In case C-127/22, a Bulgarian telecommunications company disposed of several tangible assets due to their wear and tear or becoming obsolete.
The company sold the depreciated assets that still had value with VAT, while the rest were destroyed. The judgment of the European Court of Justice confirms that disposal should be considered part of economic activity for VAT purposes. Selling assets at their residual value is also considered a taxable supply of goods eligible for VAT deduction, even if it does not take place within the taxpayer’s ordinary economic activity.
Due to the “throwing out” of an asset deemed unusable or unnecessary, it is not necessary to make an additional, proportional refund of the VAT deducted at the time of purchase, if the taxpayer can credibly prove that the asset has become objectively unfit for the continuation of the economic activity and the asset has been definitively removed from the company’s assets.