VAT Treatment of Recharging of services – Part 2 – Splitting the Services

In part 1, we discussed the criteria for evaluating how to treat recharged services for VAT purposes. In this part, we will address the splitting of services and which services are exempt from VAT when recharged. The Court in C-42/11 (Wojskowa Agencja Mieszkaniowa) established criteria for when a service cannot be split from other services when recharged, as well as instances where splitting could apply. It is important to note that recharges for the supply of staff are taxable at the standard rate, but recharges of wages of employees shared by more than one employer do not fall within the scope of VAT. Each case regarding recharges of services requires examination based on these considerations.

Source Joseph Sammut

See also

• C-42/14 (Wojskowa Agencja Mieszkaniowa) – Letting of immovable property and the provision of water, electricity and heating must be regarded as constituting several distinct and independent supplies
• C-94/19 (San Domenico Vetraria) – Secondment of staff without markup is subject to VAT

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