- Advocate General Juliane Kokott delivered an opinion on VAT treatment in Case C234/24 involving the Brose Group’s Slovak subsidiary.
- The case concerns VAT treatment of tooling structures in cross-border manufacturing within corporate groups.
- The dispute involves specialized tooling ordered by a German parent company, manufactured by a Slovak subcontractor, and sold to the Slovak subsidiary.
- The German parent treated the supply as an exempt intra EU delivery, but the Slovak tax authority denied the exemption and claimed local VAT was due.
- Key legal questions addressed: 1. No abuse of law or artificial structuring; the arrangement reflects genuine economic activity. 2. Tooling is not an ancillary supply to automotive parts; it is a standalone supply of goods. 3. Intra EU supply cannot be VAT exempt if goods do not physically leave the Member State. 4. Input VAT deduction if supplier charged VAT on intended intra EU supply is not addressed.
- The case is significant for automotive suppliers and manufacturers using cross-border tooling and production models.
- Misclassification of tooling transactions can lead to unintended VAT liabilities, blocked input VAT deductions, risks in refund procedures, and challenges in contract design.
- Recommended actions include reviewing agreements, reassessing VAT treatment, and ensuring proper documentation of movement.
Source: alvarezandmarsal.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
