CJEU holds that customer recharge of costs of repair of goods under warranty to its supplier may be deemed consideration for supply by the customer

The Court of Justice of the European Union (CJEU) issued its decision in Case C-605/20 (Suzlon Wind Energy Portugal) on 24 February 2022.

This case addresses a Portuguese business that purchased goods (wind turbines) from a group company established in India. Parts of the wind turbines, that were still under warranty, started to show defects and needed repair and/or replacement.

The customer, Suzlon Wind Energy Portugal (SWEP) concluded an agreement with the supplier Suzlon Energy Limited (SEL) for the repair or replacement of the parts. Under this agreement, SWEP agreed to perform the repair services itself or by engaging subcontractors.

SWEP deducted the Value Added Tax (VAT) on the invoices issued by these subcontractors. SWEP issued invoices to SEL for the costs of the repair and replacement services. These invoices did not include any VAT charges.

Source EY

See also ECJ C-605/20 (Suzlon Wind Energy Portugal) – Judgment – Service for consideration also applies when compensation consists of debit notes