C-234/24 Brose Prievidza

JUDGMENT OF THE COURT (Tenth Chamber)

23 October 2025 ( *1 )

(Reference for a preliminary ruling – Taxation – Common system of value added tax (VAT) – Directive 2006/112/EC – Article 138(1) – Directive 2008/9/EC – Article 4(b) – Refund of VAT to taxable persons not established in the Member State of refund – Principal supply and ancillary supply – Artificial splitting of a single supply – No dispatch of the object of the supply)

In Case C‑234/24,

REQUEST for a preliminary ruling under Article 267 TFEU from the Varhoven administrativen sad (Supreme Administrative Court, Bulgaria), made by decision of 27 March 2024, received at the Court on 27 March 2024, in the proceedings

Brose Prievidza, spol. s r.o.

v

Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’ – Sofia pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite,

THE COURT (Tenth Chamber),

composed of J. Passer, President of the Chamber, D. Gratsias and B. Smulders (Rapporteur), Judges,

Advocate General: J. Kokott,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

Brose Prievidza, spol. s r.o., by E. Evtimov, Y. Mateeva, S. Vasilev and V. Vidolovet, advokati, and by B. Lazarov,

the Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’ – Sofia pri Tsentralno upravlenie na Natsionalnata agentsia za prihodite, by E. Pavlova,

the European Commission, by P. Carlin and D. Drambozova, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 22 May 2025,

gives the following

Judgment

Legal context and the dispute

1This request for a preliminary ruling concerns the interpretation of Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State (OJ 2008 L 44, p. 23).

2The request has been made in proceedings between Brose Prievidza, spol. s r.o., a company established in Slovakia, and the Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’ – Sofia (Director of the Appeals and Tax and Social Security Practice Directorate, Sofia, at the Tsentralno upravlenie na Natsionalnata agentsia za prihodite (Central Administration of the National Revenue Agency, Bulgaria) (‘the director of the tax authority’), concerning the right to a refund of the value added tax (VAT) charged on the supply of equipment.

Legal context

European Union law

Directive 2006/112

3Title IV of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1), as amended by Council Directive (EU) 2018/1910 of 4 December 2018 (OJ 2018 L 311, p. 3) (‘Directive 2006/112’), entitled ‘Taxable transactions’, includes Chapter 1, entitled ‘Supply of goods’, which contains Article 14 of that directive, which provides, in paragraph 1 thereof:

‘“Supply of goods” shall mean the transfer of the right to dispose of tangible property as owner.’

4Title IV of Directive 2006/112 includes Article 20 of that directive, which states, in the first paragraph thereof:

‘“Intra-Community acquisition of goods” shall mean the acquisition of the right to dispose as owner of movable tangible property dispatched or transported to the person acquiring the goods, by or on behalf of the vendor or the person acquiring the goods, in a Member State other than that in which dispatch or transport of the goods began.’

5Title IX of Directive 2006/112, entitled ‘Exemptions’, contains Chapter 4, entitled ‘Exemptions for intra-Community transactions’, which includes Article 138 of that directive, which provides, in paragraph 1 thereof:

‘Member States shall exempt the supply of goods dispatched or transported to a destination outside their respective territory but within the [European] Community, by or on behalf of the vendor or the person acquiring the goods, where the following conditions are met:

the goods are supplied to another taxable person, or to a non-taxable legal person acting as such in a Member State other than that in which dispatch or transport of the goods begins;

the taxable person or non-taxable legal person for whom the supply is made is identified for VAT purposes in a Member State other than that in which the dispatch or transport of the goods begins and has indicated this VAT identification number to the supplier.’

6Article 169(a) of that directive provides:

‘In addition to the deduction referred to in Article 168, the taxable person shall be entitled to deduct the VAT referred to therein in so far as the goods and services are used for the purposes of the following:

transactions relating to the activities referred to in the second subparagraph of Article 9(1), carried out outside the Member State in which that tax is due or paid, in respect of which VAT would be deductible if they had been carried out within that Member State;

…’

7Article 170 of Directive 2006/112 states:

‘All taxable persons who, within the meaning of … Article 2(1) and Article 3 of [Directive 2008/9] and Article 171 of this Directive, are not established in the Member State in which they purchase goods and services or import goods subject to VAT shall be entitled to obtain a refund of that VAT in so far as the goods and services are used for the purposes of the following:

transactions referred to in Article 169;

…’

8Article 171(1) of that directive provides:

‘VAT shall be refunded to taxable persons who are not established in the Member State in which they purchase goods and services or import goods subject to VAT but who are established in another Member State, in accordance with the detailed rules laid down in [Directive 2008/9].’

Directive 2008/9

9Under Article 1 of Directive 2008/9:

‘This Directive lays down the detailed rules for the refund of [VAT], provided for in Article 170 of [Directive 2006/112], to taxable persons not established in the Member State of refund, who meet the conditions laid down in Article 3.’

10Article 2 of that directive provides:

‘For the purposes of this Directive, the following definitions shall apply:

1“taxable person not established in the Member State of refund” means a taxable person within the meaning of Article 9(1) of [Directive 2006/112] who is not established in the Member State of refund but established in the territory of another Member State;

2“Member State of refund” means the Member State in which the VAT was charged to the taxable person not established in the Member State of refund in respect of goods or services supplied to him by other taxable persons in that Member State or in respect of the importation of goods into that Member State;

…’

11Article 4 of Directive 2008/9 provides:

‘This Directive shall not apply to:

amounts of VAT which, according to the legislation of the Member State of refund, have been incorrectly invoiced;

amounts of VAT which have been invoiced in respect of supplies of goods the supply of which is, or may be, exempt under Article 138 or Article 146(1)(b) of [Directive 2006/112].’

Bulgarian law

The ZDDS

12Article 53 of the Zakon za danak varhu dobavenata stoynost (Law on value added tax) ([Darzhaven Vestnik (State Gazette) (DV)] No 63 of 4 August 2006) (‘the ZDDS’) provides:

‘(1) A zero rate of tax shall be applied to the intra-Community supplies referred to in Article 7, with the exception of exempt intra-Community supplies under Article 38(2).

(2) … For the purpose of applying the zero rate of tax referred to in paragraph 1, the supplier must be in possession of:

1documents relating to the supply as defined by the rules governing the application of the law, and

2… documents relating to the dispatch or transport of goods from the national territory to the territory of another Member State, as defined by Article 45a of [Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax (OJ 2011 L 77, p. 1), as amended by Council Implementing Regulation (EU) 2018/1912 of 4 December 2018 (OJ 2018 L 311, p. 10)] (“Implementing Regulation (EU) No 282/2011”), or as defined by the rules governing the application of the law.

(3) …’

13Article 81 of the ZDDS, entitled ‘Refund of tax to persons not established in the national territory’, states:

‘(1) The tax paid shall be refunded to:

1taxable persons who are not established in the national territory but who are established and registered for VAT purposes in another Member State in respect of the goods that they have purchased and the services that they have received in the national territory;

…

(2) The arrangements for, and the documents required in respect of, the refund of tax referred to in paragraph 1 shall be laid down by a regulation on the part of the Minister for Finance.’

14Under Article 128 of the ZDDS:

‘Where the principal supply is accompanied by another supply and the payment is determined jointly, it shall be presumed that there is a single principal supply.’

Naredba no N-9

15Article 1 of Naredba no N-9 za vazstanoviavaneto na danaka varhu dobavenata stoynost na danachno zadalzheni litsa, neustanoveni v darzhavata chlenka po vazstanoviavane, no ustanoveni v druga darzhava – chlenka na Evropeiskia sayuz (Regulation No N-9 concerning the refund of value added tax to taxable persons who are not established in the Member State of refund but who are established in another Member State of the European Union) of 16 December 2009 (DV No 101 of 18 December 2009) (‘Naredba no N-9’) provides:

‘(1) This Regulation shall govern:

1… the conditions and procedures under which invoiced [VAT] is refunded to taxable persons established and registered for [VAT] purposes in another Member State of the European Union, in respect of the goods that they have purchased, the services that they have received, or the imports that have been carried out in the national territory;

…

(2) This Regulation shall not apply to amounts which correspond to improperly invoiced [VAT], including intra-Community supplies carried out and exports.’

The dispute in the main proceedings and the question referred for a preliminary ruling

16Brose Prievidza is a company established and registered for VAT purposes in Slovakia. Its business consists, inter alia, in the production of window regulators and door systems in respect of motor vehicles. In order to manufacture those products, it purchases components from ‘Integrated Micro-Electronics Bulgaria’ EOOD (‘IME Bulgaria’), an undertaking established in Bulgaria. The referring court classifies the supply of those components by IME Bulgaria to Brose Prievidza as intra-Community supplies.

