ECJ’s resolution of October 2, 2014, Fonderie 2A. Place of supply of goods, transformation in the country where the acquirer is established
The judgment of the Court of Justice of the EU does relate to a supply of goods made by an Italian company to its French client, also an entity. In order to deliver the goods those are shipped from Italy to France, but firstly destined to a French supplier which performs transformation work on them. Finally, once the goods are finished and already in France, those are put at the client’s disposal also in France.
The main question is to determine the place of supply of goods for VAT purposes, as the Italian company argues that it takes place in Italy, treating it as an intra-EU supply of goods, thus carrying out his French client the relevant Intra-EU acquisition of goods in France, while the French Tax Administration considers that the supply takes place in France as it is the country where the goods are put to the client’s disposal, besides that the goods are sent from France since those go through the service provider first, before the final delivery.
The Court relies on two aspects to agree with the French administration and, therefore, to consider the place of supply in France, where the last acquirer is established:
– From the wording of Article 8, paragraph 1, letter a) of the Sixth Directive (applicable on the date on which the acts take place), regarding the place of supply of goods, it is considered made “in the place where the goods are at the time when dispatch or transport directly to the person to whom they are supplied begin”. Therefore, since the goods are in France when the transport starts to the purchaser, is in the country where the delivery occurs.
– In addition, Article 8 implies the existence of a sufficient temporal and material link between the delivery of goods and the shipment, as well as continuity in the development of the transaction, which do not exist if the shipment from Italy aims to deliver to the service provider, prior to the purchaser, to transform the goods.
A copy of the judgment C-446/13 is attached below.
On Diligens’ opinion, given the discrepancy in the treatment for VAT that may arise in these transactions with international transport of goods where different operators are involved, it should be requested the advice of a specialist in indirect taxation (VAT) to have a clear view of the correct tax treatment, so that it can be avoided or reduced beforehand the associated costs of incorrectly treating the transactions.
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