On 9 September 2026, the EU General Court ruled in Case T-366/25 that a business split between two recipients can fall outside the going concern rule in Article 19 of the VAT Directive.
The case
A Polish entrepreneur planned to give her entire undertaking to her two daughters, who would each receive a half share. She would keep no assets and stop trading. The daughters already ran a general partnership and intended to bring the shares into it at once and carry on the business there. The Polish tax authority took the view that this was not a transfer of an undertaking.
The ruling
Article 19 requires a transfer of an undertaking or an independent part of one, so that the recipient can carry on an independent economic activity. Each half share is not an autonomous unit with which a daughter could do that alone.
It does not help that they intended to contribute the shares immediately to their partnership. The General Court treated the gift and the later contribution as distinct transactions. Because the first condition failed, it did not examine the recipients' intention to continue the activity.
What to check
- In family succession, look at how the transfer is structured. The route chosen can decide whether VAT arises on the transfer.
- Assess each step separately. A later contribution to a company does not repair a first step that fails.
- A direct transfer of the whole undertaking to the entity that will run it deserves a look before the gift is made.
mr. J. el Khalfioui LL.M.