17Brose Fahrzeugteile SE & Co. KG (‘Brose Coburg’) is a company established in Germany and registered for VAT purposes in Germany and Bulgaria. It is apparent from the documents before the Court that Brose Coburg, like Brose Prievidza, is part of the Brose group, which produces, inter alia, mechatronic systems in respect of the bodies and interiors of cars intended for car manufacturers.

18Brose Coburg ordered specific equipment from IME Bulgaria for the manufacture of components to be integrated into those mechatronic systems. On 14 May 2020, IME Bulgaria invoiced Brose Coburg for the sale of that equipment. Although the equipment became the property of Brose Cobourg, it has remained with IME Bulgaria, which uses it exclusively to manufacture the abovementioned components, intended for Brose Prievidza.

19On 7 June 2021 Brose Coburg sold that equipment to Brose Prievidza. On that basis, it issued an invoice relating to the sale of tooling equipment, referred to as ‘spindle set as per Annex S-T 08-P-9965 – automatic workpiece clamping in welding system’ (‘the equipment at issue’), in a net amount of EUR 62000, plus Bulgarian VAT, which was paid. The equipment at issue remained with IME Bulgaria for the purpose of manufacturing those components.

20On 10 March 2022, Brose Prievidza applied for a refund of that VAT in respect of the period from 1 January to 31 December 2021. By a notice of set-off and refund of 15 July 2022, that application was rejected. That decision was confirmed by the director of the tax authority.

21The Administrativen sad Sofia-grad (Administrative Court, Sofia City, Bulgaria) dismissed the action brought by Brose Prievidza against that notice of set-off and refund. That court held, in essence, that, as the supply of the equipment at issue was ancillary to the intra-Community supplies of the components produced by IME Bulgaria, it had to be subject to the same tax regime. It considered that those two transactions had been artificially split. Thus, under Article 53(1) of the ZDDS, the supply of that equipment should have been subject to a zero rate of tax, so that Brose Coburg should not have entered the VAT on the invoice relating to the supply of that equipment. Therefore, in accordance with Article 1(2) of Naredba no N-9, which transposes Article 4(b) of Directive 2008/9 into Bulgarian law, it held that Brose Prievidza was not entitled to a refund of the VAT which it had paid.

22Brose Prievidza has challenged that decision before the Varhoven administrativen sad (Supreme Administrative Court, Bulgaria), which is the referring court.

23In its request for a preliminary ruling, that court states at the outset that it is of the view, having regard to the findings made in the judgment of 21 February 2008, Part Service (C‑425/06, EU:C:2008:108, paragraphs 56 and 57), that the Administrativen sad Sofia-grad (Administrative Court, Sofia City) was justified in finding that the supplies by IME Bulgaria of, first, the components for the purposes of the activity of Brose Prievidza and, second, the equipment at issue had been artificially split. A number of factors support that view, such as the material link between Brose Coburg and Brose Prievidza, the fact that the supplies of the components were made directly by IME Bulgaria to Brose Prievidza, but that the equipment at issue necessary for the manufacture of those components was supplied indirectly, namely by Brose Coburg, and the fact that, taken in isolation, the supply of that equipment appears to lack economic logic given that that equipment has remained with IME Bulgaria, which uses it solely to manufacture those components. By contrast, unlike the situation at issue in the judgment of 21 February 2008, Part Service (C‑425/06, EU:C:2008:108), no intention of tax abuse has been claimed or demonstrated in the present case.

24Next, however, the referring court is uncertain whether the supply of the equipment at issue, which it considers to be ancillary to the supply of components, can be classified as a transaction which is exempt or likely to be exempt from VAT where that equipment has not been transported outside Bulgaria.

25In addition, that court refers to its case-law, which is based on the judgments of the Court of Justice of 25 February 1999, CPP (C‑349/96, EU:C:1999:93, paragraph 26); of 21 February 2008, Part Service (C‑425/06, EU:C:2008:108, paragraph 48); and of 27 October 2005, Levob Verzekeringen and OV Bank (C‑41/04, EU:C:2005:649), according to which supplies of equipment accompanying the intra-Community supplies of parts manufactured using that equipment are subject to the same tax regime, which means, in the present case, that the supply of the equipment at issue should be taxed at a zero rate of tax. In such a case, under Article 1(2) of Naredba no N-9, which transposed Article 4(b) of Directive 2008/9, a company established in another Member State to which such equipment has been invoiced is not entitled to a refund of VAT in Bulgaria.

26That said, the referring court questions whether that reasoning is consistent with EU law, first, having regard to the findings made in the judgment of 21 October 2021, Wilo Salmson France (C‑80/20, EU:C:2021:870). In the case which gave rise to that judgment, as in the present case, the equipment invoiced did not leave the territory of the Member State of the supplier and the goods produced using that equipment were the subject of intra-Community supplies. In that judgment, the existence of a right to a refund was not called into question by the Court.

27Second, the referring court notes that the case before it differs, in particular, as regards the number of persons involved in the supplies concerned, from the cases which gave rise to the judgments of 27 October 2005, Levob Verzekeringen and OV Bank (C‑41/04, EU:C:2005:649), and of 27 September 2012, Field Fisher Waterhouse (C‑392/11, EU:C:2012:597), relating to transactions regarded as forming a single supply. It states that, in the present case, three entities are involved. Furthermore, in the case which gave rise to the judgment of 21 February 2008, Part Service (C‑425/06, EU:C:2008:108), as in the case before the referring court, various suppliers supplied equipment to a single recipient. However, in the case which gave rise to that judgment, the artificial separation of the supplies had the objective of committing tax abuse, which is not the case here.

28In those circumstances, the Varhoven administrativen sad (Supreme Administrative Court) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘Does Directive 2008/9 confer a right to obtain a refund of [VAT] paid which is claimed by the recipient of a supply of [equipment] (tooling) where the subject of the supply has not left the territory of the supplier’s Member State and the supply of [that equipment] has been artificially split from the intra-Community supply, to the same recipient, of goods manufactured by means of [that equipment]?’

Consideration of the question referred

29As a preliminary point, it should first of all be noted that what is at issue in the case in the main proceedings is the situation of a taxable person established in a Member State other than that in which the purchase of the goods was made. In that case, it is common ground that the equipment at issue was sold by Brose Coburg, established in Germany and registered for VAT purposes in Germany and Bulgaria, to Brose Prievidza, established in Slovakia.

30It is also common ground that the supply of that equipment took place and that VAT was paid in Bulgaria. The referring court stated in that regard that, in the present case, following the manufacture of the equipment at issue, the ownership of that equipment had been successively transferred to Brose Coburg and then to Brose Prievidza.

31In that context, it should be stated, as the Advocate General observed in point 30 of her Opinion, that that transfer and, therefore, the supply within the meaning of Article 14(1) of Directive 2006/112 is not called into question by the fact that a person has retained possession of the property concerned, for example in order to use it himself, herself or itself, like IME Bulgaria in the present case, which uses the equipment at issue for the sole purpose of producing components ordered by Brose Prievidza. The Court has previously held that the transfer of the right to dispose of tangible property as owner within the meaning of that provision does not require the party to whom the tangible property is transferred to be in physical possession of it, or that the tangible property be physically transported to that party and/or physically received by that party (judgment of 17 October 2024, Digital Charging Solutions, C‑60/23, EU:C:2024:896, paragraph 27 and the case-law cited).

32The referring court states, however, that it is of the view that, in the present case, the supply of the equipment at issue to Brose Prievidza and the intra-Community supplies to that company of the components manufactured using that equipment, exempt from VAT, were artificially split, with the result that the supply of that equipment should be regarded as falling within the same tax regime as the supplies of those components. That court has doubts, therefore, as to the right to a refund of the VAT paid in Bulgaria by Brose Prievidza on the supply of the equipment at issue, while questioning, at the same time, the compatibility with EU law of its assessment of the situation at issue in the main proceedings.

33Next, it must be stated that Article 171 of Directive 2006/112 provides, in paragraph 1 thereof, that VAT is to be refunded to taxable persons who are not established in the Member State in which they, inter alia, purchase goods and services subject to VAT but who are established in another Member State, in accordance with the detailed rules laid down in Directive 2008/9.

