Forum Contributions: Territorial Formalism and Structural Neutrality: Reassessing Article 47 VAT Directive in Light of the Economic-Consumption Principle

Article 47 of Council Directive 2006/112/EC allocates the place of supply of services connected with immovable property to the Member State where the property is located. While that rule is justified for genuinely site-bound services, difficulties arise when it is applied to crossborder advisory, valuation, and similar services whose economic utility is realized primarily at the customer’s establishment. In such cases, VAT recovery may be displaced from the ordinary deduction or reverse-charge mechanism to ex post refund procedures for non-established taxable persons, creating a temporary structural neutrality concern. This article argues, on the basis of the VAT Directive, Implementing Regulation 282/2011, relevant secondary legislation, European Commission guidance, and CJEU case law, that Article 47 should be interpreted strictly rather than expansively. A narrower reading of the requirement of a sufficiently direct connection would better align the immovable-property rule with structural neutrality and the broader consumption-oriented logic of the EU VAT system.