Navigating VAT on Tooling: New Rules, Zero-Rating, and Cross-Border Manufacturing Changes

• Tooling (moulds, dies, jigs, etc.) used in manufacturing often stays in the supplier’s country, creating complex VAT issues for cross-border businesses.
• The general VAT rule is that VAT applies where the tool is supplied, regardless of where the finished goods are exported.
• Some countries (Bulgaria, Sweden, Switzerland, Liechtenstein) have historically treated tooling as part of the finished goods, allowing zero-rating or exemption when goods are exported.
• Bosnia and Herzegovina will introduce zero-rating for tooling from August 2025.
• Recent legal changes, especially in the EU, are altering these special rules, so businesses must monitor developments to manage VAT costs and reclaim opportunities.

Source: vatit.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.

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