34Although the referring court does not cite any specific provision of Directive 2008/9 in the question referred for a preliminary ruling, it is apparent from its request for a preliminary ruling that the referring court is seeking the interpretation of Article 4(b) thereof. In the statement of reasons in respect of the reference for a preliminary ruling, that court starts from the premiss that the supply of the equipment at issue should follow the same tax regime as the supplies of the components which constitute intra-Community supplies which are exempt under Article 138 of Directive 2006/112. In addition, it notes, in particular, the link between Article 4(b) of Directive 2008/9 and the national legislation, namely Article 1(2) of Naredba no N-9, under which the refund of the VAT paid in respect of supplies of goods which are to be regarded as intra-Community transactions is excluded.

35In those circumstances, it must be held that, by its question, the referring court asks, in essence, whether Article 4(b) of Directive 2008/9, read in conjunction with Article 138(1) and Article 171 of Directive 2006/112, is to be interpreted as precluding a refusal to refund the VAT charged on the supply of equipment to a taxable person established in a Member State other than the Member State of purchase of those goods, on the ground that that supply must be exempt from VAT as an intra-Community supply, because it must be regarded as forming part of a single, indivisible economic supply, or as being ancillary to a principal supply comprising intra-Community supplies of goods produced using that equipment and intended for that taxable person, even though that equipment has not physically left the territory of the Member State of its supplier.

36In order to answer that question, it is necessary to examine, first, whether a supply of goods may be regarded as an intra-Community supply, even if the goods at issue have not left the Member State of their supplier, and, second, whether, in circumstances such as those at issue in the main proceedings, the supply of equipment may be regarded as forming part of a single, indivisible supply or as being ancillary to intra-Community supplies of goods produced using that equipment.

37In that regard, it should be stated, in the first place, that the Court has already held that, like the right to deduct, the right to a refund is a fundamental principle of the common system of VAT established by EU legislation, and, in principle, may not be limited. That right is exercisable immediately in respect of all the taxes charged on input transactions. The deduction system, and accordingly the refund system, is intended to relieve the operator entirely of the burden of the VAT due or paid in the course of all his or her economic activities. The common system of VAT therefore ensures neutrality of taxation of all economic activities, whatever their purpose or results, provided that they are themselves, in principle, subject to VAT (judgment of 16 May 2024, Slovenské Energetické Strojárne, C‑746/22, EU:C:2024:403, paragraph 35 and the case-law cited).

38In accordance with Article 1 of Directive 2008/9, the purpose of that directive is to lay down the detailed rules for the refund of VAT, provided for in Article 170 of Directive 2006/112, to taxable persons not established in the Member State of refund, who meet the conditions laid down in Article 3 of Directive 2008/9.

39However, the purpose of Directive 2008/9 is not to define the conditions for exercising the right to a refund; nor is it to define the extent of that right. Indeed, the second subparagraph of Article 5 of Directive 2008/9 provides that, for the purposes of that directive and without prejudice to Article 6 thereof, entitlement to an input VAT refund is to be determined pursuant to Directive 2006/112 as applied in the Member State of refund (see, to that effect, judgment of 21 October 2021, Wilo Salmson France, C‑80/20, EU:C:2021:870, paragraphs 62 and 63 and the case-law cited).

40However, in accordance with Article 4(b) thereof, Directive 2008/9 does not apply to amounts of VAT which have been invoiced in respect of supplies of goods the supply of which is, or may be, exempt under, inter alia, Article 138 of Directive 2006/112.

41Pursuant to Article 138(1)(a) of Directive 2006/112, Member States are to exempt the supply of goods dispatched or transported to a destination outside their respective territory but within the European Union, by or on behalf of the vendor or the person acquiring the goods, on condition that the goods are supplied to another taxable person, or to a non-taxable legal person acting as such in a Member State other than that in which dispatch or transport of the goods begins.

42According to settled case-law, the exemption of a supply of goods for the purposes of Article 138 of that directive becomes applicable only if the right to dispose of the goods as owner has been transferred to the person acquiring the goods, if the supplier establishes that those goods have been dispatched or transported to another Member State and if, as a result of that dispatch or transport, they have physically left the territory of the Member State of supply (judgment of 26 July 2017, Toridas, C‑386/16, EU:C:2017:599, paragraph 30 and the case-law cited).

43It follows that, without the physical movement of the goods concerned outside the territory of the latter Member State, a supply cannot be classified as an intra-Community supply.

44It should also be noted that the corollary of an intra-Community supply falling within Article 138(1) of Directive 2006/112 is an intra-Community acquisition, as defined in Article 20 of that directive (judgment of 26 July 2017, Toridas, C‑386/16, EU:C:2017:599, paragraph 31).

45It is clear from Article 20 of Directive 2006/112 that an acquisition can be classified as an intra-Community acquisition only if the goods have been transported or dispatched to another Member State, to the person acquiring them. It follows that the conditions for applying Article 138(1) of that directive cannot be fulfilled if the goods being supplied to the person acquiring them have not physically left the territory of the Member State of supply (see, to that effect, judgment of 26 July 2017, Toridas, C‑386/16, EU:C:2017:599, paragraphs 32 and 33).

46The fact that the goods were sold by a company established in a Member State other than that of the person acquiring the goods and other than that in which those goods are physically located does not call into question that conclusion. It follows from paragraphs 43 and 45 of the present judgment that, without dispatch or transport to the person acquiring the goods outside the territory of the Member State of supply, there is no question of either an intra-Community acquisition or, therefore, an exempt intra-Community supply.

47In the present case, it is apparent from the request for a preliminary ruling that the equipment at issue was the subject of two sales, by which the right to dispose of that equipment was transferred, initially, from IME Bulgaria to Brose Coburg and, subsequently, from Brose Coburg to Brose Prievidza. However, those goods have not been dispatched or transported to the successive persons acquiring the goods, but have remained in the territory of the Member State of the supplier.

48If, in such circumstances, the conditions for applying Article 138 of Directive 2006/112 are not satisfied, which it is for the referring court to determine, it follows that the refund of the VAT charged on the acquisition of those goods cannot be excluded by applying Article 4(b) of Directive 2008/9.

49In the second place, as regards the relationship between intra-Community supplies and a supply such as that of the equipment at issue, it should be noted that it follows from the second subparagraph of Article 1(2) of Directive 2006/112, as well as Article 2 thereof, that each transaction must, in principle, be regarded as a distinct and independent transaction (see, to that effect, judgments of 27 October 2005, Levob Verzekeringen and OV Bank, C‑41/04, EU:C:2005:649, paragraph 20; of 21 February 2008, Part Service, C‑425/06, EU:C:2008:108, paragraph 50 and the case-law cited; and of 17 October 2024, Digital Charging Solutions, C‑60/23, EU:C:2024:896, paragraph 47).

50As the Advocate General observed in point 42 of her Opinion, that principle applies even where there is a certain link between multiple supplies, having regard to the economic links between all the transactions at issue and their common purpose (see, to that effect, judgment of 4 September 2019, KPC Herning, C‑71/18, EU:C:2019:660, paragraph 44 and the case-law cited).

51Therefore, in a situation such as that at issue in the main proceedings, even if the sole purpose of the supplies of components, on the one hand, and the supply of the equipment at issue, on the other, consisted in implementing the orders for the manufacture of parts for Brose Prievidza, as the Administrativen sad Sofia-grad (Administrative Court, Sofia City) held was the case with regard to the supplies at issue in the main proceedings, that purpose or possible economic link between those supplies does not automatically mean that those supplies must be regarded as constituting a single transaction within the meaning of Directive 2006/112.

52That being so, it is possible that an exception must be made to the principle set out in paragraph 49 of the present judgment. A transaction which comprises a single supply from an economic point of view should not be artificially split, so as not to distort the functioning of the VAT system (judgments of 27 October 2005, Levob Verzekeringen and OV Bank, C‑41/04, EU:C:2005:649, paragraph 20, and of 16 February 2023, DGRFP Cluj, C‑519/21, EU:C:2023:106, paragraph 58 and the case-law cited).

53In accordance with settled case-law, it must be held that there is a single supply where two or more elements or acts supplied by the taxable person to the customer are so closely linked that they form, objectively, a single, indivisible economic supply, which it would be artificial to split (judgments of 27 October 2005, Levob Verzekeringen and OV Bank, C‑41/04, EU:C:2005:649, paragraph 22, and of 17 October 2024, Digital Charging Solutions, C‑60/23, EU:C:2024:896, paragraph 47 and the case-law cited).

54Moreover, in certain circumstances, several formally distinct supplies, which could be provided separately and thus give rise, in turn, to taxation or exemption, must be considered to be a single transaction when they are not independent. That is the case where, inter alia, one or more elements are to be regarded as constituting the principal supply, while other elements are to be regarded, by contrast, as one or more ancillary supplies which share the tax treatment of the principal supply (judgments of 27 October 2005, Levob Verzekeringen and OV Bank, C‑41/04, EU:C:2005:649, paragraph 21 and the case-law cited; of 20 April 2023, Dyrektor Krajowej Informacji Skarbowej, C‑282/22, EU:C:2023:312, paragraph 30; and of 17 October 2024, Digital Charging Solutions, C‑60/23, EU:C:2024:896, paragraph 48).

