Several supplies to one single client: which VAT treatment?

Your company can perform several services for the same customer. This is the case, for example, when it sells an industrial machine and also takes care of its installation. In this situation, there is on the one hand a delivery of goods (the sale of the machine) and on the other hand a service (the installation).

There are many such examples. Look for example at companies organizing the logistics of an event (renting the hall, catering, hostesses, etc., ) that re-invoice all of these services to their client, IT enterprise selling hardware as well as various IT services, the garage owner who sells and places tyres on a motor vehicle, etc.

In short, in many sectors of activity, offering several services for the same client seems to be the rule rather than the exception.

What are the rules of the game when it comes to VAT?

When a business offers several services to its customers at the same time, the question arises as to whether these different services should be subject to a single VAT treatment or whether they should be treated separately?

As a general rule, each service should be treated as a separate and independent supply.

However, the principle of independence of each supply is not absolute. Indeed, transactions must not be artificially broken down so as not to distort the VAT system.

In this context, the Court has developed two exceptions to the principle of independence of supply, namely single complex supplies and non-independent ancillary supplies.

Illustration

The case presented before the Court of Justice concerns a company operating a sports hall.

On the one hand, it offers physical training ("fitness") programmes. On the other hand, it also offers, among other things, nutritional advice. Nutritional advice is given one day a week on the premises of the sports hall by a certified professional. These different services are invoiced separately and it is possible to benefit from some without using the others.

The question asked was: should nutritional services be treated separately from sports services or should they be treated the same way for VAT purposes?

The Court's answer

Nutritional services must be considered as a separate and independent supply and must therefore follow their own VAT treatment.

In the Court's view, no exception to the general rule applies:

physical well-being and fitness services, on the one hand, and nutritional monitoring, on the other, are not inextricably linked in the sense in which this concept has been defined in its case law. These services do not therefore constitute a single service of a complex nature.
Physical well-being and fitness services, on the one hand, and nutritional monitoring, on the other, do not have the same purpose. Even if such dietary monitoring services were provided or likely to be provided in the same sports premises as physical well-being and culture services, the purpose of the former is not a sporting one, but a health and aesthetic one, notwithstanding the fact that a dietary discipline may have the effect of contributing to athletic performance. Dietetic monitoring services cannot therefore be considered as ancillary to the main services, which would be constituted by the services of well-being and physical culture.

Source: Judgment of the Court of Justice of 04/03/2021 - C-581/19