Comments on ECJ C-475/23: ECJ confirms the right to deduct VAT on acquiring a fixed asset for tooling purposes.

• On October 4, 2024, the CJEU ruled that taxpayers can deduct VAT on fixed assets provided free of charge to subcontractors under tooling agreements, as long as the assets are essential for the taxpayer’s taxable activities.
• The case involved Voestalpine Giesserei Linz (VGL) and their overhead crane used by subcontractor Global Energy Products S.A. (GEP) for producing cast products sold by VGL.
• Romanian tax authorities initially denied VAT deduction, arguing the crane was used by GEP, not directly by VGL.
• The CJEU confirmed that fixed assets used by subcontractors for the taxpayer’s taxable activities qualify for VAT deduction, provided the assets are exclusively used for the taxpayer’s purposes.
• The judgment emphasizes that formal deficiencies, like accounting issues, should not prevent VAT deduction if all substantive conditions are met, reinforcing established practices in the automotive and manufacturing industries.

Source MDDP

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See also

• C-475/23 (Voestalpine Giesserei Linz) – Judgment – Right to deduct VAT if goods purchased are provided to a subcontractor for the subcontractor’s taxable transactions

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