C\u2011243\/23. Drebers | For the purposes of the capital goods scheme, the adjustment period of the immovable property is also applicable for construction works covering the full renovation and alteration of a building provided that the useful economic life of the result of the renovation works is as long as that of a new building.<\/p>\n\n\n\n
The subject of the case is a building where the 60% of the floor area was used by a law firm as an office with the remaining 40% being utilised as a dwelling by the owners of that law firm. Between 2007 and 2015, the law firm had both the interior and the fa\u00e7ade fully reconstructed with new sealing on the walls and new pipes and cables for gas, water and electricity. \u00a0A new glass annex was also built with offices and a lift shaft.<\/p>\n\n\n\n
The Belgian legislator abolished the VAT-exemption on the legal services from 2014. For this reason, the law firm recovered the input VAT on the reconstruction and renovation costs, considering that the construction works constitute \u2018capital goods\u2019 for VAT purposes subject to the adjustment period of the \u2018immovable properties\u2019 (in Belgium, 15 years) which has not been passed since the first occupation. The Belgian tax authority rejected the VAT deduction on the ground that, according to the Belgian law, the adjustment period of movable properties (i.e., 5 years) are applicable for the newly-installed items as the renovation works did not result in \u2018new occupation\u2019 of the building.<\/p>\n\n\n\n