Podcast: EU VAT Directive 2006/112/EC Explained: Taxable transaction – Supply of Services (Art. 24-29)

The podcast is about art. 24-29 of the EU VAT Directive 2006/112/EC on the concept of ”Taxable transaction – Supply of Services”.

This part of the EU VAT Directive addresses the Supply of Services within the European Union. The articles define the delivery of services and describes various categories of services, including telecommunications services. Furthermore, the text explains when the delivery of services is considered as compensation and addresses cases where a taxpayer acts in their own name but on behalf of another.

Articles in the EU VAT Directive 

TITLE IV

TAXABLE TRANSACTIONS

CHAPTER 3: Supply of services

Article 24
1. ‘Supply of services’ shall mean any transaction which does not constitute a supply of goods.
2. ‘Telecommunications services’ shall mean services relating to the transmission, emission or reception of signals, words, images and sounds or information of any nature by wire, radio, optical or other electromagnetic systems, including the related transfer or assignment
of the right to use capacity for such transmission, emission or reception, with the inclusion of the provision of access to global information networks.

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.

Article 29
Article 19 shall apply in like manner to the supply of services.

• Article 24 – Definition of “Supply of Services”: Article 24(1) establishes a residual definition: “Supply of services” means any transaction which does not constitute a supply of goods. In other words, if something isn’t a transfer of tangible property (goods), it’s treated as a service for VAT. This extremely broad scope ensures all economic activities fall into one category or the other, leaving no gaps – a cornerstone of the VAT’s general tax on consumption. Practically, this means all intangible, intellectual, digital, or action-based supplies are taxed as services. For example, downloading an e-book or software is a supply of services (since no physical goods change hands), whereas selling a hardcopy book or software on a CD is a supply of goods. This distinction had real consequences: until recently, printed books could get a reduced VAT rate, but e-books (being electronic services) were stuck at the standard rate (the EU later amended the rules to allow equal VAT rates for e-publications, but the fundamental classification remains). Article 24’s broad definition has been affirmed by the European Court of Justice (ECJ), e.g. in Faaborg-Gelting Linien (1996), the Court held that a restaurant providing meals is not supplying goods (food) but rather a service, given the substantial service elements (cooking, serving) involved. This highlights that even when some physical goods are supplied in a transaction, it may be classified as a service if the service component predominates (here, dining-in involves service; contrast with a mere sale of takeaway food which is a goods supply). Article 24(2) further defines specific types of services: for instance, “telecommunications services” are explicitly defined as the transmission of signals, voice, data, etc., via electronic means. Similar definitions for broadcasting and electronically supplied services have been added by amendments (to facilitate special VAT rules for digital services). These definitions clarify the scope of new service categories but do not change the core principle: if it’s not a tangible good, it’s a service. This clear dichotomy is crucial because many other VAT rules (place of supply, applicable rate, exemptions, etc.) differ depending on whether a supply is of goods or services. [eur-lex.europa.eu] [taxadviser…gazine.com], [taxadviser…gazine.com] [taxadviser…gazine.com]
• Article 25 – Examples of What Constitutes a Service: To illustrate the wide scope of services, Article 25 provides that a supply of services may consist “inter alia” (among other things) in the following transactions: (a) the assignment of intangible property, whether or not documented (for example, licensing a patent or transferring intellectual property rights is a VAT service, since an intangible right is not a good); (b) an obligation to refrain from an act, or to tolerate an act or situation (for example, agreeing not to compete with a business, or tolerating construction on your property in return for a payment – such “non-actions” are treated as services); and (c) the performance of services under a legal mandate (for instance, services one is required to do by law or by order of an authority are still considered supplies of services for VAT). The legal significance of Article 25 is to remove any doubt that these less tangible transactions count as taxable services. In practice, this means activities like licensing intellectual property, providing a concession or easement, or even a compensation paid for someone’s agreement to abstain from something, all fall under VAT’s scope (unless a specific exemption applies). For example, the sale of an option or a derivative financial right – although nothing tangible changes hands – is deemed a supply of services according to Article 24(1) and 25, and indeed the ECJ confirmed that “the sale of an option…shall be a supply of services within the meaning of Article 24(1)”. By listing these examples, Article 25 underscores the breadth of “services,” ensuring that transactions involving intangibles or even deliberate inaction (like non-compete agreements) are taxed just like positive acts of service provision. [eur-lex.europa.eu]
• Article 26 – Deemed Supplies of Services (Self-Supply and Free Use): Article 26 addresses certain situations where no actual third-party service is supplied, but a taxable person’s actions or uses are treated as a supply of services for VAT purposes to ensure proper taxation of final consumption. Article 26(1) specifies two such scenarios, which are deemed to be supplies “for consideration” (i.e. as if the business made a service and ‘sold’ it, even though no payment is received): (a) when a business uses goods from its business assets for private purposes (by the taxpayer or their staff) or for any non-business use, if input VAT was deducted on those goods. For example, if a company car (on which the company reclaimed VAT when buying it) is used by the director for personal trips, that private use is taxed as a supply of services by the company to the director. Essentially the company is deemed to “self-supply” a transport service equal to the benefit of the car use. (b) when a business provides services for free for private use (of the taxable person or staff) or for other non-business purposes. For instance, if an IT firm’s employee builds a personal website for the CEO without charge, or a company’s accountant does the owner’s personal tax return for free using company resources, that free service is treated as a taxable service supply (because the company incurred costs and input VAT for it). These rules prevent businesses from escaping VAT by diverting goods or services to personal use. By taxing the output of such use, Article 26 ensures equal treatment between buying something for private use (on which one pays VAT) and taking it out of the business for private use (which now triggers an output VAT). The taxable amount for these deemed supplies is governed by Article 75: it is the full cost to the business of providing the service (or in the case of using goods, effectively the value of that usage). Article 26(2) allows Member States to derogate from these self-supply rules provided it doesn’t cause distortion of competition. In practice, many Member States implement Article 26(1) but may make exceptions for very minor fringe benefits or incidental uses (on the logic that such small values don’t distort competition). For example, a country might choose not to tax the private use of office phone for a short personal call, even if technically input VAT was deducted – a de minimis approach allowed by Article 26(2). But generally, common cases like private use of company cars, or free gifts of services, are taxed across the EU to avoid untaxed consumption. The underlying principle is that final consumers should bear VAT whether they purchase something outright or receive it as a perk of employment or ownership. [eur-lex.europa.eu] [lup.lub.lu.se]
• Article 27 – Anti-Distortion Rule for In-house Services: Article 27 provides an optional measure Member States can use to prevent tax avoidance in certain scenarios. It says that “in order to prevent distortion of competition”, and after consulting the VAT Committee, Member States may treat as a taxable supply a service that a business provides to itself for business use, in cases where, if that same service were supplied by an outside provider, the VAT on it would be only partially or non-deductible. This addresses situations primarily in partially exempt sectors: for instance, banks, insurance companies, or public bodies (who cannot fully deduct VAT) might be tempted to create services in-house (with no VAT) rather than outsource, to avoid incurring non-recoverable VAT. Article 27 lets a Member State level the playing field by taxing the internal supply as if it were bought externally. One classic example is the construction of immovable property by an exempt entity: some Member States, under Article 27, tax the value of the building the business “built for itself,” so that a bank constructing its new office with its own employees faces the same VAT as if it hired a construction firm. Another example: a company in an exempt industry might form a captive IT or cleaning department; Article 27 allows the Member State to tax the “service” those internal departments provide to the company, if hiring an outside IT or cleaning firm would carry VAT that the company couldn’t deduct. Not all Member States implement this provision, but several do in targeted areas – it requires consultation at EU level to ensure the measure is indeed to prevent distortion and not a hidden tax. Those that have adopted it typically wrote the rule into their national law for specific services (often referred to as “self-supply” rules of services). From a legal perspective, Article 27 is significant as a flexibility clause: it acknowledges that Art 26 might not cover all cases of potential distortion (Art 26 only covers private/non-business use, whereas Art 27 covers business use in exempt sectors) and gives governments a tool to plug that gap. If applied, the taxable amount for such an imputed supply is the open market value of the service (per Article 77 of the Directive). Overall, Article 27’s use is relatively rare and highly specified, because it effectively taxes a business on an internal activity, which goes against the normal principle of VAT taxing final consumption; it’s justified only to stop competitive inequities between doing a task in-house or outsourcing it. [eur-lex.europa.eu] [iter.org]
