Tamás Fehér

Lease services often lead to uncertainty from a VAT perspective. Some services which seem like lease at first glance do not meet the criteria for “lease” for VAT purposes. The improper classification can lead to surprises: on the one hand the lessor’s deduction right can be challenged, on the other hand a seemingly VAT-exempt transaction could trigger VAT liability. A recent ECJ decision will set standards for these situations.

The case

The owner of a Belgian football-stadium leased the stadium to the local football team for 18 days a year. According to the agreement of the parties 20% of the fee represented the consideration for the actual real estate use and the remaining 80% compensated other supplementary services. The supplementary services included the maintenance and cleaning of the facilities, the maintenance of the lower and the provision of reception services.
The Belgian tax authorities concluded that the above services constituted a VAT-exempt real estate lease, considering that the lessor did not opt for taxable treatment. As a consequence, the Belgian tax authorities partly refused the deduction of input VAT for the lessor.

The ECJ decided otherwise. The ECJ established that the services of the lessor go beyond a simple real estate lease, and referred the case for further examination to the local Belgian courts.

Standpoint of the ECJ

In its decision the ECJ confirmed that, in line with its earlier conclusions, a real estate lease must be interpreted for VAT purposes in a narrow sense. Accordingly, only those services are considered as lease for VAT purposes where the right to occupy property is conferred on the lessee for an agreed period and for payment, and where such right to occupy is conferred as if the lessee was the owner and in such a way to exclude anyone else from enjoying such a right.

From the circumstances of the case, the ECJ concluded that in the given case a service wider than real estate lease was performed and, therefore, such services cannot be regarded as being exempt from VAT. The court pointed out that the lessor provided permanent reception services. It also highlighted that the supplementary services provided by the lessor did not simply aim to enable the lessee to use the property, but they allowed the tenant to utilise the facility for football matches in accordance with the applicable sport regulations. The ECJ also stated that the supplementary services represented the larger part of the consideration. Finally, the ECJ emphasized that the referring court must also examine the duration of the lease. If the use of the real estate is occasional and it is limited to the period of the football matches, then this is an additional evidence to qualify the transaction as a VAT liable supply of services rather than a VAT-exempt lease.


The decision of the ECJ sets the standards how to interpret and qualify complex real estate lease services from a VAT perspective. When performing the qualification, the supplementary services provided by the lessor must be taken into account and it needs to be considered whether such services indicate a more sophisticated and more complex service than a traditional lease. Another merit of the case is that the interpretation of a real estate lease may well be different in civil law and tax law: the tax law interpretation is sometimes narrower, but it can be wider as well.