KJ Entreprise A/S
The Danish Ministry of Taxation
Letting of holiday flats was exempt from VAT, for which reason the builder did not have a claim for refund of input VAT
In 2004-2005, KJ Entreprise A/S built 36 owner-occupied holiday flats at Assens Næs. The case concerned whether the flats were to be used for a purpose that was subject to VAT, which would mean that KJ Entreprise was entitled to deduct VAT on the construction costs.
The Supreme Court held that the buyers' letting of the flats could not be regarded as being covered by the rules of the Danish VAT Act on letting of hotel rooms subject to VAT, but that it was rather tax-exempt letting of holiday homes. Consequently, KJ Entreprise was not entitled to deduct VAT.
The Eastern High Court had reached the same conclusion.