55In the context of the cooperation established by Article 267 TFEU, it is for the national courts to determine whether, in the circumstances of the particular case, the supply concerned constitutes a single supply and to make all definitive findings of fact in that regard. However, it is for the Court to provide the national courts with all the guidance as to the interpretation of European Union law which may be of assistance in adjudicating on the case pending before them (judgment of 17 October 2024, Digital Charging Solutions, C‑60/23, EU:C:2024:896, paragraph 49 and the case-law cited).

56In the present case, it is apparent from the order for reference that the components manufactured using the equipment at issue were the subject of several intra-Community supplies made directly by IME Bulgaria to Brose Prievidza. That equipment, the supply of which was subject to the VAT at issue in the main proceedings, was sold by Brose Coburg to Brose Prievidza, but remained in Bulgaria and was made available to IME Bulgaria.

57First, the fact that several supplies of identical goods, in the present case the components, took place between the same companies is not sufficient to determine that those supplies must, in themselves and independently of the supply of the equipment at issue, be regarded as a single transaction. The fact that the purpose of those supplies is the same does not automatically mean that they form, objectively, a single, indivisible economic supply, which it would be artificial to split.

58That is all the more the case where two supplies of different goods, in this instance the equipment at issue and the components, are carried out by two independent suppliers. As the Advocate General observed, in essence, in points 46 and 47 of her Opinion, from the perspective of an average consumer, the separate treatment of supplies carried out by two independent suppliers appears entirely logical.

59In addition, as has already been pointed out in paragraphs 50 and 51 of the present judgment, the fact that there is a certain link between the transactions, because the equipment at issue is necessary for the manufacture of the components, does not mean that those transactions must be regarded as constituting a single transaction or, therefore, as indivisible supplies.

60However, by way of exception, two supplies provided by two independent suppliers may be regarded as a single complex transaction. That is the case where it is established that an artificial division of those supplies has taken place.

61Such a situation was taken into account by the Court in the judgment of 21 February 2008, Part Service (C‑425/06, EU:C:2008:108). It is on paragraphs 56 and 57 of that judgment (in which the Court noted the characteristics of the transactions at issue in the case which gave rise to that judgment) that the referring court in this case relied – as it states in its order for reference – in order to hold that the supplies of the components and the supply of the equipment at issue had to be regarded as forming a single supply which had to be governed by the same tax regime.

62However, the information in paragraphs 56 and 57 of the judgment of 21 February 2008, Part Service (C‑425/06, EU:C:2008:108), cannot lead to the conclusion that supplies such as those at issue in the main proceedings have been artificially split, as none of the characteristics of the transactions described by the Court in that regard is comparable to the characteristics of those supplies.

63Unlike a legal situation such as that at issue in the main proceedings, the two companies providing the supplies of services to the same customer in the case which gave rise to that judgment were linked inasmuch as they formed part of the same group. In addition, supplies such as those at issue in the main proceedings each arise not from an intentional splitting of the supply agreed to by a supplier, but from separate contracts concluded with two independent suppliers, so that, taken in isolation, those supplies are subject to their own economic logic. Furthermore, in the present case, the referring court considered that it has neither been claimed nor demonstrated that the company to whom the various supplies are made, namely Brose Prievidza, sought to obtain an undue tax advantage resulting from a different tax treatment of the supplies concerned, whereas the Court has stated, in essence, in paragraphs 58 to 62 of the judgment of 21 February 2008, Part Service (C‑425/06, EU:C:2008:108), that that element plays an essential role in the classification of transactions as being artificially split.

64Furthermore, the fact that equipment is not intended to produce a single part or a single batch of parts, or to be integrated into the components, but is intended to be used in respect of the serial production of those parts or components, can contribute to showing that the supply of that equipment is not so closely linked to a specific supply of parts to the point where it must be regarded as objectively forming, together with that specific supply of parts, a single, indivisible economic supply.

65Secondly, as regards the question whether a supply must be regarded as ancillary to a principal supply, according to settled case-law, such is the case if that supply does not constitute for customers an aim in itself, but a means of better enjoying the principal supply provided (see, to that effect, judgments of 21 February 2008, Part Service, C‑425/06, EU:C:2008:108, paragraph 52 and the case-law cited; of 16 February 2023, DGRFP Cluj, C‑519/21, EU:C:2023:106, paragraph 60 and the case-law cited; and of 17 October 2024, Digital Charging Solutions, C‑60/23, EU:C:2024:896, paragraph 48). It follows that, if, on the contrary, those supplies each have a specific function or purpose for the customer, one cannot be classified as ancillary in relation to the other.

66Thus, where the purchase of equipment essential to the manufacture of goods, which is made available to the supplier of those goods, provides the person acquiring the goods with security enabling that person to secure his, her or its position with regard to that supplier, in particular in the event of the insolvency of that supplier, or enables the person acquiring the goods to transfer or move that equipment, should the production process so require, such a circumstance constitutes a strong indication that the supply of that equipment constitutes an end in itself for that person and that, therefore, it should not be regarded as ancillary to the supply of parts manufactured using that equipment, which has a different purpose.

67Furthermore, as a tool, it may be presumed, subject to verification by the referring court, that equipment will be used throughout the production cycle of the goods manufactured using that equipment, which is why it has been made available to the manufacturer. Thus, the supply of such equipment has its own purpose in relation to the various supplies of the components, with the result that it cannot be regarded as ancillary to those supplies.

68While it is true that the fact that equipment constitutes a precondition for any subsequent supply of goods manufactured using that equipment may indicate that its acquisition would constitute a means of better enjoying the supply of those goods and, therefore, could appear to be a supply ancillary to that of the supply of those goods, that element must nevertheless be considered in all the circumstances in which those transactions take place.

69It is for the referring court to take into account the economic and commercial reality as a relevant element for the classification of a supply as ancillary or, on the contrary, independent (see, to that effect, judgment of 26 May 2016, National Exhibition Centre, C‑130/15, EU:C:2016:357, paragraph 22). Consideration of the economic reality of the transactions at issue, which is, in principle, reflected in the contractual relations of the parties, is regarded as a fundamental criterion for the application of the common system of VAT (see, to that effect, judgment of 22 February 2018, T‑2, C‑396/16, EU:C:2018:109, paragraph 43 and the case-law cited).

70In that regard, the business model of the group of which some of the companies involved in the supplies at issue in the main proceedings form part is an element which must be taken into account by the national court. In the present case, Brose Prievidza stated, in its written observations submitted to the Court, that the fact that the equipment at issue was first sold by IME Bulgaria to Brose Coburg before Brose Prievidza itself acquired that equipment from Brose Coburg is justified by the centralisation, with Brose Coburg, of the orders for tooling within the Brose group. At the time of ordering equipment, the group entity which must produce the parts including the components manufactured using that equipment is not yet known. The choice of that entity depends, inter alia, on the geographical location of the customers and the third-party company which produces that equipment. However, after that entity has been determined, the transfer of that equipment to that entity takes place. Subject to verification by the referring court, that method of proceeding within the Brose group appears to correspond to the economic and commercial reality of the supply transactions at issue in the main proceedings, which is reflected by the successive contracts of sale of the equipment at issue, which the referring court has found do not constitute an arrangement with a view to committing tax abuse or in order to obtain an undue tax advantage. Each supply, whether it concerns that equipment or the components, appears to correspond to a stage in the production process of the manufactured parts including those components, which could justify classifying those various supplies as independent supplies which must be taxed independently.

71Lastly, it is apparent from the order for reference that the intra-Community supplies of the components and the supply of the equipment at issue were invoiced separately. In that regard, the Court has already held, in essence, that, if it follows from the circumstances of the case in the main proceedings that the customer intends to purchase distinct supplies, the transaction carried out must be regarded as comprising independent supplies, even if that customer has paid a single price (see, to that effect, judgment of 25 February 1999, CPP, C‑349/96, EU:C:1999:93, paragraphs 31 and 32). A fortiori, where the supplies have been paid for separately, that element, although not decisive in itself (see, to that effect, judgment of 26 May 2016, National Exhibition Centre, C‑130/15, EU:C:2016:357, paragraph 21), supports the classification of the supplies concerned as independent supplies.

