3.3.2.1 Legal relationship entailing reciprocal performance applied to composite supplies

As mentioned above, some supplies are ‘composite supplies’, meaning that they consist of multiple elements. These composite supplies are often made for one single consideration. It is not always clear whether this consideration is paid for all elements, or that one or more elements are supplied free of charge. I will discuss composite supplies in Chapter 4.

One of the relevant criteria for determining whether the consideration agreed for a composite supply is paid for all elements of that supply is the legal relationship underlying the composite supply. Above, I argued that certain specific elements of a composite supply should not be treated as separate elements from a VAT perspective. Even though these elements, the ‘dependent ancillary supplies’, are often not explicitly agreed (crisps and a bag, a soft drink and a can, an ice cream and a tub), I would argue that they are always an element of the composite supply. If they are not specifically agreed, no part of the consideration should be allocated to these elements. This can be different if, for example, some form of elaborate or special packaging is explicitly part of the legal relations (the agreement), e.g. ‘biscuits in a decorative tin’ or ‘tea bags in a decorative wooden display box’. In these cases, other rules apply that I will elaborate on in Chapter 4.

It is also possible that under the agreement for the supply, some elements are specified as being made for consideration and others are specified as being made ‘for free’. Examples would be ‘buy a ham and get a cutting board and a knife for free’ and ‘buy this sun blind and we will install it to your house for free’. Even though under the agreed legal relations some of the elements of these composite supplies are made for no consideration, the question arises whether from an EU VAT perspective they should be considered to be made ‘for consideration’ or not. I will elaborate on that in Chapter 4.