation of perpetual usufruct into full immovable property ownership against payment of a fee is a supply of goods for VAT purposes

The Court of Justice has delivered its judgment in Gmina Wrocław (Conversion du droit d’usufruit) (C‑604/19), finding that under Article 14(2)(a) of the VAT Directive, the transformation of the right of perpetual usufruct into full immovable property ownership by virtue of the law and against the payment of a fee constitutes a ‘supply of goods’, and thus is liable to VAT.

In the dispute leading to the main proceedings, the Municipality of Warsaw owned immovable property subject to a perpetual usufruct, but under the Polish law on transformation, such right to perpetual usufruct was transformed into full ownership right over that land, subject to the perpetual usufructuaries’ payment of a transformation fee to the municipality. The


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