Can a marriage be one VAT taxpayer? YES!

On April 3, 2025, the CJEU issued a revolutionary ruling in the Polish case C-213/24, Grzera, which may radically change the current tax practice regarding VAT taxation of sale or letting of real estate by spouses.

What was it about?

Spouses concluded a contract of free transfer of the farm to successors in 1989.

Almost 30 years later, the marriage decided to sell these plots of the farm. The preparation of the transaction was ordered to a professional entrepreneur who, acting as the marriage’s representative, carried out a series of actions intended to make plots more attractive for buyers: from dividing the plots, adding amenities and changing the zoning plan (from agricultural to building plots), to placing advertisements in local media and finalizing the sale. Polish tax authorities concluded that spouses conducted business activities subject to VAT. However, the Voivodship Administrative Court in Wrocław addressed questions to the CJEU for a preliminary ruling.

What has the CJEU ruled?

The Court confirmed that when a natural person mandates a professional to prepare and update land before its sale, the sale does not constitute ordinary management of private property, but business activity subject to VAT. And this standpoint is not particularly surprising. However, most importantly, the CJEU allowed the possibility of recognizing a marriage (under a joint marital property regime) as a single VAT taxpayer. And this is groundbreaking!

When a marriage can be treated as a singly VAT taxpayer according to the CJEU? It is possible when:

• an asset jointly owned by the spouses is supplied,
• spouses in the eyes of third parties (e.g. the buyer, public authorities) and outsiders acted together/jointly or as entities acting independently – spouses “appear, in the eyes of third parties, to have carried out together the sale of land”,
• the marriage bears the economic in connection with the transaction risk jointly or each spouse individually.

Why is this a revolutionary ruling?

According to the current approach of tax authorities, in cases similar to this one, each of the spouses being co-owners was separately recognized as a VAT taxpayer who invoices and reports transactions on a 50/50 basis. The CJEU ruling in the Grzera case clearly opens the possibility of a different approach – recognizing the marriage as a single VAT taxpayer.

What’s next?

The conclusions from the CJEU ruling raise numerous practical doubts:

• Is this judgment applicable only to supply of goods or also to supplies of services (e.g. lease of properties)?
• should the marriage register for VAT purposes before each transaction subject to VAT?
• If family law regulations are the only criteria to determine VAT status of a marriage or spouses?
• what should such registration look like?
• is it necessary to amend (i) the VAT Act introducing regulations on, among others, the status of a marriage and the rules for settling transactions undertaken by them, or (ii) the regulations on tax identification?
• what about invoices issued according to the current practice and VAT returns – will correction be necessary? Consequently – will “retroactive” VAT registration be necessary? Or does the ruling apply prospectively?
• what about the right to deduct VAT by purchasers?
• according to what criteria “appear, in the eyes of third parties” shall be assessed? Who is competent to make such an assessment?
• what in the event of divorce and the need to divide joint property?
• What happens when only one spouses has already his/her business activities in which the joint owned assets are used?

These are just some of the questions we still have to wait for answers to. Undoubtedly, it would be a great advantage if the Minister of Finance issues a general interpretation following the ruling in case C-213/24 Grzera.

Therefore, it is worth following the echoes of the ruling in the Grzera case and its impact on the domestic scene. The first herald of forthcoming changes may the judgment of the court in Wrocław that now has to decide the case and to include CJEU standpoint in its verdict.