Delivery of forms is subject to VAT, court rules

Manufacturers who use various moulds for their production often find themselves in conflict with their customers from countries outside the Czech Republic who want to own the production mould but do not want to buy the mould located in the Czech Republic with Czech value added tax. At the end of October, the Court of Justice of the European Union issued a clear confirmation that the sale of moulds within the Czech Republic is correctly subject to VAT in its judgment C-234/24. 

In the case in question, the manufacturing plant proceeded as most companies do. It sold a mould to a customer from another Member State with local VAT, but exempted the products manufactured using the mould and shipped to the customer in another Member State from VAT. When the customer from Slovakia requested a refund of the Bulgarian tax paid on the purchase of the mould, the Bulgarian tax administrator refused the refund on the grounds that the supply of the mould was ancillary to the supply of the parts and should therefore share the tax treatment of those parts, i.e. the mould should have been invoiced in the same way as the products, exempt from VAT under the regime for the supply of goods to another Member State. Customers who purchase moulds and have to deal with tax refunds or lose the local tax altogether may rejoice at this opinion of the Bulgarian tax authority, because that is exactly what they want – to purchase moulds without VAT. However, the Court of Justice took a different view from the Bulgarian tax authority.  

First, the Court stated that in the absence of physical movement of the goods concerned outside the territory of a Member State, the supply cannot be classified as a supply to another Member State. In other points of the judgment, it addressed the question of whether the mould is ancillary to the parts manufactured on it. The fact that there is a certain connection between the supplies, since the mould is necessary for the manufacture of the parts, does not mean that the mould and the parts must be regarded as a single supply and, therefore, as indivisible supplies. Furthermore, the fact that the mould is not intended for the production of a single part or a single set of parts, but for use in the mass production of such parts or components, may help to demonstrate that the supply of the mould is not so closely linked to the specific supply of parts that it must be regarded as a supply which, objectively, forms a single indivisible economic supply with that specific supply of parts. 

As a further argument, the court stated that if the purchase of a mould, which is necessary for the manufacture of goods and is made available to the supplier of those goods, provides its purchaser with security enabling it to safeguard its position vis-à-vis that supplier, in particular in the event of the supplier's insolvency, or also allows the purchaser to transfer or relocate this equipment if required by the production process, such a circumstance is a strong indication that the supply of the equipment is in itself the objective of the purchaser and should therefore not be considered ancillary to the supply of the parts manufactured using this equipment, this mould.  

As the court's reasoning shows, the conclusion could not be other than that the supply of a mould for mass production is a separate supply within the state where it takes place and must therefore be subject to tax in that state. A purchaser registered for VAT in another Member State may then request a refund of the tax paid. This is clearly supported by the judgment described above. The same applies to the supplier, who can use the judgment as an argument for why the supply of the mould must be subject to value added tax.