VATLP05200 | Exemption: European basis for treating certain supplies of land as exempt

The UK exemption for supplies of land is based on Article 135 of Council Directive 2006/112. This requires member states to exempt:

• the supply of buildings, or parts of buildings, and the land on which they stand, other than new buildings (Article 135(1)(j)) (in this European context, we consider that ‘supply’ means freehold sale or similar).

• the supply of land which has not been built on, (Article 135(1)(k)), except for building land (in this European context, we consider that ‘supply’ means freehold sale or similar). However, Article 371 and Annex X, Part B(9) allows member states to continue to exempt the supply of building land if the exemption was in force on 1 January 1978. The UK relies on this to exempt building land.

• the leasing or letting of immovable property (Article 135(1)(l)), subject to four mandatory exclusions, which are set out in Art. 135(2). The tailpiece to Article 135(2) gives Member States the discretion to add further exclusions to the exemption.