Single complex supply and VAT: The Court rejects an artificial splitting of transactions
In its judgment of 23 October 2025 (Brose Prievidza, C 234/24), the CJEU provided helpful clarification on how VAT should apply to the so-called “single complex transactions”, especially where several group entities and different Member States are involved.
1. Background
Brose Coburg, a German company within the Brose group, bought production equipment in Bulgaria. The equipment was intended for another group company, Brose Prievidza established in Slovakia, but it remained physically at the Bulgarian supplier’s premises.
More than a year later, the equipment was sold to Brose Prievidza without being shipped. The Slovak company subsequently requested a refund of the Bulgarian VAT paid on this local purchase.
The Bulgarian Tax Authorities refused the refund. They considered that the sale of the equipment was merely ancillary to the group’s intra EU supplies of components and represented an artificial splitting of a single complex transaction, which therefore prevented any VAT refund.
2. The Court’s ruling
The CJEU reiterated that a VAT exempt intra EU supply requires actual transport of the goods to another Member State.
Since no physical movement took place, the sale of the equipment could not be treated as an intra EU supply.
The Court also held that the sale was an independent transaction because : it gas its own economic purpose, it was based on a separate contract, it was invoiced separately and there was no intention to obtain an improper tax advantage.
Taken together, these factors rule out any artificial splitting of a single complex transaction. The sale must therefore be treated as a local supply subject to Bulgarian VAT, entitling Brose Prievidza to a refund.
3. Implications
The judgment confirms that, for a transaction to be treated as single and complex, its elements must be objectively inseparable from an economic perspective. The fact that a piece of equipment is linked to the production of components is not enough to fold it into a single supply of those components.
It also reaffirms that physical movement of the goods remains a decisive condition for VAT exemption on intra EU supplies.
Finally, the decision highlights the need for businesses to properly document the economic and contractual reality of their cross border flows, in order to secure their VAT position and reduce the risk of requalification.
