French Court Confirms VAT Deductibility for Free Goods Used in Taxable Business Activities

• The French Supreme Administrative Court held that VAT on purchased goods can still be deducted even if those goods are later given away for free.
• Deductibility depends on a direct and immediate link to the taxpayer’s overall taxable business activity.
• In this case, free LED bulb distribution was necessary to obtain Energy Savings Certificates, which were then sold in taxable transactions.
• Because the free distribution supported a clear business purpose and future taxable sales, the input VAT was fully deductible.

Source: meridianglobalservices.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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