• Article 28 – Transactions Involving Intermediaries Acting in Own Name: Article 28 deals with agency arrangements, specifically the case of an “undisclosed agent” (also known as a commissionaire, or intermediary acting in their own name on someone else’s behalf). It states that if a taxable person acting in their own name but on behalf of another takes part in a service supply, they are deemed to have received that service and supplied it themselves. In effect, VAT law creates a fiction of two supplies: one from the original provider to the intermediary, and a second from the intermediary to the final customer, even though in reality the service might economically go directly from the original provider to the final consumer. The purpose of this rule is to ensure that VAT is accounted for properly and transparently in agency scenarios. For example, consider an event ticket reseller who buys tickets in bulk and sells to the public in its own name, or a travel agent who, in some arrangements, might appear as the provider of a tour package while actually arranging on behalf of a tour operator. Article 28 ensures that such an intermediary is treated not as a mere broker (which would be a separate service of “arranging,” if acting in the name of the principal) but as a principal in the transaction, liable for VAT on the full value. The legal significance is that it aligns VAT with commercial reality when the customer doesn’t know the underlying supplier: the customer gets an invoice/receipt from the intermediary, so the tax system treats the intermediary as the supplier. Meanwhile, the original supplier (principal) makes a supply to the intermediary (often zero-rated intra-community or exempt if appropriate, or taxed normally if domestic). All Member States must apply this rule, so the treatment is uniform: any time someone “acts in his own name” but for another’s account, there are two supplies for VAT. The ECJ in Henfling (2011) examined Article 28 (then Sixth Directive Article 6(4)) in the context of betting services: a betting company’s agents took bets in their own name but for the company. The Court confirmed that the agent was an undisclosed intermediary, so the betting services were deemed supplied twice (company → agent, agent → punter). Importantly, the Court clarified that VAT exemptions propagate through the deemed supplies: since betting/gambling was VAT-exempt under EU law, both the service from company to agent and agent to customer were exempt. In other words, the agent was not separately taxed on their commission; the exemption for betting applied “in full”, treating the agent’s onward supply as the same exempt betting service. (However, the Court noted a caveat: if an exemption requires a specific status of the supplier – e.g. a medical service must be provided by a licensed doctor to be exempt – an intermediary without that status cannot benefit from the exemption. But this was not an issue for betting, which has no such provider-specific condition.) In summary, Article 28’s practical effect is that the VAT outcome is the same as if the intermediary had bought the service and resold it. This can affect reporting (the intermediary needs to charge VAT or can zero-rate an export, etc., and the original supplier may not charge VAT to the intermediary depending on the scenario), and it affects which party can deduct input VAT. It also means final customers sometimes effectively see the intermediary as the supplier for VAT – for instance, many online platforms historically tried to avoid acting “in their own name” to not be deemed the supplier, but EU reforms under the E-commerce package (2015 and 2021) and upcoming VAT in the Digital Age proposals are expanding the deemed supplier concept to certain platforms by law (even if contractually they are just intermediaries). In fact, the ViDA reform (expected 2025) will introduce a new Article 28a to deem platforms facilitating short-term accommodation rentals and passenger transport as suppliers, where the underlying provider is not registered for VAT. That essentially leverages the Article 28 principle to make the platform an official VAT collector in those cases (to ensure VAT on services arranged via platforms like home-sharing or ride-hailing when the actual provider is a private individual). Article 28 thus embodies the crucial VAT principle: “undisclosed agency = two supplies.” It eliminates loopholes where an intermediary could argue “I’m just an agent” to avoid VAT; VAT treats them as buying and selling the service. [eur-lex.europa.eu] [lup.lub.lu.se] [kpmg.com]
• Article 29 – Transfers of a Business (Extension of the No-Supply Rule to Services): Article 29 simply provides that Article 19 of the Directive applies equally to the supply of services. Article 19 (in Chapter 1 on goods) is the rule that allows Member States to treat the transfer of a totality of assets (business) as not a supply for VAT – commonly known as the transfer of going concern (TOGC) rule. By reference, Article 29 ensures that whether the assets of the business being transferred are goods or services (or a mix), the same relief can apply. In other words, when a business (or an independent part of a business) is sold or contributed, a Member State may consider that no supply occurs for VAT purposes, so no VAT is charged on the transfer, and the purchaser steps into the shoes of the seller (takes on their VAT position such as adjustment periods, etc., as the “successor” to the transferor). The purpose of this rule is to facilitate business restructuring and sales without imposing a VAT burden that would ultimately be recoverable (in many cases) but could hurt cash flow or create tax friction. All EU countries have implemented a form of this TOGC rule (it’s optional, but virtually universally used). Article 29 is vital because many businesses have significant intangible assets or going-concern value (client lists, ongoing services, goodwill) that technically would be “supplies of services” if sold. For example, selling a client portfolio of an insurance broker, or transferring a lease business, involves supplies that are not goods. Article 29 ensures such transfers can also qualify for the no-supply treatment just like transferring a factory with stock would. The ECJ case Zita Modes (C-497/01, 2003) is the leading interpretation of the TOGC provision (then Article 5(8) of the Sixth Directive, now Art 19/29). The Court held that the rule covers any transfer of an (entire) business or an independent part of a business capable of operating on its own, including all tangible and intangible elements, and that the transferee must intend to continue that business (not simply liquidate the assets). If those conditions are met, the Member State’s “no supply” relief applies and no VAT is charged. The Court also ruled that Member States cannot introduce extra conditions not in the directive (for instance, a Member State tried to require the buyer to already hold certain business licenses to qualify; the Court struck that down as incompatible with the directive). In practice, the TOGC (Articles 19 + 29) is a highly important relief: it prevents awkward VAT charges on corporate acquisitions, mergers, or transfer of activities (which, if taxed, the buyer might reclaim but only after a delay, or worse, might not be able to reclaim fully if they have exempt activities). It also avoids pricing distortions when a business is sold, since VAT is not included in the sale/purchase price (except for assets sold outside a TOGC). Member States do vary in their implementation details: for example, countries typically require the purchaser to be a taxable person (or become one as a result of the transfer) and to continue the same type of business. Some require notification or specific form of agreement to apply the TOGC treatment. There can be cross-border mismatches – e.g. if a business is transferred involving assets in two countries and one country treats it as TOGC (no VAT) while the other doesn’t – but generally the harmonized directive framework and Court rulings like Zita Modes push toward consistency. Article 29’s extension of the rule to services ensures that all parts of a business (not just physical goods assets) can be transferred VAT-free as a going concern. This is crucial in modern economies where much business value is in intangible assets, goodwill, and ongoing service contracts. [eur-lex.europa.eu] [eur-lex.europa.eu], [eur-lex.europa.eu] [eur-lex.europa.eu]

