© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
C5. Single or multiple supplies
GENERAL
Presumption of separateness
- Every supply must normally be regarded as distinct and independent
"[26] According to settled case-law, it follows from Article 2 of the Sixth Directive that every supply must normally be regarded as distinct and independent..."(Purple Parking Ltd C-117/11)
- Supplies that are treated as single supply not similar to those supplies separately for fiscal neutrality purposes
"[47] That conclusion cannot be called into question by the argument advanced by the German Government and implicitly based on the principle of fiscal neutrality, according to which the supply of heating by an association of residential property owners to the property owners belonging to that association should be exempt from VAT in order to ensure equal treatment for VAT purposes between, on the one hand, the owners and tenants of single family homes not subject to VAT, who are respectively exempt from VAT, where they supply heat to themselves as property owners or where they simultaneously lease the house and the heating system, and on the other, the co-owners of properties subject to VAT, where the association to which they belong supplies them with heating.
[48] It is true that, according to established case-law, the principle of fiscal neutrality, which was intended by the EU legislature to reflect, in matters relating to VAT, the general principle of equal treatment (judgment of 29 October 2009, NCC Construction Danmark, C-174/08, EU:C:2009:669, paragraph 41 and the case-law cited), precludes in particular treating similar goods and supplies of services, which are thus in competition with each other, differently for VAT purposes (judgment of 14 December 2017, Avon Cosmetics, C-305/16, EU:C:2017:970, paragraph 52 and the case-law cited). Furthermore, it is apparent from the case-law of the Court that that principle must be interpreted as meaning that a difference in treatment for the purposes of VAT of two deliveries of goods or two supplies of services which are identical or similar from the point of view of the consumer and meet the same needs of the consumer is sufficient to establish an infringement of that principle (see, to that effect, judgment of 10 November 2011, Rank Group, C-259/10 and C-260/10, EU:C:2011:719, paragraph 36). However, it must be pointed out that the line of argument advanced by the German Government is based on a comparison of supplies of goods to two clearly distinct groups of consumers and that the fact that those groups are potentially treated differently is merely the consequence of the choice made by the persons belonging to those groups to own or not to own a dwelling in a building under co-ownership." (WEG C-449/19)
"[31] That conclusion cannot be undermined by the principle of fiscal neutrality inherent in the common system of VAT, which precludes treating similar supplies of services, which are thus in competition with each other, differently for VAT purposes (see, inter alia, Case C‑94/09 Commission v France [2010] ECR I‑0000, paragraph 40, and Case C‑58/09 Leo-Libera [2010] ECR I‑0000, paragraph 34), since Everything Everywhere’s situation is entirely different from that of an economic operator which provides financial services to its clients as the principle supply." (Everything Everywhire Ltd C-276/09)
[39] It is clear from the paragraphs set out above that the principle of fiscal neutrality is concerned with ensuring that supplies of similar goods and services, which are thus in competition with each other, are treated the same way for VAT purposes. The CJEU clearly states, at para 39 of Purple Parking, that 'the treatment of several services as a single supply for the purposes of VAT necessarily leads to tax treatment different from that that those services would have received if they had been supplied separately … Accordingly, a complex supply of services consisting of several elements is not automatically similar to the supply of those elements separately'. This passage shows that the principle of fiscal neutrality is not a factor to be taken into account in determining whether a transaction consisting of more than one element should be regarded as a single supply or as several independent supplies. Further, para 40 indicates that the fact that the UK zero rates the supply of cold water is not relevant to the question whether the different elements provided by the Middle Temple are a single supply of services or several supplies." (HMRC v. Middle Temple [2013] UKUT 250 (TCC), Judges Sinfield and Gort)
- No competitive situation where supply is ancillary
"[37] In the case of such negligible ancillary supplies, dispensing with a separate VAT assessment cannot jeopardise the differentiated system of the VAT Directive. For the sake of practicability, a single transaction should therefore be taken to exist. In addition, the principle of fiscal neutrality, which precludes treating similar supplies of services, which are thus in competition with each other, differently for VAT purposes, does not require transactions to be split in this situation. ( 39 ) There is no competitive situation where the supplier can make the accessory ancillary supply only depending on the principal supply." (Frenetikexito C-581/19 AG Kokott)
