Goods containing precious metal or stones are not second-hand goods and cannot therefore be subjected to the profit margin regime set out in the 'VAT' directive, if these goods are no longer likely to fulfil their initial purpose, the Court has confirmed in a judgment returned on Wednesday 11 July (case C-154/70).
Accepting the line of argument of the Advocate General (see EUROPE 11998), the Court stresses that in order to come under the category of 'second-hand goods', an object made of precious metal or stones must have had a purpose other than that which is inherent to the materials it comprises, have retained this purpose and can be reused, in its existing form or following repairs.
If this is not the case, the item in question cannot benefit from the profit margin regime as it does not remain within its own economic cycle and has no purpose other than to be transformed into a new item that will enter a new economic cycle, such that the risk of dual taxation, which is the reason the profit margin regime was created, disappears.
Finally, all of the objective circumstances of the transaction, such as the presentation of the goods, the evaluation methods for the goods and the invoicing method (bulk/per item) are among the elements that must be taken into account. (Original version in French by Mathieu Bion)