On 2 September 2026, the EU General Court ruled in A&P Deco (T-397/25) that a transfer of a business does not protect the seller's VAT deduction on a building it keeps.
The case
A Belgian company ran a garden centre in premises it had built in 2004 and 2005 and renovated from 2008 to 2011. It deducted the VAT. On 23 January 2013, it transferred the business as a going concern to another company, and on the same day let the buildings to that company, which carried on the garden centre there. The Belgian tax administration adjusted part of the VAT deducted, because the letting was exempt.
The seller argued that the buyer stepped into its shoes as successor, so that any adjustment obligation had passed to the buyer.
The ruling
The seller must make the adjustment. The building stayed with the seller, and the seller now uses it for an exempt letting, even though the buyer continues the taxable activity there.
Keeping the deduction in place would undermine VAT neutrality, because the building is now used for a transaction without a right to deduct. It also makes no difference that a sale of the building within the transfer would have been treated differently. As landlord, the seller is in the same position as a third party letting a commercial building to the buyer.
What to check
- Before you sell a business and keep the premises, calculate the adjustment on past deductions. It belongs in the price negotiation.
- The going concern rule protects what is transferred. It does not cover an asset that stays behind and changes use.
- Review the VAT treatment of the letting under the national rules that apply. The outcome here followed from the letting being exempt.
mr. J. el Khalfioui LL.M.