Bachmann/Partners Advokatpartnerselskab has assisted a client in a principled case concerning VAT on the transfer of plots of land with foundations, where the foundations had been cast before 1 January 2011. The case has been quite protracted and began with SKAT’s decision in the autumn of 2017, in which SKAT found that the transfer of plots of land with foundations cast before 1 January 2011 should be regarded as a VAT-liable transfer of building plots.
In September 2021, the National Tax Tribunal decided that the transactions did not constitute VAT-liable transfers of building plots. The Ministry of Taxation brought the National Tax Tribunal’s decision before the courts, where the Western High Court, approximately four and a half years later, held that the transactions did constitute VAT-liable transfers of building plots.
The question of when a building plot changes its character from being a building plot to being buildings with associated land was assessed by the Western High Court in a judgment of 5 March 2026, in which the High Court held that plots of land with foundations cast before 1 January 2011 were not covered by the VAT exemption for construction commenced before 1 January 2011, as such plots with foundations were to be regarded as building plots. The High Court found that neither party should pay legal costs to the other party.
Under the Spring Package 2.0, rules were introduced on VAT on the sale of (i) new buildings and new buildings with associated land as well as (ii) building plots. These amended rules entered into force on 1 January 2011.
The main issue in the case was whether a foundation constituted a building for VAT purposes.
During the written proceedings, the Western High Court referred a preliminary question to the Court of Justice of the European Union. In its judgment of 7 November 2024 in case C-594/23, Lomoco, the Court of Justice concluded that a foundation does not constitute a building for VAT purposes.
In its judgment of 5 March 2026, the Western High Court held that transactions involving plots of land with foundations constructed before 1 January 2011 constituted supplies of building plots. In its reasoning, the High Court referred to the judgment of the Court of Justice of the European Union, which had specifically established that a foundation does not constitute a building.
In the view of the High Court, it was irrelevant that the casting of the foundations had been commenced before 1 January 2011. The statements in the legislative preparatory works for the 2009 amendment to the VAT Act could therefore not lead to a different result.
The case also concerned, secondly, whether the tax-exempt contribution of assets could be regarded as a VAT-exempt transfer of a going concern. Following the evidentiary proceedings, the High Court found that the tax-exempt transfer of assets did not constitute a VAT-exempt transfer of a going concern. The fact that the transfer had been carried out on a tax-neutral basis under the rules of the Danish Merger Tax Act, which, like the rules on VAT-exempt transfers of a going concern, are based on directives, could not lead to a different result.
Bachmann/Partners Advokatpartnerselskab assists with all tax and duties matters. Inquiries can be directed to Christian Bachmann at +45 30 30 45 21 / chb@bachmann-partners.dk or Peter Hansen at +45 40 32 35 35 / pha@bachmann-partners.dk.
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