• Place of Taxation: The VAT Directive sets different default rules for where a supply is taxed depending on goods vs services. Goods are generally taxed where they are delivered or where transport to the customer ends (with special intra-EU rules for cross-border sales of goods), whereas services follow either a B2B “customer location” rule or B2C “supplier location” rule, unless specific services have special place rules. So misclassifying a transaction can result in VAT being paid to the wrong country. For example, a UK company selling software on a disk to France would have charged UK VAT (prior to Brexit) on the physical good until it triggered distance selling thresholds, whereas selling the same software via download (a service) required French VAT from the start under the electronically supplied services rules. [taxadviser…gazine.com]
• Applicable VAT Rates: EU law allows reduced rates on certain goods and some services, but historically many reduced-rate categories were goods-focused (e.g. foodstuffs, printed books, medicine – mostly goods). Services were often taxable at standard rate except specific socially important ones (passenger transport, some labor-intensive services, etc.). The classification therefore has impacted the VAT cost: e.g., as noted, printed books could be zero or reduced-rated as goods in many countries, but e-books were long taxed at standard rate because they were services until the law was changed. Another example: restaurant food vs takeaway – the former is a service (typically standard-rated), the latter can be treated as supply of food (goods) which might enjoy a reduced rate. The Faaborg-Gelting case confirmed restaurant supply is a service, thus subject to the higher VAT in countries that differentiate catering (though since then many countries also apply a reduced rate to restaurant services as allowed by Annex III modifications). [taxadviser…gazine.com]
• VAT Exemptions: Some exemptions apply specifically to services (e.g. financial services, insurance, medical services, education are exempt supplies of services under Articles 135 and 132). Supply of goods is rarely exempt except in special cases (like certain exports or intra-community supplies which are zero-rated rather than exempt). Knowing whether something is a service or a good can determine if an exemption might apply. For instance, the VAT exemption for immovable property rentals treats the granting of a lease as a service; if that were treated as a good (which it is not, but hypothetically), it wouldn’t fall under the exemption category. Conversely, some goods like shares or currencies are treated as intangible property – but legally, transfers of shares/currency are defined as financial services and are exempt.
• Compliance and Reporting: The EU VAT system imposes different compliance mechanisms for goods vs services in cross-border scenarios. Cross-border B2B goods supplies within the EU require listing on EC Sales Lists and are subject to the zero-rate + acquisition VAT mechanism (for now, until “definitive regime” changes). Cross-border services B2B are often accounted by reverse charge by the recipient and listed in separate sections of EC Sales Lists (only for a limited set of services after 2010). Additionally, imports and exports apply only to goods (services have no “customs” border, instead the place-of-supply rules handle cross-border services). For example, a company importing goods must go through customs and pay import VAT, whereas “importing” a service means applying a reverse charge on your VAT return. Thus, getting the classification wrong could mean failing to customs-declare something or, vice versa, unnecessarily attempting to do so. Tax authorities also often segregate audit teams or processes for goods trade (e.g. checking shipping documentation) versus services. Even boxes on the VAT return differ (in many countries, intra-EU goods purchases and sales are declared in distinct boxes from services).
• Special schemes: Some special VAT schemes are type-specific. The margin scheme for second-hand goods applies to goods; the Mini One Stop Shop (now One Stop Shop OSS) was originally only for digital services (now extended). The Tour Operators Margin Scheme (TOMS) deals with travel services. So classification can determine eligibility or necessity to use a scheme.

