Definition of “Installed or Assembled Goods”
Opinion Statement on the Definition of “Installed or Assembled Goods”in Article 36 of Council Directive 2006/112/EC
CFE Tax Advisers Europe has issued an Opinion Statement examining the interpretation of Article 36 of the EU VAT Directive, which determines the place of supply for installed or assembled goods.
CFE considers that the absence of a clear definition of what constitutes an “installed or assembled” good has resulted in divergent approaches across Member States, creating legal uncertainty and unnecessary compliance burdens for businesses engaged in cross-border trade. The Statement highlights that inconsistent application of Article 36 may lead to differing VAT outcomes, including unexpected VAT registration obligations, depending on how national tax authorities interpret the installation or assembly element of a transaction.
CFE recommends that the European Commission provides greater legal certainty through amendments to Council Implementing Regulation (EU) No 282/2011 or, alternatively, guidance from the VAT Committee.
In particular, CFE recommends:
- introducing a de minimis threshold so that insignificant installation or assembly activities do not automatically trigger Article 36;
- providing harmonised criteria for determining when installation or assembly is sufficiently significant to determine the place of supply;
- clarifying that activities such as supervision, testing, customer acceptance procedures and software configuration should not, in themselves, determine the VAT treatment of a transaction; and
- promoting a consistent interpretation of Article 36 across Member States in order to reduce compliance burdens and improve legal certainty for businesses.
Conclusion
This Opinion Statement forms part of CFE’s ongoing work to support the simplification and modernisation of the EU VAT framework. CFE considers that clearer and more harmonised rules governing the VAT treatment of installed or assembled goods would significantly improve the functioning of the Internal Market by reducing administrative burdens and ensuring consistent treatment of cross-border transactions.
We invite you to read the full Opinion Statement and remain available for any queries you may have.
