Clarifications on deductible VAT for donations of light bulbs

A company was subject to a tax audit regarding the VAT it had claimed as a deduction for the purchase of LED light bulbs. These bulbs were then distributed free of charge by social housing providers to their tenants in Réunion. This distribution allowed the company to generate energy-saving certificates, which it then resold.

administration had determined that the VAT paid when the company purchased the light bulbs could not be deducted because the bulbs were given away for free and the company received no consideration in exchange for the donation. The company was then issued a tax assessment for the amount of VAT it had paid on the purchase of the light bulbs and subsequently deducted.

The Court, interpreting French law in light of the VAT Directive, nevertheless held that the company’s free distribution of LED light bulbs resulted in energy savings that enabled the company to obtain energy-saving certificates, which it then resold. This sale of certificates was, moreover, subject to VAT.

The judges therefore conclude that there is a direct and immediate link between the purchase of the LED bulbs and the sale of the certificates. They therefore hold that the VAT paid on the purchase of the bulbs was deductible.

The Court notes, however, that only some of the light bulbs had been distributed free of charge. It therefore overturns the tax assessment with respect to the VAT on the donated light bulbs but upholds it for the other light bulbs.

CAA Douai, April 24, 2025, No. 24DA00126

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