4.7 VAT deduction and the difference between ‘free elements’ and ‘paid for-elements’

The supply of all elements to a multiple-element supply that is made for consideration is subject to VAT. Where part of the total consideration has to be allocated to an element, this is obvious, as the supply is made for consideration by definition. For the elements that are actually supplied ‘free of charge’, the EU VAT rules dictate that in most cases, these supplies should be treated ‘as if they were made for consideration’.1 This means that VAT deduction should not be affected by the fact that the supplies are made free of charge.2 Where no VAT is charged on the supply of these free elements, VAT deduction is also still ensured under the relevant EU VAT rules.3 This means that VAT deduction should not be affected by the answer to the question whether certain elements to a multiple-element supply are made free of charge. I will elaborate on the VAT treatment of supplies for no consideration in Chapter 6.