Roadtrip through ECJ Cases – Focus on ”Deemed supply of services” (Art. 25-28)”

Last update: October 11, 2025

Importance of articles 25 – 28 of the EU VAT Directive 2006/112/EC

Article 25: Expands the Definition of Services It clarifies that services aren’t limited to traditional activities like consulting or labor. They include intangible transactions such as licensing intellectual property, tolerating or refraining from actions, and fulfilling legal or public authority obligations. This ensures VAT applies to a wide range of non-material economic activities.
Article 26: Captures Private Use and Free Services It treats private use of business assets and free services as taxable supplies if VAT was previously deducted. This prevents abuse of VAT deductions and ensures fair taxation when business resources are diverted to personal or non-business use.
⚖️ Article 27: Anti-Avoidance Mechanism Allows Member States to treat certain internal business services as taxable when VAT would otherwise be non-deductible. This helps prevent distortions in competition and tax avoidance through internal transactions that mimic external supplies.
Article 28: Legal Fiction for Intermediaries Establishes that intermediaries acting in their own name but on behalf of others are deemed to both receive and supply the service. This simplifies VAT accounting and ensures transparency in agency relationships, especially in complex supply chains.

Articles 25 – 28 of the EU VAT Directive 2006/112/EC

Supply of services

Article 25
A supply of services may consist, inter alia, in one of the following transactions:
(a) the assignment of intangible property, whether or not the subject of a document establishing title;
(b) the obligation to refrain from an act, or to tolerate an act or situation;
(c) the performance of services in pursuance of an order made by or in the name of a public authority or in pursuance of the law.

Article 26
1. Each of the following transactions shall be treated as a supply of services for consideration:
(a) the use of goods forming part of the assets of a business for the private use of a taxable person or of his staff or, more generally, for purposes other than those of his business, where the VAT on such goods was wholly or partly deductible;
(b) the supply of services carried out free of charge by a taxable person for his private use or for that of his staff or, more generally, for purposes other than those of his business.
2. Member States may derogate from paragraph 1, provided that such derogation does not lead to distortion of competition.

Article 27
In order to prevent distortion of competition and after consulting the VAT Committee, Member States may treat as a supply of services for consideration the supply by a taxable person of a service for the purposes of his business, where the VAT on such a service, were it supplied by another taxable person, would not be wholly deductible.

Article 28
Where a taxable person acting in his own name but on behalf of another person takes part in a supply of services, he shall be deemed to have received and supplied those services himself.

Comments: Art. 28 creates a legal fiction of two identical supplies provided consecutively. with an intermediate party who has first received a supply of services from a supplier and secondly, supplies that same service to customer on behalf of the supplier for whom he acts.

ECJ Cases Decided

Article 25

Article 26