Comments on ECJ Case C-234/24: Applicable VAT treatment in tooling arrangement

Independent Taxable Supply: Advocate General Kokott concluded that the transfer of tooling set-ups in the EU automotive sector constitutes an independent, taxable transaction in Bulgaria, separate from the exempt intra-Community supply of manufactured parts, due to the lack of physical transport of the tools outside Bulgaria.
Exemption Requirements: The opinion clarified that for a transaction to qualify as an exempt intra-Community supply, there must be a physical dispatch of goods to another Member State. As the tools remained in Bulgaria, the exemption did not apply, allowing for a VAT refund without rejection based on the argument of an exempt supply.
Documentation and Compliance: AG Kokott emphasized the need for businesses to ensure proper documentation that aligns with VAT regulations, particularly regarding ownership, transport, and supply distinctions. The opinion highlights the importance of clarity in these aspects as businesses prepare for potential CJEU rulings.

AG’s Opinion on VAT Deductibility for Tooling in Intra-Community Transactions

Advocate General of the European Court of Justice issued an opinion on VAT treatment for tooling in intra-Community transactions.
Case involved a Slovakian company buying parts from a Bulgarian vendor, with tooling ordered by a related German company.
Slovakian company sought a refund of Bulgarian VAT on tooling, claiming it as deductible input VAT.
Advocate General concluded tooling transfer is a taxable supply in Bulgaria, not part of an exempt intra-Community supply.
Opinion stated Article 4 of Directive 2008/9 allows for VAT refund eligibility in these circumstances.
Bulgarian tax authorities had rejected the refund, but the Advocate General’s opinion challenges this.
Final judgment by the European Court of Justice is still pending.

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