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France place of supply rules on goods in transit - ECJ case

  • Oct 5, 2014 | Richard Asquith

France place of supply rules on goods in transit - ECJ case

The European Court of Justice has ruled that where additional work in the country of supply is performed on intra-community supplies, this may change the nature of the supply to a domestic supply.

The case concerned a French company, Société Fonderie 2A. Its Italian factory agreed to sell metal components to a French customer. Rather than deliver the goods directly to the French customer’s address, the goods first went to a third party subcontractor in France for painting. The goods were then delivered to the final French customer in France.

The French subcontractor charged the Italian factory with French VAT for the painting work. The Italian factory then tried to recovery the VAT through an 8th Directive VAT reclaim. However, the French VAT authorities refused to accept that the transaction was an intra-community supply since the goods had been delivered in France as a domestic supply. This meant an 8th Directive claim was not applicable. The European Court of Justice, the highest court of appeal for EU legal matters, upheld the French authorities’ point of view.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He can be contacted at: He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.