72If, having regard to the specific characteristics and objectives of the supplies at issue in the main proceedings and to all the circumstances in which those supplies took place, the referring court concludes that the supply of the equipment at issue must be classified as independent in relation to the supplies of the components, that supply cannot be classified as intra-Community and, therefore, exempt under Article 138 of Directive 2006/112. Consequently, in that case, the refund of the VAT paid cannot be excluded under Article 4(b) of Directive 2008/9.

73In the light of all the foregoing considerations, the answer to the question referred is that Article 4(b) of Directive 2008/9, read in conjunction with Article 138(1) and Article 171 of Directive 2006/112, must be interpreted as precluding a refusal to refund the VAT charged on the supply of equipment to a taxable person established in a Member State other than the Member State of purchase of those goods, where that equipment has not physically left the territory of the Member State of its supplier, unless, having regard to all the circumstances characterising the transactions in question, that supply must be regarded as forming part of a single, indivisible economic supply, or as being ancillary to a principal supply comprising intra-Community supplies of goods produced using that equipment and intended for that taxable person.

Costs

74Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds, the Court (Tenth Chamber) hereby rules:

Article 4(b) of Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State, read in conjunction with Article 138(1) and Article 171 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive (EU) 2018/1910 of 4 December 2018,

must be interpreted as precluding a refusal to refund the value added tax charged on the supply of equipment to a taxable person established in a Member State other than the Member State of purchase of those goods, where that equipment has not physically left the territory of the Member State of its supplier, unless, having regard to all the circumstances characterising the transactions in question, that supply must be regarded as forming part of a single, indivisible economic supply, or as being ancillary to a principal supply comprising intra-Community supplies of goods produced using that equipment and intended for that taxable person.

Signatures

[Signatures]

( *1 ) Language of the case: Bulgarian.

Provisional text

OPINION OF ADVOCATE GENERAL

KOKOTT

delivered on 22 May 2025 (1)

Case C‑234/24

Brose Prievidza, spol. s r. o.

v

Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’ – Sofia

(Request for a preliminary ruling from the Varhoven administrativen sad (Supreme Administrative Court, Bulgaria))

( Reference for a preliminary ruling – Common system of value added tax – Directive 2006/112/EC – Refunding of input tax to taxable persons established abroad pursuant to Directive 2008/9/EC – ‘Tooling’ – Taxable or non-taxable supply of a tool which remains on site – Independent transaction or supply ancillary to an exempt intra-Community supply of the components manufactured by that tool – Independent transactions or a single, complex intra-Community supply – Artificial splitting of the transactions – Single intra-Community supply without transportation of that tool? )

I. Introduction

1In this request for a preliminary ruling, the Court must consider the VAT assessment of what is known as ‘tooling’. This is a common practice, in particular with suppliers in the automobile sector. An order is placed with a subcontractor for the manufacture of certain parts. Those parts can only be manufactured using specific tools (sometimes also using only certain production facilities). Those tools are also ordered from the subcontractor, but remain the property of the ordering party and are used only on site (in this case, in Bulgaria) by the subcontractor to make the parts.

2If the parts thus manufactured are supplied to an ordering party in another Member State, they constitute exempt intra-Community supplies in that regard. However, if the tools are subsequently sold to a third party abroad (that is to say, ownership is transferred to a third party) without changing their location (in this case, Bulgaria), the question arises as to whether the sale of that tool is taxable. Is it to be regarded as a taxable supply or does the supply of the tool receive the same tax treatment as the parts produced using it and supplied under an (intra-Community) exemption?

3This is relevant for the purchaser of the tool, established abroad, who would like to obtain from Bulgaria a refund of the Bulgarian VAT paid to the vendor as deductible input tax. The Bulgarian tax authorities wish to refuse to do so on the ground that the supply of the tools is also an exempt intra-Community supply. However, there is no right of deduction in respect of exempt transactions.

4In that regard, these proceedings raise questions relating respectively to the determination of principal and ancillary supply or a single, complex supply in the context of an exempt intra-Community supply. These questions have never been answered by the Court and are likely to be of considerable practical significance.

A. European Union law

– Directive 2006/112/EC on the common system of value added tax (2) (‘the VAT Directive’)

5The taxation of intra-Community movements of goods (supplies) under VAT law takes place in two stages. It is done, first, through an exemption of the supply in the country of origin and, second, through taxation of the intra-Community acquisition in the country of destination.

6The basic requirement for a supply is laid down in Article 14(1) of that directive:

‘“Supply of goods” shall mean the transfer of the right to dispose of tangible property as owner.’

7Intra-Community acquisition is governed by Article 20 of the VAT Directive. Paragraph 1 of that article states:

‘“Intra-Community acquisition of goods” shall mean the acquisition of the right to dispose as owner of movable tangible property dispatched or transported to the person acquiring the goods, by or on behalf of the vendor or the person acquiring the goods, in a Member State other than that in which dispatch or transport of the goods began.’

8The exemption of intra-Community supplies is contained, inter alia, in Article 138(1) of the VAT Directive. It states:

‘Member States shall exempt the supply of goods dispatched or transported to a destination outside their respective territory but within the Community, by or on behalf of the vendor or the person acquiring the goods, where the following conditions are met:

(a) the goods are supplied to another taxable person, or to a non-taxable legal person acting as such in a Member State other than that in which dispatch or transport of the goods begins;

(b) the taxable person or non-taxable legal person for whom the supply is made is identified for VAT purposes in a Member State other than that in which the dispatch or transport of the goods begins and has indicated this VAT identification number to the supplier.’

9Article 171(1) of the VAT Directive sets out the procedure for providing refunds to taxable persons established abroad who do not carry out domestic transactions:

‘VAT shall be refunded to taxable persons who are not established in the Member State in which they purchase goods and services or import goods subject to VAT but who are established in another Member State, in accordance with the detailed rules laid down in Directive 2008/9/EC.’

– Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State (3) (‘the Refund Directive’)

10More detailed rules on the refund procedure are contained in the Refund Directive. In so far as is relevant here, however, Article 4 of that directive expressly precludes the refund of VAT in certain cases:

‘This Directive shall not apply to:

(a) amounts of VAT which, according to the legislation of the Member State of refund, have been incorrectly invoiced;

(b) amounts of VAT which have been invoiced in respect of supplies of goods the supply of which is, or may be, exempt under Article 138 or Article 146(1)(b) of Directive 2006/112/EC.’

B. Bulgarian law

11The VAT Directive was transposed by the Zakon za danak varhu dobavenata stoynost (Law on value added tax; ‘the ZDDS’), in force since 1 January 2007.

12The Refund Directive was transposed by Naredba No N-9 of 16 December 2009 on the refund of value added tax under Directive 2006/112/EC to taxable persons established not in the Member State of refund but in another Member State of the European Union (‘Regulation No N-9’).

II. The facts

13Brose Prievidza, spol. s r. o. (‘Brose SK’) is a company founded, registered for VAT purposes and established in Slovakia. It manufactures window regulators, door systems and power liftgates for vehicles. For the purposes of its activity, it purchases from ‘Integrated Micro-Electronics Bulgaria’ EOOD (‘IME Bulgaria’), a company based in Botevgrad (Bulgaria), components which are the subject of intra-Community supplies.

14Brose Coburg, a company registered in Germany, has a corporate link with Brose SK and is registered for VAT purposes in both Germany and Bulgaria. Brose Coburg (‘Brose DE’) placed an order with IME Bulgaria for the production of special tools to manufacture the components to be supplied to Brose SK.

15After fulfilling the order, IME Bulgaria issued invoice No 4921038649 to Brose DE, dated 14 May 2020, for the net amount of EUR 62 000, plus Bulgarian value added tax, indicating the Bulgarian VAT number of the recipient (Brose DE). The special tools became the property of Brose DE but remained on the premises of the supplier, IME Bulgaria, which uses them only to manufacture products for Brose SK.

16On 7 June 2021, Brose DE transferred the special tools to Brose SK and issued disputed invoice No 703047 for the sale of tooling – ‘spindle set as per Annex S-T 08-P-9965 – automatic workpiece clamping in welding system’ in the net amount of EUR 62 000, plus Bulgarian VAT.

17On 10 March 2022, Brose SK applied for a refund of the Bulgarian VAT shown on the invoice and paid for the period from 1 January to 31 December 2021. The application made by Brose SK was rejected by notice on the ground that the supply of the special tools and the components constituted an economically indivisible supply in which the special tools lost their economic significance once the components had been manufactured. Since Brose SK received the components manufactured by IME Bulgaria as intra-Community supplies, the supplying of the special tools also had to be treated as such. In that regard, Brose DE was considered to be neither the recipient nor the actual user of the special tools manufactured. Brose DE was held to be only a formal owner as IME Bulgaria used the special tools to manufacture the end products and exercised control and oversight over them.

