Comments on ECJ case C-234/24 (Brose Prievidza): No VAT Exemption for Tooling Without Physical Movement

The Court of Justice ruled that VAT exemption for intra-Community supply requires actual physical movement of goods to another Member State.
The supply of tooling (such as moulds and dies) is considered an independent transaction with its own economic purpose, not automatically part of the exempt supply of components produced with it.
In the Brose Prievidza case, tooling remained in Bulgaria despite ownership transfer within the group, so VAT exemption did not apply.
The Court clarified that functional or economic links between tooling and produced components do not justify treating the tooling supply as VAT-exempt without physical movement.
VAT refunds can be refused if there is no physical transfer of goods, even if the tooling is used for producing VAT-exempt components.

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CJEU judgment relevant to the automotive industry

Qualification of Supply: The CJEU ruled that the supply of production tools (tooling) and the supply of components are separate transactions, emphasizing that the economic autonomy of each supply should be recognized rather than artificially combining them into a single transaction for VAT purposes.
VAT Refund Rights: The Court upheld the right to VAT refund for the Slovak company Brose Prievidza, stating that the fact that the tooling remained in Bulgaria and was not physically moved means it cannot be classified as an intra-Community supply, thus reinforcing the independence of each transaction’s tax treatment.
No Artificial Division: The judgment clarified that a supply cannot be deemed ancillary merely due to a link between transactions; each supply should be treated independently, and the economic significance of each transaction must be respected to avoid artificial divisions for VAT benefits.

Source Prawo