This case arose in the context of a sale of land in which VAT was charged by the seller, with the purchaser subsequently being denied a VAT deduction by the Tax Authorities, on the basis that the land was recorded in the Property Registry as "rustic land" (which is VAT exempt).

The Property Registry indicates the legal status of properties registered therein, but not other matters of fact related to them. In this case, based on different elements additional to the information recorded in the Registry — which included administrative certifications of the land — it was established that the land sold was in fact "urbanized" (which is not VAT exempted) and thus it was necessary to recognize that a VAT deduction was appropriate in such circumstances.

The approach adopted by the TEAC consisted therefore in considering that reality prevails over form — specifically the data available in the Property Registry is not automatically determinative of the VAT treatment of the transaction if there are other elements to prove that the registry data is not accurate.