18Brose SK unsuccessfully appealed against that notice. The court of first instance dismissed the action on the grounds that, although the applicant fulfilled the conditions for the refund of the VAT declared in accordance with Directive 2008/9 and Article 1(2) of Regulation No N-9, those provisions did not apply to amounts constituting unlawfully indicated VAT. If the supply of the components was an intra-Community supply, that was also true of the supply of the invoiced special tools. Therefore, no VAT could be entered on the invoice for the supply of the special tools. Consequently, Brose SK was not entitled to a refund of the VAT paid.

19Brose SK brought an appeal on a point of law against that notice before the referring court. The referring court considers that the court of first instance was correct in its factual finding that there was an artificial splitting of the supplies of components for Brose SK’s activities from the supplies of specialised tools. However, in the view of the referring court, it has been neither alleged nor demonstrated that the sole purpose of splitting the supplies is to obtain a tax benefit for Brose SK, nor is it evident what the nature of any such benefit would be.

III. Request for a preliminary ruling

20The Varhoven administrativen sad (Supreme Administrative Court, Bulgaria) stayed the proceedings and referred the following question to the Court of Justice:

‘Does Directive 2008/9 confer a right to obtain a refund of value added tax paid which is claimed by the recipient of a supply of devices (tooling) where the subject of the supply has not left the territory of the supplier’s Member State and the supply of the tooling has been artificially split from the intra-Community supply, to the same recipient, of goods manufactured by means of those devices?’

21In the proceedings before the Court of Justice, only the European Commission submitted written observations in addition to those submitted by Brose SK and the Bulgarian tax authorities. In accordance with Article 76(2) of the Rules of Procedure of the Court of Justice, the Court did not consider it necessary to hold a hearing.

IV. Legal assessment

A. The course of the investigation

22This request for a preliminary ruling shows once again that, despite a harmonised VAT system, each tax authority interprets both the directive and the rulings of the Court of Justice differently and that there is therefore a risk of the same situations being treated differently under VAT law within the European Union.

23In Wilo Salmson France, (4) which concerned a comparable tooling case in Romania, it was – as rightly emphasised by the Commission and Brose SK – common ground that the supply of the tools, which were used in Romania for the production of components and remained there, was a normal domestic supply (in Romania). The input VAT deduction in that case was only problematic due to the lack of an invoice. In Bulgaria, by contrast, the input VAT deduction cannot take place because the supply of the tools is not a ‘normal’ supply, but also an exempt intra-Community supply.

24The referring court’s question basically concerns the relationship between the principal and ancillary supplies and the existence of a single, complex supply in connection with exempt intra-Community supplies. In order to answer this question, I will first clarify whether there can be an intra-Community supply of the specialised tool if that tool has never left Bulgaria (see C. below). If that is not the case, it is necessary to examine whether there can be a dependent ancillary supply (supply of the special tool) which receives the same tax treatment as the principal supply (supply of the parts) where the ‘ancillary supply’ and the ‘principal supply’ are carried out by two different persons (see D. below). If that is possible and the supply of the special tool is an ancillary supply, it must be examined whether that supply can receive the same tax treatment as the exempt intra-Community supply (in this case the supply of the parts) without itself fulfilling the main requirement (transportation to another Member State) (see E. below).

25Before that, however, I will examine the background to the question referred because the referring court assumes that the sale of the special tool from Brose DE to Brose SK is an artificial arrangement, without, however, being able to identify any tax advantage (see B. below).

B. The background to the question referred: The assumption that there has been an artificial splitting of a transaction

26It is unclear whether it is assumed in Bulgaria that the special tools were supplied exempt from tax from Brose DE to Brose SK or whether an exempt supply of the special tools from IME Bulgaria to Brose SK is assumed. This is probably bound up with the fact that the referring court assumes that there has been an artificial splitting of the transactions (supplies of the components and the tool).

27I am not convinced by this – in line with the view taken by the Commission and Brose SK. In any event, a supply from Brose DE to Brose SK is not impossible by virtue of the fact that the special tools were used continually in Bulgaria by IME Bulgaria to produce the components. On the contrary, the transfer of ownership of goods – as occurred in this case between Brose DE and Brose SK – is a classic case of a supply under Article 14(1) of the VAT Directive. (5)

28It is true that a supply covers any transfer of tangible property by one party which empowers the other party actually to dispose of it as if he or she were its owner. (6) A supply of goods is not precluded in the absence of a transfer of ownership under civil law. (7) This is because even if the recipient of a supply does not dispose of the supplied goods ‘like an owner’, he can at least deal with it ‘qua owner’. (8) This is made clear in certain language versions of the VAT Directive at least. (9)

29Rather, the decisive factor is that the right of disposal has been transferred. In that regard, the right to dispose of the goods is assigned to the person who (positively) can dispose of the substance of goods and (negatively) also bears the risk of accidental destruction of those goods. That person was evidently Brose DE in this case since, as far as can be seen, it alone was able to profit from the economic substance of the special tools through a sale and subsequent transfer of ownership. It is not clear from the file that IME Bulgaria was to bear the risk of accidental destruction of the tools, for example, due to flooding of its premises. Consequently, the transfer of ownership of the special tools from Brose DE to Brose SK for consideration also constitutes a supply between them.

30Nor is there anything to indicate that another person (in particular not IME Bulgaria) had gained the right to dispose of the tools. The mere transfer of possession of items and the authorisation to use those items for the production of components is not sufficient for that purpose. This is clearly illustrated by the example of a tenant. The tenant likewise does not acquire any right to dispose of the rented property. Rather, that control remains with the owner, who ‘disposes’ of the substance precisely by letting it.

31The transfer of ownership from Brose DE to Brose SK also appears to have taken place effectively. There is nothing to indicate an artificial arrangement. In so far as the referring court and the Bulgarian tax authorities refer to the decision of the Court of Justice in Part Service (10) in respect of that conclusion, they do so on the basis of an obvious misunderstanding. That case concerned the splitting of what was actually a single (taxable) transaction into a taxable leasing and an exempt insurance service provided by two companies in a group to a single recipient. Therefore, the present case is not remotely comparable. (11)

32The recipient of the two supplies in this case is Brose SK. First, there are no corporate relationships between the two suppliers (Brose DE and IME Bulgaria) in that respect. Second, no part of the supply is intended to be artificially exempt from tax; on the contrary, Brose DE supplied the special tools subject to tax (and apparently also paid the Bulgarian VAT correctly). None of the guidance which the Court gave to the national court in the abovementioned decision, in order to make it possible to assess whether there are two transactions by two companies in a group or only one transaction by one company in a group, is relevant here. It therefore cannot be understood why the sale of special tools from one company in a group to another company in a group should be ‘economically illogical’ simply because the special tools remain on the premises of the supplier of the parts in Bulgaria – as the referring court expressly states in the reference.

33If I understand the sense and purpose of ‘tooling’ correctly, the primary aim is to find another local subcontractor under comparable conditions in the event of the insolvency of the originally designated subcontractor, which can quickly resume production of the components using the special tool in order to avoid interruptions in the (sometimes global) supply chains. The ownership of the ordering party (or another company in the group of the ordering party) prevents creditors of the insolvent subcontractor from being able to seize the special tool. They appear to me to be valid economic reasons.

34Which balance sheet of which company in a group records the special tools seems to me to be more of an internal group issue, the economic logic of which cannot be assessed on the basis of the available facts. It is also not relevant for the purposes of the VAT assessment, provided that the right of disposal has actually been transferred from Brose DE to Brose SK. However, there are no discernible doubts in that regard, also according to the description by the referring court.

C. Exempt intra-Community supply without the special tool having left the Member State (Bulgaria)?

35It must therefore be clarified, first of all, whether the sale of the special tool constitutes an exempt intra-Community supply. The conditions for the existence of an exempt intra-Community supply are laid down in Article 138 of the VAT Directive.

36However, that tax exemption applies only if the goods supplied (in this case, the special tool) have been ‘dispatched or transported’ by the vendor (in this case, Brose DE), the purchaser (in this case, Brose SK) or a third party on their behalf (usually a forwarding agent). According to settled case-law of the Court, the exemption of the supply of goods within the meaning of that article therefore becomes applicable only if, as a result of that dispatch or transport, they have physically left the territory of the Member State of supply. (12) According to the request for a preliminary ruling, however, the special tool is still located in Bulgaria. In this respect, it seems strange to speak of an intra-Community supply.

