Court of Justice (Second Chamber) 12 September 2024, C-243/23 (Belgische Staat/Federale Overheidsdienst Financiën v L BV.)

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The Court of Justice (Second Chamber) held that Article 190 of the VAT Directive (Directive 2006/112/EC), read in conjunction with Article 187 and the principle of fiscal neutrality, precludes national legislation under which the extended VAT deduction adjustment period applicable to immovable property acquired as capital goods is denied to construction works—taxed as a supply of services—that involve a significant extension and/or substantial renovation of a building whose economic life corresponds to that of a new building. The Court further held that the criterion of whether such works constitute a 'conversion' within the meaning of Article 12(2) of the VAT Directive is irrelevant for this purpose, as that provision pursues a different objective from Article 190. Article 190, read in conjunction with Article 187 and the principle of fiscal neutrality, has direct effect, enabling a taxable person to rely on it before national courts against the competent tax authority to obtain application of the extended adjustment period where the authority has refused to apply it on the basis of non-conforming national legislation.AI