• The all-encompassing nature of “services” (Article 24) means the Court often emphasizes that anything not amounting to a transfer of tangible property falls in this category. For instance, the sale of greenhouse gas emission allowances, of frequencies, of club membership rights, etc., have all been treated as supplies of services. The Directive itself was amended to list certain intangibles (electricity, gas, heat) as goods to remove doubt – by default they’d be services, but Article 15 explicitly classifies those as goods. This shows that by default, borderline items are services unless the law says otherwise.
• Composite supplies: The Court has developed tests to determine whether a transaction with both goods and service elements should be seen as a single supply (and if so, of which type) or split. The Faaborg caseand subsequent cases (like CPP (C-349/96) and Levob (C-41/04)) instruct that one must identify the essential features of the transaction. For example, Levob concerned customized software delivered on a medium – the Court held it was a single service supply (the customization was the essential part, the disc was ancillary). Such cases reinforce how crucial the correct categorization is, as it affects place-of-supply and VAT rate. The implementing regulation (No 282/2011) also addresses a specific composite scenario: if a customer provides all parts for something and the supplier only assembles them, that assembly work is a service (the parts are not sold by the assembler). Conversely, if a supplier provides parts and assembly, it may well be a supply of goods (delivery of a finished product). These nuances have been guided by Article 25 and court decisions (e.g. Jürgen Dudda case cited in the regulation, which indicated one must look at the “whole” of a transaction to decide its nature).
• Henfling (2011) – As described above, this case clarified that Article 28’s fiction applies fully to any VAT exemption on the underlying service. The ECJ essentially said an undisclosed agent steps into the shoes of the supplier for VAT: if the original service was exempt, the agent’s supply is the same exempt service. This was significant for the gambling sector (agents of betting companies weren’t individually taxed on their commission). The Court, however, hinted that for certain exemptions requiring personal qualification (like medical services by licensed professionals), an intermediary might not meet the exemption criteria on their own. Tax authorities thus must consider whether an intermediary-supply truly mirrors the principal supply in all legal characteristics. [lup.lub.lu.se], [lup.lub.lu.se] [lup.lub.lu.se]
• Vehicle leasing vs sale: A more recent case, Mercedes-Benz Financial Services UK (C-164/16, 2017), dealt with distinguishing a lease (service) from a de facto goods sale (hire purchase). While Article 14(2)(b) addresses straightforward hire-purchase with automatic transfer of ownership, MBFS dealt with an optional transfer at the end. The Court gave guidance that if the contract makes transfer of ownership essentially a foregone conclusion (economically or legally), it’s a supply of goods; otherwise it remains a service. This interpretation ensures Article 24/25 versus Article 14 are applied in line with the economic reality, preventing arbitrage of VAT timing via contract form.
• ECJ on TOGC (Art 19/29): Apart from Zita Modes, subsequent cases like Schriever (C-444/10) and Finnish Etelä-Karjalan (C-270/09) further clarified what constitutes “part of a business” (it can be just some assets and leases as long as capable of independent economic activity) and confirmed that even transferring only intangible assets like clientele can qualify as a transfer of a going concern if those assets suffice to carry on an independent business (e.g. transfer of a client base in insurance was held to be within Art 19/29). Member States have taken cues from these rulings when framing conditions for TOGC in national law.

