In its decision, the court states that VAT charged on the intermediation expenses incurred by a seller as part of the sale of a building booked as a fixed asset and leased with VAT is deductible when this sale is subject to the VAT exemption regime provided for in article 257 bis of the FTC.
The court points out that even if the proceeds from the sale of the building were immediately distributed, this has no impact on the VAT deduction.
The French Tax Authorities considered that this VAT was not recoverable insofar as the sale was not subject to VAT, due to the application of the VAT exemption, and that in the present case, the VAT refund claim was not possible since the disposal had a patrimonial nature owing to the distribution of the proceeds from the sale.
Therefore, the FTA tried to implement the VAT regime applicable to the sales of securities held by holding companies (decision of the French Supreme Court in the PFIZER HOLDING FRANCE case), to the sales of buildings subject to the VAT exemption.
We hope that the – obvious – solution clearly reminded by the Versailles Administrative Court of Appeal will put an end to this type of reassessment companies may be confronted to.