37This impression is reinforced if account is taken of the spirit and purpose of Article 138 of the VAT Directive. The tax exemption laid down therein was intentionally not included in Chapters 2 and 3 of Title IX of the VAT Directive. What is at issue here is not favourable treatment of the recipient of a supply, as is the case, for example, with the tax exemptions under Article 132 of the VAT Directive. Nor is this tax exemption an advantage for the supplier.

38Rather, this exemption serves solely to implement the destination principle in respect of supplies between taxable persons within the European Union, in which the supply in the country of origin (where the transport begins) is exempt (taxable transaction of the supplier), but taxed in the country of destination (taxable transaction of the purchaser). This is because Article 2(1)(b) of the VAT Directive makes it clear that intra-Community acquisitions are also taxable transactions. Intra-Community acquisition is governed by Article 20 of the VAT Directive and taxes the purchaser of goods as part of a supply in the country of destination.

39In the end, this is just a different method of taxation which ultimately moves the place of supply from the country of origin to the country of destination and is accompanied by a transfer of the tax liability to the customer in the country of destination.

40If the intra-Community acquisition under Article 20 of the VAT Directive also requires that the goods be ‘dispatched or transported’ to the purchaser (in this case, Brose SK), no intra-Community supply can be assumed in the present case. Consequently, no tax exemption under Article 138 of the VAT Directive applies.

D. The existence of an ancillary supply or single, complex supply where two taxable persons are involved as suppliers

1. Uniform approach to the two supplies

41A different conclusion would only be conceivable if the supply of the components by IME Bulgaria and the supply of the special tool as a whole by Brose DE could be regarded as a single intra-Community supply made to Brose SK. However, this approach too does not appear to be an obvious one.

42First, the Court has held in settled case-law that, for VAT purposes, every supply must normally be regarded as distinct and independent. (13) This follows from the second subparagraph of Article 1(2) and Article 2 of the VAT Directive. (14) This holds even where there are certain links between multiple supplies because they pursue a single economic aim. (15)

43There is no single economic aim in this case. No such aim is evident in the case of supplies by two different suppliers (IME Bulgaria and Brose DE) in relation to two different sets of goods (the components manufactured in Bulgaria and the special tool remaining there), which also took place independently of each other.

44Second, the abovementioned principle relating to the independence of each transaction is infringed only in cases of dependent ancillary services or a single, complex service. (16) Even though the Court has somewhat confused those two situations in a more recent judgment, (17) they remain two different situations, neither of which exists in this case.

45A supply must be regarded as ancillary to a principal supply if it does not constitute for customers an end in itself but a means of better enjoying the principal service supplied. (18) Since Brose DE and IME Bulgaria are independent taxable persons, it is hardly possible to identify a principal supply in this case. This is because – contrary to the view expressed by Bulgaria in its observations – those supplies each have their own original character and none of the supplies is subordinate to the other in terms of its purpose. None of those supplies is, in relation to the others, a dependent ancillary supply.

46Nor is there a single, complex supply. In this case, multiple elements form one sui generis supply. That is so where the supply provided by the taxable person consists of two or more elements or acts which are so closely linked that they form, objectively, a single, indivisible economic supply, which it would be artificial to consider separately. (19) The Court determines whether that is the case by ascertaining the essential features (20) or characteristic elements of the transaction (21) from the perspective of the ‘typical consumer’. (22) (23)

47No indivisibility of the elements of the supply is evident in this case. From the perspective of an average consumer, the separate treatment of the supply of the manufactured components by one taxable person and the supply of the special tool by another taxable person is not artificial. On the contrary, separate treatment is obvious because the two supplies are made by different taxable persons.

2. Single supply with several (different) suppliers?

48If two supplies have a certain substantive proximity to each other, but are provided by two different taxable persons, that can only be treated as a single supply in exceptional cases, namely if the division of a supply into two independent parts was artificial. (24)

49Consequently, both the existence of a dependent ancillary service and the existence of a single, complex service are ruled out in principle if different suppliers are involved. The conclusion may be different only if the actual supplier artificially divides a transaction between two taxable persons controlled by it. That is ruled out in this case, as explained in paragraph 26 et seq. above. Accordingly, the Court has always held that the taxable person (that is to say, one taxable person) provides several supplies, (25) which are to be treated either separately or in combination.

50The protection of fundamental rights also supports this conclusion. A taxable person who is compulsorily involved in tax collection (26) can hardly have his price calculation demolished retrospectively and unilaterally by a third party. That would be so, for example, in the case of a small enterprise which is granted a tax exemption for its transactions in Article 287 of the VAT Directive for reasons of procedural simplification. (27) It would lose that exemption, without having any influence on it, simply because its supplies have a substantive link to supplies by another taxable person, which the recipient has also received.

51In so far as the Court ultimately extended, in Horizon College, (28) a tax exemption (now contained in Article 132(1)(i) of the VAT Directive) to a third party (a subcontractor), that only concerned services and supplies ‘closely related’ to an exempt transaction. However, that is a different situation from the principal and ancillary supply or the single, complex supply. (29) Article 138 of the VAT Directive precisely does not refer to closely related services and supplies.

3. Interim conclusion

52Since, in this case, the provider of the supply relating to the special tool (Brose DE) and the provider of the intra-Community supplies relating to the manufactured parts (IME Bulgaria) are two independent taxable persons, the VAT assessment of the respective supply cannot be influenced by the other supply. A dependent ancillary supply is ruled out, as is a single, complex supply as well. It remains the case, therefore, that each transaction must be considered in isolation. The supply of the special tool therefore remains a ‘normal’ supply, of which the place of supply was in Bulgaria in accordance with Article 31 of the VAT Directive and in respect of which no tax exemption is apparent.

E. In the alternative: Supply which completes an intra-Community supply but does not leave the Member State

53If the Court nevertheless holds that the supply of the special tool must be regarded as a dependent supply ancillary to the supply of the components manufactured using it, further – and no less interesting – questions would have to be answered.

54As explained above (point 37 et seq.), the exemption of an intra-Community supply primarily serves to implement the destination principle and is closely linked to the taxation of the purchaser, who has to pay tax on the intra-Community acquisition as a transaction in the country of destination. Under these conditions, it is obvious that a supply which is to constitute an ancillary supply dependent on an intra-Community supply must at least also have left the country of origin and arrived in the country of destination.

55An intra-Community supply without an intra-Community acquisition cannot actually exist in systematic terms. They are two sides of the same coin. (30) Should Brose SK actually pay tax on an intra-Community acquisition of the special tools in Slovakia, even though they are still located in Bulgaria? If the special tool is later sold to the Bulgarian supplier (IME Bulgaria), does that constitute an intra-Community supply because the goods were taxed as an intra-Community acquisition in Slovakia? Would the sale to a Slovakian taxable person, to whom the special tools are then transported, be a purely domestic supply (in Slovakia), even though the goods are transported from Bulgaria to Slovakia?

56These questions alone are liable to cause confusion and this holds a fortiori for the conceivable answers. However, the spirit and purpose of the tax exemption do not apply if the ‘ancillary service’ remained in the country of origin. For this reason, I take the view that the main condition for claiming the special tax exemption laid down in Article 138 of the VAT Directive (transport to another Member State) must also be met in respect of the dependent ancillary service (if it is also a supply) in order for the taxation to shift to the country of destination and the purchaser to become liable for tax there.

57Since (as set out in point 35 et seq. above) the special tool is still in Bulgaria and an exempt intra-Community supply is ruled out due to the lack of transport or dispatch, a tax exemption is not possible even if it were to be accepted that a dependent ancillary supply exists in this case. The supply of goods in connection with an intra-Community supply can complete or supplement that exempt transaction only if the goods in question are also transported to the country of destination of the principal supply.

V. Conclusion

58I therefore propose that the question referred by the Varhoven administrativen sad (Supreme Administrative Court, Bulgaria) be answered as follows:

Where the recipient of components, supplied as an exempt intra-Community supply, which are manufactured by a subcontractor using a special tool located in Bulgaria, purchases that special tool from the owner (a third party established abroad) and continues to use it to manufacture the components in Bulgaria, there is a taxable supply in Bulgaria. The transfer of the right to dispose of the special tool does not itself constitute an exempt intra-Community supply and it is not to be regarded as a supply dependent on the exempt intra-Community supply of the subcontractor’s manufactured components or as part of an exempt single, complex intra-Community supply. Therefore, Article 4 of Directive 2008/9 does not exclude a right to obtain a refund of the VAT paid.

Notes

(1) Original language: German.

(2) Council Directive of 28 November 2006 (OJ 2006 L 347, p. 1) in the version applicable to the year at issue (2021), as most recently amended in that respect by Council Directive (EU) 2020/2020 of 7 December 2020 (OJ 2020 L 419, p. 1) and Council Directive (EU) 2021/1159 of 13 July 2021 (OJ 2021 L 250, p. 1).

