Case law
16 February 2018

Delivery of goods or provision of services?

Late last year, the Supreme Administrative Court (SAC) ruled in case 3 Afs 96/2016, dealing with whether a transaction should be viewed as a delivery of goods or a provision of a service; this had an effect on the correct VAT treatment.

Tomáš Havel
Dominik Kovář

The case involved a sale of cereal grains growing on leased land. At the time of the sale, the grains were not yet ready for harvest. The supplier viewed the sale as a delivery of goods. The tax administrator disagreed, stating that it was a provision of a service (transfer of the right to harvest the grains). The tax administrator based this on the legal assessment that crops not yet harvested are a part of the soil where they grow and are only viewed as a separate thing once harvested. 

The SAC disagreed with the tax administrator and held that the grains do not have to be necessarily harvested once ripe. For the grower, even harvesting the crop before ripe, or not harvesting it at all, may have economic meaning. According to the SAC, even a thing that in the legal sense is part of another thing can be considered goods, as long as the goods to be delivered can be clearly identified and separated from the parent thing (in this case the soil) without substantially diminishing its value.

Although the judgement dealt with a highly specific issue, it is important nonetheless: it shows that to determine the VAT treatment of a transaction, its legal definition or accounting recognition is not always decisive. The judgement also confirms the case law of the Court of Justice of the EU to the effect that the term ‘delivery of goods’ has to be interpreted in a uniform manner in all EU member states, irrespective of how it is defined in the private or commercial law of the given country.


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