Taxable transactions

Supply of goods is the transfer of the right to dispose of tangible property as owner.
Article 14(1) VAT Directive

• The transfer, by order made by or in the name of a public authority or in pursuance of the law, of the ownership of property against payment of compensation;
• The actual handing over of goods pursuant to a contract for the hire of goods for a certain period, or for the sale of goods on deferred terms, which provides that in the normal course of events ownership is to pass at the latest upon payment of the final instalment;
• The transfer of goods pursuant to a contract under which commission is payable on purchase or sale.

Article 14(2) VAT Directive

Intra-EU transfer of goods
Article 17 VAT Directive

Business (taxable person) shall treat as a supply of goods the transfer of its business assets to another EU country when:

• Business dispatches or transports its movable tangible property to another EU country;
• This is done for the purposes of its business;
• None of the exceptions listed in Article 17(2) VAT Directive apply or they cease to apply.

Exceptions include:

• Distance sale of goods taxed in the EU country of destination;
• Transfer of goods for installation/assembly in another EU country by the supplier or on his behalf;
• Supply of goods on board a passenger ship, aircraft or train;
• Supply of gas, electricity, heat or cooling energy through a distribution system or network;
• Certain exempt supplies of goods;
• Transfer of goods for valuations or work on, if returned afterwards;
• Transfer of goods for temporary use in relation with the supply of services.
• Transfer of goods for temporary use (not more than 2 years) under conditions similar to the temporary importation with full exemption from customs duties.

Self-supply of goods for non-business use
Article 16 VAT Directive

Business (taxable person) shall treat as a supply of goods the final use of its business assets when:

• VAT on goods or their component parts was fully or partly deductible;
• Business uses those goods for non-business use such as private use or private use of its staff, disposes them free of charge;
• Goods are not used as samples of gifts (use as gifts or samples is not considered as a supply of goods).

Self-supply of goods for business use
Article 18(a) VAT Directive

EU countries may require businesses (taxable persons) to treat as a supply of goods the final use of their business assets when:

• Business produced, extracted, processed, purchased or imported goods for its business use;
• VAT on such goods if they were purchased from a taxable person would be not fully deductible;
• Business uses those goods for its business use.

Self-supply of goods for non-taxable use
Article 18(b) VAT Directive

EU countries may require businesses (taxable persons) to treat as a supply of goods the final use of their business assets when:

• Business produced, extracted, processed, purchased or imported goods for its business use;
• VAT on such goods was fully or partly deductible (either upon their acquisition or upon a supply for business use);
• Business uses those goods for non-taxable area of its business.

Self-supply of retained goods when stopping trading
Article 18(c) VAT Directive

EU countries may require businesses (taxable persons) to treat as a supply of goods the use of their business assets when:

• Business ceases its economic activities;
• Business or its successors retain the goods;
• This is not considered as a non-taxable transfer of business assets;
• VAT on such goods was fully or partly deductible (either upon their acquisition or upon a supply for business use).

Exception for transfer of business assets
Article 19 VAT Directive

EU countries may consider that no supply of goods has taken place and that the recipient is the successor to the transferor when:

• Business transfers totality or part of its business assets;
• Such a transfer is done for consideration or without it or as a contribution to a company.

If the recipient is not wholly liable to tax EU countries may introduce special rules to avoid distortion of competition.

Supply of services is any transaction which does not constitute a supply of goods.
Article 24 VAT Directive

• the assignment of intangible property, whether or not this is a document establishing title;
• the obligation to refrain from an act, or to tolerate an act or situation;
• services performed under (i) the law or (ii) an order made by or on behalf of a public authority.

Article 25 VAT Directive

Self-supply of services for non-business use, treated as supply of services
Article 26(1)(a) VAT Directive

Business (taxable person) shall treat as a supply of services the temporary use of its business assets when:

• VAT on goods was fully or partly deductible;
• Business uses those goods for non-business use such as private use or private use of its staff.

The difference with the self-supply of goods for non-business use is that in this case the goods are only used for those purposes temporary as opposed to the final use of goods.
EU countries may decide to treat it as non-taxable transactions if this does not lead to distortion of competition.

Self-supply of services for non-business use
Article 26(1)(b) VAT Directive

Business (taxable person) shall treat as a supply of services transactions when:

• Business supplies services free of charge;
• Those services are used for non-business use such as private use or private use of its staff.

EU countries may decide to treat it as non-taxable transactions if this does not lead to distortion of competition.

Self-supply of services for business use
Article 27 VAT Directive

EU countries may require businesses (taxable persons) to treat as a supply of services the self-supply when:

• Business supplies services to itself (i.e. uses those services);
• VAT on such services if they were purchased from a taxable person would be not fully deductible;
• Business uses those services for its business use.

Supply of services by intermediaries
Article 28 VAT Directive

It shall be considered that business (taxable person) received and supplied services when:

• It acts as an intermediary in the supply of services on behalf of another person;
• Those services are supplied in its own name.

Example
A French company orders an aircraft part from a German manufacturer. The manufacturer arranges for the part to be air-freighted to the French company’s factory in Toulouse.

The French company has made an intra-EU acquisition of goods. The manufacturer, on the other hand, has made an exempt supply of goods.

An intra-EU acquisition of goods is a taxable transaction, on which the acquirer is liable to pay the VAT under the reverse-charge mechanism.

Intra-EU acquisition of goods imported by non-taxable legal persons
Article 20(2) VAT Directive

The following shall be considered as intra-EU acquisition of goods:

• Non-taxable legal person acquires goods outside the EU;
• He imports those goods in one EU country and transports or dispatches to the final destination in another EU country.

The non-taxable legal person must:

• Pay import VAT in the EU country of importation (unless another person is designated as liable for it);
• Account for intra-EU acquisition in the EU country of destination of goods;
• That import VAT is refunded by EU country of importation when the person can prove that VAT on intra-EU acquisition was accounted for.

Article 21 transactions
Article 21 VAT Directive

Business (taxable person) shall treat as an intra-EU acquisition of goods for consideration the final use of goods where:

• Business produced, extracted, processed, purchased, imported or acquired goods for its business use in one EU country;
• It dispatches or transports those goods into another EU country;
• In that EU country it uses those goods for its business use.

Article 22 transactions
Article 22 VAT Directive

The final use of goods by NATO forces shall be treated as an intra-EU acquisition of goods for consideration where:

• NATO forces use the goods for its needs or for their accompanying civilian staff;
• those goods were not purchased under the local VAT rules of the EU country in which they are stationed;
• the importation of those goods would not have been eligible for exemption in the normal way for such transactions under Article 143(1)(h) VAT Directive.

Article 23 transactions
Article 23 VAT Directive

EU countries shall treat as an intra-EU acquisition of goods for consideration the transactions where:

• if that transaction would have been treated as a supply of goods if carried out by a taxable person in that EU country.