Transfer of a going concern in the European spotlight

The no-supply rule for the transfer of a going concern features in three European cases. Together they show that parties should not assume too readily that the relief applies.

VAT provides relief for the transfer of a going concern. On such a transfer, no supplies of goods or services are deemed to take place and the transferee steps into the transferor's VAT rights and obligations, including the adjustment obligation.

The relief, also known as the no-supply rule, prevents two things. First, there is no need to establish for every asset or service transferred whether and how much VAT is due. Second, the transferee does not have to pre-finance a substantial amount of VAT. This relief features in several European cases, which we review below.

Roenes: let property from developer to investor

At the end of 2025 the Dutch Supreme Court asked the Court of Justice of the EU whether the sale of VAT-exempt let property by a developer to a property investor amounts to the transfer of a totality of assets. If it does, the developer owes no VAT on the supply of the new property and the investor steps into its VAT rights and obligations.

The advantage is considerable: the VAT burden on the developed property remains limited to the non-deductible VAT on the developer's costs. No VAT is borne on the value the developer has added. The Court of Justice of the EU has referred the case to the General Court, which has yet to rule. The case is registered as Roenes. For the property sector this is one to watch.

A&P Deco: the letting of the premises does not share in the relief

Roenes is not the only case on this relief before the European courts. In A&P Deco NV, Advocate General Brkan concluded that where a garden centre is transferred and the business premises are not transferred but let to the buyer VAT-exempt, that letting does not share in the relief. Letting the premises is a continuing supply made to the buyer of the business from the moment of transfer. The result is an adjustment for the seller because of the exempt letting.

In the Netherlands that adjustment can be avoided by opting for a taxed letting, provided the buyer (as in this case) is entitled to deduct and will use the let property at least 90% for activities carrying a right to deduct. Here too the General Court has yet to rule. The case shows how important it is to map the VAT consequences of a transfer carefully before the contracts are signed.

D.B.: gifting a business in two halves

The last case is D.B. This concerns not a sale but a gift of a business. Although VAT is a transaction tax, a transfer of goods free of charge can trigger VAT where the donor deducted VAT on those goods, such as stock and fixtures.

A mother gifted each of her two daughters 50% of her business. The daughters then contributed that interest to their joint partnership, an existing business, which continued the economic activity. Viewed from a distance this looks like the transfer of a going concern. Advocate General Martín Y Perez de Nanclares nevertheless concluded that the relief does not apply. In his view each gift must be assessed separately, and an individual gift of a 50% interest is not the transfer of a going concern, because no economic activity can be continued with a half share. In addition, the daughters do not continue the business themselves, their partnership does. Here too the General Court's decision is awaited.

Why this matters in practice

Three cases on the same relief pending before the General Court: it is no exaggeration to say the no-supply rule is in the European spotlight. The rulings are still to come, but the cases already make clear that parties to a transfer should not assume too readily that the relief applies. Test the position carefully in advance.

Are you or your client transferring or acquiring a business or let property? We are happy to think along about optimising your VAT position.