The transfer of a business, free of charge and in equal shares to two beneficiaries, does not necessarily qualify as a transfer of a totality of assets falling outside the scope of VAT.
In its judgment of 9 September 2026, Case T-366/25, the General Court of the European Union examined a transaction whereby an entrepreneur intended to transfer his entire business to his two daughters, granting each of them a 50% interest. The beneficiaries subsequently intended to contribute their respective interests to a jointly owned company that would continue the father’s business.
According to the Court, the initial transfer and the subsequent contributions must be treated as separate and independent transactions. Each beneficiary is free to dispose of her interest and is not legally bound to complete the proposed contribution.
Accordingly, the VAT exclusion under Article 19 of the VAT Directive does not apply where the assets transferred to each beneficiary do not constitute a functionally independent business capable, on its own, of carrying on an autonomous economic activity.
The mere intention to combine the interests at a later stage is therefore insufficient. The structure of the transaction and the functional autonomy of the transferred assets should be carefully assessed from the outset, particularly when planning an intergenerational business transfer.
