CFE Tax Advisers Europe has issued an Opinion Statement examining the distinction between supplies of goods and supplies of services under EU VAT law, the fundamental concept that determines the application of VAT rules relating to place of supply, exemptions, reduced rates, invoicing obligations, a
CFE Opinion Statement on Distinguishing Between Supply of Goods and Supply of Services in EU VAT Law
CFE Tax Advisers Europe has issued an Opinion Statement examining the distinction between supplies of goods and supplies of services under EU VAT law, the fundamental concept that determines the application of VAT rules relating to place of supply, exemptions, reduced rates, invoicing obligations, and VAT liability. The Statement notes that while the VAT Directive provides relatively simple definitions of goods and services, the practical application of these concepts has become increasingly complex due to the growth of digital business models, customised products, bundled transactions, installation contracts, maintenance arrangements, and other hybrid supplies. As a result, businesses frequently face uncertainty when determining the correct VAT treatment of transactions that combine both tangible and intangible elements. CFE by issuing this Statement wishes to highlight the growing difficulty faced by businesses in classifying modern commercial transactions. CFE observes that many contemporary business arrangements combine goods and services in ways that do not fit neatly within the traditional binary distinction established by the VAT Directive. Examples highlighted in the Statement include customised industrial equipment requiring specialist installation, vehicle and aircraft maintenance involving significant replacement parts, software products combined with ongoing support services, training packages that include both educational services and physical materials, and tolling arrangements where Member States currently apply different VAT classifications. The Statement notes that divergent national interpretations can result in legal uncertainty, increased compliance costs, inconsistent treatment of identical transactions and the risk of retrospective tax assessments. The Statement highlights that, in the absence of detailed legislative guidance, the distinction between goods and services has largely been shaped through the jurisprudence of the Court of Justice of the European Union. Over time, the Court has developed a number of interpretative principles, including the single supply doctrine, the dominant element test, the average consumer perspective, and the concept of economic reality. CFE reviews a range of landmark judgments in our Statement, concerning software customisation, installation contracts, catering services, construction activities, repairs, bundled supplies and digital transactions. While these decisions provide valuable guidance, the Statement notes that the resulting framework remains fragmented and can be difficult to apply consistently in practice. CFE is of the view that the current framework places excessive reliance on judicial interpretation and lacks sufficiently clear legislative criteria for determining whether a transaction should be treated as a supply of goods or a supply of services. The Statement therefore calls on the European Commission and the VAT Committee to provide clearer guidance on common borderline cases and to develop a more coherent framework for the classification of mixed and hybrid supplies. CFE also recommends greater codification of principles established by CJEU case law, including the concepts of economic reality, the dominant element of a transaction and the perspective of the average consumer. In the medium to longer term, the Statement suggests that amendments to the VAT Directive may be necessary to embed these principles directly into EU legislation and ensure that VAT rules remain suitable for modern business models. Beyond targeted clarification measures, CFE raises the question of whether the traditional distinction between supplies of goods and supplies of services remains necessary for intra-EU transactions. The Statement suggests that greater harmonisation of VAT rules across both categories of supplies could simplify compliance and reduce uncertainty for businesses operating across borders. CFE further emphasises that VAT rules should be economically intuitive, logically coherent and capable of being applied consistently throughout the European Union. The Statement warns that where classification rules appear overly formalistic or produce outcomes that differ from commercial reality, legal certainty and voluntary compliance may be undermined. Through issuing this Opinion Statement, CFE calls for a modernised and more predictable framework for distinguishing between goods and services in EU VAT law. CFE advocates for greater legal certainty, improved consistency between Member States, and reforms that reflect contemporary business practices and digital economic realities. CFE remains committed to engaging with the European Commission, EU institutions and other stakeholders on the future development of the EU VAT system and looks forward to contributing to future discussions on simplification, harmonisation and modernisation of VAT rules across the internal market. We invite you to read the Opinion Statement and remain available for any queries you may have.
Fonte: CFE Tax Advisers Europe. Pubblicazione originale del 2026-06-24.