The Advocate General’s Opinion in A&P Deco, Case T-397/25, delivered on 15 April 2026, is a useful reminder that the VAT treatment of a business transfer must be analysed carefully, especially where real estate is involved. The case concerns the transfer of a garden centre business by A&P Deco NV to WR Woestijnroos BV. The seller retained ownership of the business premises and leased them to the purchaser, who continued the transferred activity. The key issue was whether the seller had to adjust the input VAT previously deducted on the building, given that the building was thereafter used by the seller for VAT-exempt letting. This is not yet a judgment of the General Court, but the Opinion of its Advocate General. However, given the reasoning adopted and its consistency with existing case law, it appears likely that the Court may follow this approach.

A transfer of a going concern, or TOGC, broadly refers to the transfer of a business, or an autonomous part of a business, enabling the purchaser to continue an independent economic activity. Under Articles 19 and 29 of the VAT Directive 2006/112/EC, Member States may treat the transfer of a totality of assets, or part thereof, as if no supply of goods or services had taken place. 

In M&A practice, TOGC treatment may therefore be relevant, for example, in the sale of a business line, a branch of activity, a commercial undertaking with its stock, contracts, customer base and operating means, or a real estate letting business transferred with the elements required to continue the activity. It should not be assumed, however, where the transaction is limited to isolated assets.

The Court of Justice has progressively clarified the concept. In Zita Modes, Case C-497/01, judgment of 27 November 2003, a Luxembourg referral, the Court confirmed that the regime applies to the transfer of a business or an independent part of an undertaking capable of carrying on an independent economic activity. In Schriever, Case C-444/10, judgment of 10 November 2011, the Court accepted that TOGC treatment may apply even where the premises are not transferred, provided that the assets transferred, together with the availability of the premises, allow the purchaser to continue the activity. In Mailat, Case C-17/18, judgment of 19 December 2018, the Court confirmed that the mere letting of immovable property, together with movable assets necessary for its use, does not necessarily constitute a TOGC. In W, Case C-729/21, order of 16 January 2023, the Court again focused on whether the assets transferred are sufficient to constitute an autonomous economic activity. 

The practical contribution of A&P Deco is to distinguish two separate VAT questions: the treatment of the transfer of the business, and the treatment of the assets retained by the seller. Even if the business transfer qualifies as a TOGC, the retained building remains in the seller’s assets. If that building is then used for VAT-exempt letting, the seller may face an adjustment of the input VAT previously deducted on the building (In Luxembourg the adjustment is computed on a ten years period). According to the Advocate General, the purchaser’s continued taxable use of the premises is not sufficient, in itself, to preserve the seller’s deduction position. 

For Luxembourg transactions, the point is particularly relevant where a business is transferred but the premises are retained by the seller and leased to the purchaser. In a comparable Luxembourg situation, the seller could potentially avoid or limit this type of consequence by opting to apply VAT to the lease entered into with the purchaser, in accordance with Article 45 of the Luxembourg VAT Law, provided that the applicable conditions and formalities are met.

Article 45 allows a taxable person, in certain circumstances, to waive the VAT exemption applicable to immovable leasing or sale transactions made to another taxable person. 

The message is clear: TOGC qualification is not a mere technical label. It can avoid unnecessary VAT on the transfer itself, but it does not remove the need to analyse collateral VAT effects, including retained real estate, input VAT adjustments, pricing, VAT clauses and indemnities in the transaction documentation.