• Digital Services Definitions (2010 amendments): As noted, definitions for telecom, broadcasting, and electronic services were inserted (Art 24(2)-(4) in some versions of the Directive) to support the 2015 place-of-supply changes. This didn’t change the meaning of “service” but clarified sub-categories.
• Vouchers (2019): While not altering “services” per se, new Articles 30a and 30b introduced by Directive (EU) 2016/1065 define how vouchers (which could be for goods or services) are treated, but that’s outside 24–29.
• Platform Economy (Upcoming): The ViDA proposal, as mentioned, will insert Article 28a to handle platform-facilitated services. According to the agreed approach, platforms facilitating short-term accommodation or passenger transport by non-taxable persons will be deemed suppliers of those services. This is effectively an extension of the Article 28 principle, tailored to the digital age where often the platform claims not to act in the name of the provider. The new rule will impose a legal fiction anyway, making the platform charge VAT to the customer and relieving the underlying provider of VAT obligations. This shows the continued relevance of Article 28’s mechanism in new contexts. Similarly, for goods, previous E-commerce reforms introduced a deemed supplier rule (Article 14a) for online marketplaces facilitating imports. These changes do not redefine “service” or “goods,” but they modify how certain intermediated supplies are handled to improve VAT collection. [kpmg.com] [kpmg.com], [kpmg.com]
• No Fundamental Redefinition in ViDA: Notably, nothing in ViDA changes the fundamental definitions in Art 24–25; the concept of what is a service remains the same. The reforms are about how and where to tax services (e.g. digital reporting requirements, OSS expansions, platform deeming, etc.), rather than what is a service. For example, no proposal suggests that any current service would become a good or vice versa. The broad scope of “supply of services” has proven flexible enough to cover new business models (from cloud computing to online advertising – all clearly services). Thus, Articles 24–29 continue as the bedrock definitions, with new rules built on top of them.

