In a decision dated 16 December 2025, the Bordeaux Administrative Court of Appeal clarified the criteria used to distinguish between a supply of goods and a supply of services for VAT purposes. This distinction is critical, as it determines both the applicable VAT treatment and the timing of VAT becoming due.
The case concerned Laser 87, a company specialising in laser cutting of metal parts, which challenged the VAT classification applied to certain of its transactions. The French Tax Authorities had treated these operations as supplies of goods, while the company argued that they should be regarded as supplies of services. The classification was decisive, as it impacted the place of supply rules, VAT deductibility and the point at which VAT became chargeable.
Laser 87 relied on the fact that it provided tailored studies and technical input to its customers, arguing that these elements gave the transaction the character of a service. On this basis, the company disputed VAT reassessments triggered by VAT becoming due upon delivery of the parts, rather than upon payment.
The Court rejected this position and confirmed that the transactions constituted supplies of goods.
Two key factors were decisive:
- First, the company supplied the raw materials itself, resulting in the creation of a new tangible movable asset.
- Second, the associated services, including studies and laser cutting, were regarded as ancillary. While necessary to produce the parts, they were not an end in themselves for the customer, whose primary objective was to obtain the finished product.
As a result, the transactions were correctly classified as supplies of goods, with VAT becoming chargeable at the time of delivery, in line with the applicable VAT rules.
For businesses carrying out so-called “mixed” transactions, this decision serves as a clear reminder of the need to assess the economic reality of each operation. Identifying whether services are merely ancillary or form the principal element of the transaction is essential, as this analysis directly affects the VAT regime, the timing of VAT due and the right to deduct VAT.
More broadly, the decision highlights the importance of accurately documenting transactions in a manner consistent with their true nature, in order to secure the VAT position adopted and mitigate the risk of reassessment.
