The General Financial Directorate (GFD) addressed VAT issues relating to the disposal of assets during the Coordination Committee meeting held on 23 September 2026. The assets in question are those from which materials, secondary raw materials or spare parts intended for resale are subsequently recovered. The conclusions are particularly relevant to companies involved in demolition, the disposal of technological equipment, metal recycling or waste processing.

One of the main questions was whether the disposal of assets constitutes only a supply of services or also a supply of goods. If a disposal company obtains material and takes its value into account when setting the disposal fee, this may constitute two separate taxable supplies for VAT purposes.

The GFD also emphasised that, where the taxable amount is determined by reference to the open market value, that value must correspond to the value of the specific supply at the time it takes place. Any open market value cannot subsequently be changed arbitrarily merely on the basis of an agreement between the contracting parties. The application of the reverse charge mechanism is another important issue. The GFD stressed that the mere fact that goods are intended for disposal does not automatically mean that they constitute waste or scrap subject to this mechanism.

What matters is the actual nature of the goods, their classification under the Combined Nomenclature and their inclusion in Annex No. 5 to the VAT Act at the time of supply. For example, if an entire machine intended for subsequent dismantling is sold, the reverse charge mechanism cannot automatically be applied solely because ferrous scrap will be recovered from it. However, the conditions for applying this mechanism may be met when the recovered scrap is subsequently sold separately. Each transaction must therefore be assessed individually.

The GFD also considered the subsequent sale of used spare parts, for example those recovered from end-of-life vehicles. It confirmed that, provided the statutory conditions under Section 90 of the VAT Act are met, the special scheme for dealers in second-hand goods may be used. Under this scheme, VAT is charged only on the profit margin, that is, the difference between the selling price and the purchase price. The purchase price of the parts may be determined by deducting the expected proceeds from the sale of scrap from the purchase price of the end-of-life vehicle. At the same time, however, the GFD rejected the possibility of carrying forward any negative balance of margins to subsequent tax periods.

The GFD’s position, based on the Coordination Committee, confirms that the actual substance of a transaction, rather than merely its contractual designation, is decisive for the correct VAT treatment. In particular, it is essential to consider what goods are supplied, their condition and when the supply takes place. These factors determine the number of taxable supplies, the calculation of the taxable amount and the choice of the correct VAT treatment.

If this issue affects you, or if you are unsure how to apply VAT correctly to the disposal and subsequent sale of goods, please do not hesitate to contact us. We will be pleased to help you assess your specific situation and establish the appropriate tax treatment.

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