General Court: a Member State may not narrow the going concern relief (Peckeger, T-413/25)

The applicant ran an individually owned undertaking. Its assets included several buildings that were let subject to VAT, and the input VAT on them had been deducted (para. 15). In 2007, he contributed the buildings to a company of which he was the sole shareholder and manager, without receiving new shares. The company continued to let the buildings subject to VAT (para. 16).

Under Austrian law, a contribution is not a taxable transaction if it qualifies as a reorganisation. That covers only businesses that generate certain types of income, such as income from commercial activity (paras 12 and 13). The tax authority found that the applicant managed assets and earned letting income, so the contribution did not qualify. It taxed the contribution as an exchange for shares and adjusted the deductions on the buildings (para. 18).

No narrowing of Article 19

Where a Member State uses the option in the first paragraph of Article 19, a transfer of a totality of assets is not a supply of goods and falls outside VAT (para. 25). The second paragraph lists exhaustively when the rule may be restricted (para. 27). A Member State that uses the option must therefore apply it to any transfer of a totality of assets, save under the conditions of the second paragraph (para. 28).

The rule is an independent concept of EU law (para. 29). It is not a derogation that calls for a strict reading: it applies only where the VAT on the transfer would have been deductible, and the recipient continues the activity as the successor of the transferor (para. 33). It is for the Austrian court to assess the national rules on that basis (para. 34).

Direct effect

The Austrian rules date from 1991 and 1994, before Austria joined the EU, and no standstill clause allows them to be kept (para. 38). The first paragraph of Article 19 is sufficiently precise (para. 43). Where a Member State has used its margin to restrict the rule in a manner contrary to EU law, the provision is also unconditional (para. 46).

A Member State that has restricted the rule in breach of Article 19 cannot rely on that restriction against a taxable person who shows that the transaction is in fact a transfer of a totality of assets (para. 47).

Contribution without new shares

A supply is for consideration only if there is reciprocal performance between supplier and recipient (para. 51). The applicant received no actual value for the buildings, so, subject to verification by the national court, the contribution is not a supply for consideration under Article 2(1)(a) (paras 52 and 53).

The contribution was made free of charge, and the input VAT on the buildings had been deducted (paras 57 and 58). It is therefore an application of business assets that Article 16 treats as a supply for consideration (para. 59).

Where a Member State limits the going concern relief beyond the second paragraph of Article 19, a taxable person can invoke the relief directly against the tax authority. The taxable person must be able to show that the transaction is in fact a transfer of a totality of assets (para. 47).

The classification decides the outcome. If the contribution is a transfer of a totality of assets, no supply takes place. If it is not, a contribution of assets on which VAT was deducted to a wholly owned company, without new shares, is caught by Article 16. The VAT position of a contribution in kind should therefore be settled before the transaction, with attention to the deductions on the assets.

The judgment reads Article 19 as a uniform EU concept that national law cannot narrow (paras 28 and 29). A week later, in Szytelbiecka (T-366/25), the same chamber applied the conditions of Article 19 strictly to each recipient. Member States may thus not add conditions of their own, while the EU conditions are tested closely. Whether the let buildings in this case form a totality of assets remains for the Austrian court.