• There is uniformity in what constitutes a service versus a good across the EU, thanks to the common definitions and ECJ rulings. One could sell the same product in multiple countries and expect the same classification, with rare exceptions on the fringes.
• Article 26 (self-supply) is implemented in all Member States, though the extent of 26(2) derogations (not taxing certain uses) can vary. For instance, EU law allows small gifts of goods (worth under a certain amount) to be excluded from deemed supplies; similarly, for services, trivial use might be ignored. Most countries tax private use of company assets like cars, accommodation, etc., fairly strictly – these are common audit targets to ensure businesses output tax for significant perks.
• Article 27 (in-house services) being optional, its use varies. Some countries have long-standing “self-supply” rules for specific sectors. For example, in Belgium and some others, if an exempt business (like a bank or hospital) constructs a building with its own labor, that is taxed as a self-supply (to prevent an advantage over hiring a contractor and suffering VAT). Other countries might not use Article 27 at all, or only after obtaining an EU derogation if needed. The directive only requires consultation, not formal permission, for Art 27 (unlike Article 394+ which require Council approval for special measures), so Member States have some leeway. This can lead to differences: a service internally performed might be taxed in one country but not in another, which could factor into business decisions (though it’s a niche scenario).
• Article 28 (undisclosed agents) is uniformly applied by all Member States since it’s mandatory. However, identifying whether an intermediary “acts in their own name” can sometimes be tricky in modern business arrangements. Businesses have tried to design contracts to either fall within or outside Article 28 depending on what’s beneficial. For example, online platforms often structure terms to say the service is provided by the underlying seller (making the platform a disclosed agent or mere facilitator) to avoid being deemed the supplier. Tax authorities and courts then examine the reality – ECJ case law (e.g. Fonz (JC Decaux) v. Revenue & Customs in the UK, or the AirBNB Ireland case in some national courts) have looked at who is the actual supplier. Generally, the “economic reality” prevails principle in VAT means that if a platform or intermediary really controls the transaction and the customer perceives them as the seller, Article 28 will be applied even if contracts try to say otherwise. The upcoming explicit rules in ViDA will remove ambiguity by forcefully deeming certain platforms as suppliers, to avoid case-by-case analysis.
• Article 29 (TOGC) is widely taken up, but Member States set conditions under the freedom Article 19/29 gives. Almost all require the purchaser to be (or become) a taxable person and continue the business. Some Member States exclude transfers to a non-taxable person entirely from the scope (thus those would be normal taxable supplies). Others might exclude transfer of just assets as opposed to a whole business (interpreting “part of an undertaking” strictly). These differences can lead to what a 2025 academic study called “TOGC shopping” – businesses structuring deals in the jurisdiction that gives the most favorable VAT result if cross-border. The Commission is aware of such mismatches; however, the principle of TOGC itself is firmly established by Article 29, so most differences are in details like administrative steps or specific scope, rather than the concept. If a dispute arises, ECJ tends to ensure the broad principle (no VAT on genuine business transfers) is upheld, as in Zita Modes.

