- The European Court of Justice ruled in the Deco Proteste – Editores case that a welcome gift given with a magazine subscription does not constitute a separate delivery of goods and is incidental to the main service.
- Therefore, the publisher is only liable for VAT at the reduced rate on the main performance.
- This judgment can have positive consequences for entrepreneurs who provide gifts to promote sales.
- The case involved a Portuguese publisher who gave customers a tablet or smartphone as a welcome gift with a subscription.
- The publisher only paid VAT at the reduced rate for the subscription and not for the gift, but the Portuguese tax authorities disagreed.
- The Court of Justice concluded that the welcome gift was an ancillary performance to the main performance of the magazine subscription and did not constitute an independent purpose for the customer.
- The judgment took into account all circumstances, including the value of the gift, the fact that customers could not choose a discount instead of a gift, and that they did not have to do anything extra to receive it.
- The Court’s decision differs from a previous judgment in the Kuwait Petroleum case, where free stamps provided as part of a promotional campaign were considered an independent, free supply subject to VAT unless the gift was of small value.
Source Meijburg
See also
- ECJ C-505/22 (Deco Proteste – Editores, Lda) – Judgment – A gift for a subscription is not a free transfer of goods and is ”incidental service” to the main supply
- Summary of the ECJ Case C-505/22: A subscription gift in exchange for a periodical subscription is considered an ancillary supply
- Roadtrip through ECJ Cases – Focus on ”Free Products” (Art. 16)
- Join the Linkedin Group on ECJ VAT Cases, click HERE
- VATupdate.com – Your FREE source of information on ECJ VAT Cases