(3) Council Directive of 12 February 2008 (OJ 2008 L 44, p. 23), as most recently amended by Council Directive 2010/66/EU of 14 October 2010 (OJ 2010 L 275, p. 1).

(4) Judgment of 21 October 2021 (C‑80/20, EU:C:2021:870, paragraph 34 et seq.).

(5) See, in particular, judgment of 19 December 2018, AREX CZ (C‑414/17, EU:C:2018:1027, paragraph 78).

(6) Judgments of 17 October 2024, Digital Charging Solutions (C‑60/23, EU:C:2024:896, paragraph 21); of 2 July 2015, NLB Leasing (C‑209/14, EU:C:2015:440, paragraph 29); of 18 July 2013, Evita-K (C‑78/12, EU:C:2013:486, paragraph 33); of 3 June 2010, De Fruytier (C‑237/09, EU:C:2010:316, paragraph 24); of 14 July 2005, British American Tobacco and Newman Shipping (C‑435/03, EU:C:2005:464, paragraph 35); and of 8 February 1990, Shipping and Forwarding Enterprise Safe (C‑320/88, EU:C:1990:61, paragraph 7).

(7) Judgments of 17 October 2024, Digital Charging Solutions (C‑60/23, EU:C:2024:896, paragraph 26 and the case-law cited), and of 8 February 1990, Shipping and Forwarding Enterprise Safe (C‑320/88, EU:C:1990:61, paragraph 9).

(8) See, in particular, my Opinion in Herst (C‑401/18, EU:C:2019:834, point 34).

(9) Thus, according to the German and French language versions, ‘wie ein Eigentümer’ and ‘comme un propriétaire’ respectively, whereas in the English language versions ‘as owner’. See my Opinion in Herst (C‑401/18, EU:C:2019:834, point 34 in footnote 16).

(10) Judgment of 21 February 2008 (C‑425/06, EU:C:2008:108, paragraphs 56 and 57).

(11) This also explains why the referring court was unable to find any tax advantage as a result of the ‘artificial arrangement’.

(12) Judgments of 26 July 2017, Toridas (C‑386/16, EU:C:2017:599, paragraph 30), and of 16 December 2010, Euro Tyre Holding (C‑430/09, EU:C:2010:786, paragraph 29 and the case-law cited).

(13) Judgments of 17 October 2024, Digital Charging Solutions (C‑60/23, EU:C:2024:896, paragraph 47); of 2 July 2020, Blackrock Investment Management (UK) (C‑231/19, EU:C:2020:513, paragraph 23); of 18 January 2018, Stadion Amsterdam (C‑463/16, EU:C:2018:22, paragraph 22); and of 10 March 2011, Bog and Others (C‑497/09, C‑499/09, C‑501/09 and C‑502/09, EU:C:2011:135, paragraph 53).

(14) See my Opinion in Frenetikexito (C‑581/19, EU:C:2020:855, point 16 and the case-law cited).

(15) See my Opinion in Frenetikexito (C‑581/19, EU:C:2020:855, point 18); see judgment of 4 September 2019, KPC Herning (C‑71/18, EU:C:2019:660, paragraph 44), and also, to that effect, judgment of 17 January 2013, BGŻ Leasing (C‑224/11, EU:C:2013:15, paragraph 42).

(16) As the Court quite rightly found again in its judgment of 17 October 2024, Digital Charging Solutions (C‑60/23, EU:C:2024:896, paragraphs 47 and 48), and previously in its judgment of 27 October 2005, Levob Verzekeringen and OV Bank (C‑41/04, EU:C:2005:649, paragraphs 21 and 22).

(17) See judgment of 4 May 2023, Finanzamt X (Permanently installed equipment and machinery) (C‑516/21, EU:C:2023:372, paragraph 39 – ‘where that letting constitutes a supply ancillary to a principal supply of leasing of a building … and (emphasis added) those supplies form a single economic supply’).

On closer inspection, that ruling can only be used as an answer to a limited extent. The fact that a transaction constitutes both a single supply and a supply ancillary to a principal supply was and is logically ruled out in VAT law (and in fact also previously in the case-law of the Court – see, in particular, judgments of 17 October 2024, Digital Charging Solutions (C‑60/23, EU:C:2024:896, paragraphs 47 and 48, and of 27 October 2005, Levob Verzekeringen and OV Bank (C‑41/04, EU:C:2005:649, paragraphs 21 and 22). It is likely that the Court intended ‘or’ instead of ‘and’.

(18) See my Opinion in Frenetikexito (C‑581/19, EU:C:2020:855, point 34) and judgments of 18 January 2018, Stadion Amsterdam (C‑463/16, EU:C:2018:22, paragraph 23); of 10 November 2016, Baštová (C‑432/15, EU:C:2016:855, paragraph 71); of 21 February 2008, Part Service (C‑425/06, EU:C:2008:108, paragraph 52); of 15 May 2001, Primback (C‑34/99, EU:C:2001:271, paragraph 45); and of 25 February 1999, CPP (C‑349/96, EU:C:1999:93, paragraph 30).

(19) Judgments of 2 July 2020, Blackrock Investment Management (UK) (C‑231/19, EU:C:2020:513, paragraph 23); of 19 December 2018, Mailat (C‑17/18, EU:C:2018:1038, paragraph 33); of 18 January 2018, Stadion Amsterdam (C‑463/16, EU:C:2018:22, paragraph 22); of 10 November 2016, Baštová (C‑432/15, EU:C:2016:855, paragraph 70); and of 29 March 2007, Aktiebolaget NN (C‑111/05, EU:C:2007:195, paragraph 23).

(20) Judgments of 29 March 2007, Aktiebolaget NN (C‑111/05, EU:C:2007:195, paragraph 22), and of 27 October 2005, Levob Verzekeringen und OV Bank (C‑41/04, EU:C:2005:649, paragraph 20).

(21) Judgments of 18 January 2018, Stadion Amsterdam (C‑463/16, EU:C:2018:22, paragraph 30); of 27 September 2012, Field Fisher Waterhouse (C‑392/11, EU:C:2012:597, paragraph 18); and of 25 February 1999, CPP (C‑349/96, EU:C:1999:93, paragraph 29). However, the judgments always use the same term in the original (that is to say, in the French language version): ‘éléments caractéristiques’.

(22) Judgments of 19 July 2012, Deutsche Bank (C‑44/11, EU:C:2012:484, paragraph 21); of 2 December 2010, Everything Everywhere (C‑276/09, EU:C:2010:730, paragraph 26); and of 25 February 1999, CPP (C‑349/96, EU:C:1999:93, paragraph 29).

(23) See also, in that regard, my Opinion in Frenetikexito (C‑581/19, EU:C:2020:855, point 22).

(24) The judgment in Part Service concerns such a situation: judgment of 21 February 2008, Part Service (C‑425/06, EU:C:2008:108, paragraphs 56 and 57).

(25) Judgments of 27 September 2012, Field Fisher Waterhouse (C‑392/11, EU:C:2012:597, paragraph 16); of 11 June 2009, RLRE Tellmer Property (C‑572/07, EU:C:2009:365, paragraph 19); and of 27 October 2005, Levob Verzekeringen and OV Bank (C‑41/04, EU:C:2005:649, paragraph 20).

(26) The Court has consistently in its case-law referred to a tax collector on behalf of the State: judgments of 11 November 2021, ELVOSPOL (C‑398/20, EU:C:2021:911, paragraph 31); of 15 October 2020, E. (VAT – Reduction of the taxable amount) (C‑335/19, EU:C:2020:829, paragraph 31); of 8 May 2019, A-PACK CZ (C‑127/18, EU:C:2019:377, paragraph 22); of 23 November 2017, Di Maura (C‑246/16, EU:C:2017:887, paragraph 23); of 13 March 2008, Securenta (C‑437/06, EU:C:2008:166, paragraph 25); and of 1 April 2004, Bockemühl (C‑90/02, EU:C:2004:206, paragraph 39).

(27) See my Opinion in UP CAFFE (C‑171/23, EU:C:2024:417, point 52 et seq.).

(28) Judgment of 14 June 2007 (C‑434/05, EU:C:2007:343, paragraph 46).

(29) See in that regard, in detail, my Opinion in Frenetikexito (C‑581/19, EU:C:2020:855, point 44 et seq.).

(30) See also, to that effect, judgment of 26 July 2017, Toridas (C‑386/16, EU:C:2017:599, paragraph 31 et seq.).