3.2.1 A supply of goods

Under the current EU VAT rules, a supply of goods is defined as “the transfer of the right to dispose of tangible property as owner”.1 This definition applies to the ‘general’ scenarios (i.e. not based on VAT rules) of supplies of goods, where two parties agree that one will supply one or more goods and the other party will receive and accept these. It is clear from the relevant provision that only tangible, physical objects can be considered ‘goods’ from an EU VAT perspective. The concept of ‘goods’ is an independent concept of Union law, making it irrelevant if (different) definitions of ‘goods’ exist in national (civil or other) law of the Member States.2

Even though the concept of ‘goods’ seems quite straight forward, the number of cases about whether a supply qualifies as a supply of goods or services demonstrates the opposite. Examples of cases ruled by the CJEU in this respect concerned animals,3 food and drinks supplied in a restaurant,4 printing services,5 the supply of software on a carrier medium6 and the supply of certain food and drink items by (amongst others) cinemas and butchers.7 By law, electricity, gas, heat, cooling energy and the like are treated as tangible property for VAT purposes.8 Also, Member States are allowed to regard certain interests in immovable property as tangible property, as well as rights in rem giving the holder thereof a right of use over immovable property and shares or interests equivalent to shares giving the holder thereof de jure or de facto rights of ownership or possession over immovable property or part thereof.9 From a VAT perspective, the difference between ‘goods’ and ‘services’ is relevant for the application of a number of provisions, e.g. with regard to determining the place of supply, the application of VAT rates and the application of VAT exemptions.

For this research, the answer to the question whether a supply qualifies as a supply of goods or a supply of services is also relevant because the VAT treatment of the application of business assets (free of charge), which can be treated as a supply of goods for consideration, can differ from the VAT treatment of the use of business assets or the provision of services free of charge, which can be treated as the supply of a service for consideration.10 I will elaborate on this in Chapter 6.

Case law not only exists about whether the object of the transaction qualifies as a goods or a service, but also about whether, in the case of goods, the right to dispose of the tangible goods as owner is effectively transferred. If this is the case, there is a supply of goods. If the right is not transferred, the transaction qualifies as a service. A number of cases have been referred to the CJEU about the question whether certain types of leasing should be qualified as the transfer of the right to dispose of the lease objects as if the lessees were the owner of those goods (instead of a service).11

The supply of goods, i.e. the transfer of the right to dispose of the goods as owner, requires a legal relationship between the supplier and the recipient of the goods. It follows from the wording of the relevant provision that the concept of supply of goods does not refer to the transfer of ownership in accordance with the procedures prescribed by the applicable national law but covers any transfer of tangible property by one party which empowers the other party actually to dispose of it as if he were its owner. The theft of goods, for example, makes the thief the mere possessor of the goods. It does not have the effect of empowering him to dispose of the goods under the same conditions as their owner.12 This ‘empowering’ would require, in my view, a legal relationship between the parties involved. I will elaborate on the concept of ‘legal relationship’ in Section 3.3.1.

In situations where a supply consists of multiple elements, which can be both goods and services, the supplier will have to determine whether he makes one or more supplies and, if he makes one (composite) supply, whether that supply qualifies as the supply of goods or services. I will elaborate on multiple element supplies in Chapter 4.