• Council Directive 2006/112/EC, Articles 24–29 (definitions of supply of services and related provisions). [eur-lex.europa.eu], [eur-lex.europa.eu], [eur-lex.europa.eu], [eur-lex.europa.eu]
• ECJ Judgment Faaborg-Gelting Linien (C-231/94) – restaurant transactions are services, not goods.
• Tax Adviser Magazine (N. Warren, June 2015) – examples distinguishing goods vs services (software on disk vs download, newsletters, etc.). [taxadviser…gazine.com], [taxadviser…gazine.com]
• ECJ Judgment Zita Modes (C-497/01) – scope of no-supply rule for business transfers (must transfer an independent economic entity, transferee continues activity). [eur-lex.europa.eu], [eur-lex.europa.eu]
• ECJ Judgment Henfling (C-464/10) – undisclosed agents: Article 28 deems two supplies and extends exemption to intermediary’s supply. [lup.lub.lu.se], [lup.lub.lu.se]
• KPMG Summary of ViDA Platform proposals – introduction of Article 28a deemed supplier rule for accommodation/transport platforms. [kpmg.com]
• Council Implementing Regulation (EU) No 282/2011, Article 8 – clarifying assembling customer’s goods = service (applies Art 24(1)).
• EU VAT Directive consolidated text (Jan 2020) – Article 25(a)–(c) examples of services; Article 26(1)(a),(b) self-supplies; Article 27 in-house services rule; Article 28 commissionaire rule. [eur-lex.europa.eu]

Also in this series

• Art. 9–13: Taxable persons
• Art 14-19: Taxable transaction – Supply of Goods
• Art. 20-24: Taxable transaction – Intra-Community Acquisition of Goods

ECJ/CJEU Cases

Roadtrip through ECJ Cases – Focus on Taxable transactions – Supply of Services (Art. 24-29) – VATupdate