Two routes to single supply: ancillary or complex
"[27] Nevertheless, in certain circumstances, several formally distinct services, which could be supplied separately and thus give rise, in turn, to taxation or exemption, must be considered to be a single transaction when they are not independent. There is a single supply where two or more elements or acts supplied by the taxable person to the customer are so closely linked that they form, objectively, a single, indivisible economic supply, which it would be artificial to split. That is also the case where one or more supplies constitute a principal supply and the other supply or supplies constitute one or more ancillary supplies which share the tax treatment of the principal supply. In particular, a supply must be regarded as ancillary to a principal supply if it does not constitute for customers an end in itself but a means of better enjoying the principal service supplied (judgment of 16 April 2015, Wojskowa Agencja Mieszkaniowa w Warszawie, C‑42/14, EU:C:2015:229, paragraph 31 and the case-law cited)." (Stock 94 C-208/15)
"[22] In those circumstances, for it to be possible to consider that all the supplies which the landlord makes to the tenant constitute a single supply from the point of view of VAT, it must be examined whether in the present case the supplies form a single, indivisible economic supply which it would be artificial to split, or whether they consist of a principal supply in relation to which the other supplies are ancillary." (Field Fisher Waterhouse LLP C-392/11)
- Must be a single transaction consisting of several elements
"[37] It follows from the Court’s case-law that where an economic transaction comprises a bundle of elements and acts, regard must be had to all the circumstances in which the transaction in question takes place in order to determine whether it gives rise to one or more supplies (see, to that effect, judgment of 25 February 1999, CPP, C‑349/96, EU:C:1999:93, paragraph 28 and the case-law cited), given that, as a general rule, each supply must be regarded as a distinct and independent supply, as follows from the second subparagraph of Article 1(2) of Directive 2006/112 (judgment of 2 July 2020, Blackrock Investment Management (UK), C‑231/19, EU:C:2020:513, paragraph 23 and the case-law cited)." (Frenetikexito C-581/19)
"[15] Where, however, a transaction comprises several elements, the question arises whether it is to be regarded as consisting of a single supply or of several distinct and independent supplies which must be assessed separately from the point of view of VAT. According to the Court’s case-law, in certain circumstances several formally distinct services, which could be supplied separately and thus give rise, in turn, to taxation or exemption, must be considered to be a single transaction when they are not independent (Case C-425/06 Part Service [2008] ECR I-897, paragraph 51)." (Field Fisher Waterhouse LLP C-392/11)
- Linked goods concession withdraw
Linked goods concession withdrawn because the same result will usually be reached applying the case law. See policy paper.
Supplies by different taxable persons
- Not possible to combine supplies by two suppliers under two contract to result in one supply
"[46] The Court sometimes employs the notions of ‘principal and ancillary supply’ in the context of closely related activities. ( 53 ) This is not entirely accurate from a doctrinal point of view. If closely related activities were already a dependent ancillary supply, there would be no need for the explicit exemption for those transactions. They would already be exempt by virtue of their character as a dependent ancillary supply.
[47] In using this terminology, the Court is, in my view, merely seeking to make clear that, like ancillary supplies in the abovementioned sense, closely related activities are ‘auxiliary’, even though they are independent supplies. Unlike dependent ancillary supplies, they can thus also be provided by a taxable person other than the person who makes the exempt supply itself. ( 54 ) Nor is the identity of the recipient of the supply a condition for a closely related activity. ( 55 )"(Frenetikexito C-581/19, AG Kokott)
"[223] Other than the decisions of the CJEU in Bookit and National Exhibition Centre (and the decision of the Upper Tribunal in SilverDoor) all the authorities cited to us have decided that it is not possible to fuse supplies by two suppliers into a single supply for VAT purposes. This was acknowledged by Mr Southern when he cited the decisions of the courts in Wellington Private Hospital, Nell Gwynn, and Telewest. We would also add Lower Mill v HMRC [2010] UKUT 463 (TCC)...
