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V2125-19 12 August 2019 · SG de Impuestos sobre el Consumo Criterion in force
IVA · entrega de bienes

Classification of manufacturing as supply of goods or provision of services depends on material significance

A Spanish company manufactures products for German clients using chemical components and packaging supplied by them. The DGT examines whether these operations constitute supplies of goods or provisions of services and their subsequent VAT treatment.

The question raised

Value Added Tax treatment of the transactions described in the written inquiry.

The DGT's ruling

The transaction constitutes a supply of goods if the manufacturer provides the majority of the materials or if those provided by the customer are insignificant. It constitutes a supply of services if the customer provides the majority of the raw materials or if the value of the manufacturer's materials is lower than the cost of the manufacturing service. In the case of successive deliveries with a single transport, this shall be attributed to a single transaction to determine the intra-Community exemption.

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