© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
C4. Identity of supplier
- Contractual terms are a factor
"[58] Under Article 24 of Directive 2006/112, any transaction which does not constitute a supply of goods is a supply of services. In order to determine the proper classification of the transaction at issue, all the circumstances in which that transaction takes place must be taken into account (judgment of 17 January 2013, BGŻ Leasing, C‑224/11, EU:C:2013:15, paragraph 32). In that context, it has been held that the relevant contractual terms constitute a factor to be taken into consideration when the supplier and the recipient in a ‘supply of services’ transaction within the meaning of that directive have to be identified (judgment of 2 May 2019, Budimex, C‑224/18, EU:C:2019:347, paragraph 28 and the case-law cited).
[59] In that regard, it is apparent from the information before the Court that the 2008 agreement, which describes itself as an agreement for the supply of services, and the debit notes at issue referring to the non-conformity and retrofit reports, make it clear that Suzlon Wind Energy Portugal is a service provider and Suzlon Energy India its customer." (Suzlon Wind Energy Portugal C-605/20)
- Contract is the most useful starting point, test against reality
"[47] This approach appears to me to reflect the approach of the Supreme Court in the subsequent case of WHA Ltd v Revenue and Customs Comrs [2013] UKSC 24; [2013] STC 943 where at para 27, Lord Reed said that “[t]he contractual position is not conclusive of the taxable supplies being made as between the various participants in these arrangements, but it is the most useful starting point”. He then went on in paras 30 to 38 to analyse the series of transactions, and in para 39, he explained that the tribunal had concluded that “the reality is quite different” from that which the contractual documentation suggested. Effectively, Lord Reed agreed with this, and assessed the VAT consequences by reference to the reality. In other words, as I said in Secret Hotels2 Ltd v Revenue and Customs Comrs [2014] STC 937, para 35, when assessing the VAT consequences of a particular contractual arrangement, the court should, at least normally, characterise the relationships by reference to the contracts and then consider whether that characterisation is vitiated by [any relevant] facts." (Airtours Holidays Transport Limited v. HMRC [2016] UKSC 21)
- Have regard to all circumstances where multiple contracts involved
"[30] Where the question at issue involves more than one contractual arrangement between different parties, this Court has emphasised that, when assessing the issue of who supplies what services to whom for VAT purposes, "regard must be had to all the circumstances in which the transaction or combination of transactions takes place" – per Lord Reed in Revenue and Customs Commissioners v Aimia Coalition Loyalty UK Ltd [2013] 2 All ER 719, para 38. As he went on to explain, this requires the whole of the relationships between the various parties being considered." (HMRC v. Secret Hotels2 Ltd [2014] UKSC 16)
- Utilities provided by third party to tenant are supplied by landlord where landlord has contract with utility provider
"[27] By contrast, in an agreement such as that at issue in the main proceedings in which the landlord concludes the agreement for the provision of supplies consisting of the provision of utilities and refuse collection, it is the landlord who purchases the services in question for the immovable property which he lets. It is true that the tenant uses those supplies directly, but does not purchase them from specialist third-party suppliers. Accordingly, the considerations relating to the purchase of fuel in the judgment in Auto Lease Holland (C‑185/01, EU:C:2003:73), which are valid in relation to Article 14(1) of the VAT Directive, do not apply, under a rental agreement such as that at issue in the main proceedings, either to the supply of electricity, heating and water, which also constitute goods for the purposes of Article 15 of the VAT Directive, or to the supply of services within the meaning of Article 24 of the VAT Directive, such as refuse collection. It follows from the purchase by the landlord of supplies comprising the provision of those goods and services that it is the landlord who must be regarded as providing those supplies to the tenant.
[28] Therefore, the answer to Question 1 is that Articles 14(1), 15(1) and 24(1) of the VAT Directive must be interpreted as meaning that, in the context of the letting of immovable property, the provision of electricity, heating and water and refuse collection, provided by third-party suppliers for the tenant directly using those goods and services must be regarded as being supplied by the landlord where he has concluded agreements for the provision of those supplies and simply passes on the costs thereof to the tenant." (Wojskowa Agencja C-42/14)
- Fuel supplied directly to vehicle lessee where they had free choice re purchase
"[23] In that judgment, which concerns a motor vehicle leasing contract allowing the lessee of the leased vehicle to refuel the vehicle in the name and on behalf of the lessor of the vehicle, the Court examined whether it was to be deemed that the lessor supplied fuel to the lessee of that vehicle.
[24] The Court answered in the negative, pointing out that, under Article 5(1) of Directive 77/388, ‘“[s]upply of goods” shall mean the transfer of the right to dispose of tangible property as owner’. The Court stated that the concept of a supply of goods includes any transaction of a supply of tangible property by a party which empowers the other party to dispose of it as if he were the owner of that property. It held that the oil companies transferred to the lessee of the leased vehicle the right actually to dispose of the fuel as owner and that there was not a supply of fuel by those companies to the lessor of the leased vehicle nor, as a result, from that lessor to the lessee of that vehicle (judgment in Auto Lease Holland, C‑185/01, EU:C:2003:73, paragraphs 31 to 36).
[25] It should be pointed out that the facts underlying such an agreement are not the same as those underlying a rental agreement for immovable property together with supplies of the sort at issue in the main proceedings.
[26] In the context of an agreement such as that at issue in the case which gave rise to the judgment in Auto Lease Holland (C‑185/01, EU:C:2003:73), the lessee of the leased vehicle himself purchases the fuel from filling stations and has a free choice as to its quality and quantity, as well as when to purchase. The Court held that the fuel management agreement between the lessor of the leased vehicle and the lessee of that vehicle is not a contract for the supply of fuel, but rather a contract to finance its purchase (judgment in Auto Lease Holland, C‑185/01, EU:C:2003:73, paragraph 36)." (Wojskowa Agencja C-42/14)
Partnership
- Supplies not allocated to partnership where partners have not acted together in their relations with third parties
"[45] It is clear from the foregoing factors that, in circumstances such as those at issue in the main proceedings, the economic activity cannot be allocated to the entity set up by the joint activity agreement, as the partners have not acted together in their relations with third parties and the person empowered to act in the name of the partners as a whole has not been involved in those relations in accordance with the rules governing representation that are established by that agreement, so that that entity cannot be regarded as having carried out the taxable transactions at issue in the main proceedings. As the partner has not carried out any transaction himself, it is clear from all those factors that, in the present instance, only a person such as XT is to be regarded as having acted independently and therefore as a taxable person." (XT C-312/19)