In the Romanian case of Amarasti Land Investment SRL, (C-707/18), the court considered the effect of a contractual arrangement between the parties to the sale of land for the first registration of the land in the name of the seller. Both parties agreed that in order for the sale of land to take place validly under Romanian land law, the land would first have to be registered in the name of the seller in the official Land Register. The parties agreed that the costs of making the first registration of the land (which required the services of lawyers, notaries and specialist land-registration companies) should be borne by the purchaser. The purchaser, which was acquiring the land for agricultural purposes, recovered from the tax authority input tax on the costs of the services supplied for the purpose of registering the land. However, the Romanian tax authority contended that the purchaser should account for output tax on the value of the service of registering the land which the tax authority claimed the purchaser had supplied to the vendor. The tax authority argued that the purchaser had, in return for the land, (i) paid a price; and (ii) supplied a service of land registration to the sellers.

The court noted that the obligation to effect the first registration of property in the Land Register is a statutory obligation on the seller. It therefore followed that the purchaser was deemed to be acting on behalf of the seller in arranging the land registration with the consequence that the supply fell within the scope of article 28 of the Principal VAT Directive. Article 28 provides that where a taxable person acting in its own name but on behalf of another person takes part in a supply of services, it is deemed to have received and supplied those services itself. It did not matter that the parties to the sale contract had agreed that the sale price of that property did not include the value of the land-registration service. It therefore followed that the purchaser could recover the input tax on the services used to effect the registration but had to account for output tax on a deemed supply to the seller of registering the land.

DLA Piper comment: It is interesting that the court applied Article 28 to an implied agency situation. Article 28 generally applies to commissionaire and express agents, who act in their own name in receiving or making supplies on behalf of their principal. Here the court applied to it to a situation where they implied an agency on law.