[224] We agree with Mr Donmall that the decisions of the CJEU in both Bookit and National Exhibition Centre must be given careful analysis. Although the decisions were not based on the doctrine of abuse of rights, the background to both cases was tax avoidance, where the supplier group sought to recharacterise part of the consideration payable for tickets as a (VAT exempt) card processing charge. We agree with Mr Donmall that the CJEU's decision is based on the principle that the charges incurred in the process used by a supplier to structure receipt of payments forms part of the consideration for the supply. We consider, and find, that the CJEU was making no wider statement of principle.
...
[227] We find that neither Bookit nor National Exhibition Centre have altered the general principle that it is not possible to combine supplies by two suppliers under two contracts to result in one supply for VAT purposes. We find that the supplies of land made by the Lessors and the supplies of Maintenance Services made by the MTCs are separate." (Places for People Homes Limited v. HMRC [2025] UKFTT 1417 (TC), Judge Aleksander)
- Splitting single supply between two connected parties to avoid single supply treatment may be abusive
"[59]As regards the first criterion, that court can take into account that the anticipated result is the accrual of a tax advantage linked to the exemption, pursuant to Article 13B(a) and (d) of the Sixth Directive, of the services entrusted to the co-contracting company of the leasing company.
[60] That result would appear to be contrary to the objective of Article 11A(1) of the Sixth Directive, namely the taxation of everything which constitutes consideration received or to be received from the customer.
...
[62] As regards the second criterion, the national court, in the assessment which it must carry out, may take account of the purely artificial nature of the transactions and the links of a legal, economic and/or personal nature between the operators involved (Halifax and Others, paragraph 81), those aspects being such as to demonstrate that the accrual of a tax advantage constitutes the principal aim pursued, notwithstanding the possible existence, in addition, of economic objectives arising from, for example, marketing, organisation or guarantee considerations." (Part Service C-425/06)
Supplies to different persons
- Supplies must be made to the same person to result in one supply
"[46] The Court sometimes employs the notions of ‘principal and ancillary supply’ in the context of closely related activities. ( 53 ) This is not entirely accurate from a doctrinal point of view. If closely related activities were already a dependent ancillary supply, there would be no need for the explicit exemption for those transactions. They would already be exempt by virtue of their character as a dependent ancillary supply.
[47] In using this terminology, the Court is, in my view, merely seeking to make clear that, like ancillary supplies in the abovementioned sense, closely related activities are ‘auxiliary’, even though they are independent supplies. Unlike dependent ancillary supplies, they can thus also be provided by a taxable person other than the person who makes the exempt supply itself. ( 54 ) Nor is the identity of the recipient of the supply a condition for a closely related activity. ( 55 )"(Frenetikexito C-581/19, AG )
- CJEU raising possibility of supplies to different persons amounting to single supply
"[41] The Court has also held that, for VAT purposes, every supply must normally be regarded as distinct and independent, as follows from the second subparagraph of Article 1(2) of the VAT Directive (judgment in BGŻ Leasing, C‑224/11, EU:C:2013:15, paragraph 29). However, in certain circumstances several formally distinct services, which could be supplied separately and thus give rise, in turn, to taxation or exemption, must be considered to be a single transaction when they are not independent (see, to that effect, judgment in RR Donnelley Global Turnkey Solutions Poland, C‑155/12, EU:C:2013:434, paragraph 20).
[42] In accordance with that case law, it is for the referring court to ascertain whether the transactions at issue in the main proceedings, namely, first, the services provided to Domino and, second, the sale of immovable property to a third company, must be regarded as a ‘single supply’. Such is the case, inter alia, where several elements or acts supplied by the taxable person are so closely linked that they form, objectively, a single, indivisible economic supply, which it would be artificial to split.
[43] When it is shown that such transactions cannot be regarded as forming a single supply, the principle of fiscal neutrality does not preclude those transactions from being taxed separately for VAT purposes." (NLB Leasing C-209/14)