The ECJ has decided in few cases on the determination of the Taxable Amount if discounts are granted
- ECJ Rulings on Taxable Amount for Discounts: The European Court of Justice (ECJ) has ruled on various cases concerning how discounts affect the determination of the taxable amount for VAT purposes, emphasizing that the taxable amount should reflect the subjective value expressed in monetary terms, including any price reductions or rebates granted at the time of supply or importation.
- Relevant Articles in EU VAT Directive: Key articles from the EU VAT Directive that guide these rulings include:
- Article 79: Excludes price reductions, discounts, and certain reimbursements from the taxable amount for goods or services.
- Article 87: Excludes discounts from the taxable amount for the importation of goods.
- Article 90: Requires the taxable amount to be reduced in cases of cancellation, refusal, non-payment, or post-supply price reductions.
- Notable ECJ Cases: The ECJ decisions cover various promotional schemes and discount scenarios, such as:
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- Promotional Schemes: Cases like Naturally Yours Cosmetics (C-230/87) and Argos Distributors (C-288/94) clarified the taxable amount for vouchers and bonuses.
- Discounts: Cases like Boots (C-126/88) and Boehringer Ingelheim (C-717/19) addressed adjustments to the taxable amount when discounts or rebates are applied, reaffirming that discounts should reduce the VAT value of supplies.
Article in EU VAT Directive
Article 79 (Taxabe amount – Supp;y of goods or services)
The taxable amount shall not include the following factors:
(a) price reductions by way of discount for early payment;
(b) price discounts and rebates granted to the customer and obtained by him at the time of the supply;
(c) amounts received by a taxable person from the customer, as repayment of expenditure incurred in the name and on behalf of the customer, and entered in his books in a suspense account.
The taxable person must furnish proof of the actual amount of the expenditure referred to in point (c) of the first paragraph and may not deduct any VAT which may have been charged.
Article 87 (Taxable amount – Importation of Goods)
The taxable amount shall not include the following factors:
(a) price reductions by way of discount for early payment;
(b) price discounts and rebates granted to the customer and obtained by him at the time of importation.
Article 90 (Taxable amount – Misc. provisions)
1. In the case of cancellation, refusal or total or partial non-payment, or where the price is reduced after the supply takes place, the taxable amount shall be reduced accordingly under conditions which shall be determined by the Member States.
ECJ Cases – Decided
Promotional schemes
- C-230/87 – Naturally Yours Cosmetics – The taxable amount is a subjective value which must be capable of being expressed in monetary terms
- C-33/93 – Empire Stores – Delivery, without additional payment, of article to person who registers himself or another as a new customer
- C-288/94 (Argos Distributors) – Taxable amount of a voucher is the sum actually received by the supplier upon the sale of the voucher
- C-86/99 – Freemans – Discount obtained at the time the action is performed – Price reduction after the action has taken place
- C-380/99 – Bertelsmann – The taxable amount for the supply of a bonus in kind includes the delivery cost
- C-398/99 – Yorkshire Co-operatives – The nominal value of that coupon must be included in the taxable amount in the hands of the retailer
- C-62/00 – Marks & Spencer – Adoption of national measures correctly implementing a directive does not exhaust the effects of a directive
Discounts
- C-126/88 – Boots – Concept of “price discounts and rebates”. Price discount on surrender of a voucher obtained free of charge by the customer with a previous purchase
- C-427/98 – Commission v Germany – Adjustment of taxable amount in case of Money-Off Coupons
- C-317/94 – Elida Gibbs Ltd. – Money back and discount coupons – Taxable amount to be adjustedC-300/12 – Ibero Tours Gmbh – Judgment – Granting of price discounts to customers, taxable amount for services by an intermediary
- C-300/12 – Ibero Tours GmbH – Granting of price discounts to customers, taxable amount for services by an intermediary
- C-462/16 – Boehringer Ingelheim Pharma GmbH & Co. KG – Discounts reduce the VAT value of pharmaceutical supplies
- C‑684/18 – World Comm Trading – Global rebates required local adjustments
- C-717/19 – Boehringer Ingelheim – Reduction of the taxable amount – Agreement between pharmaceutical company and health insurer
- C-802/19 – Firma Z – Adjustments of taxable amount; domestic and intra-Community supplies of medicinal products; discounts under health insurance scheme
- C-248/23 (Novo Nordisk) – Reduction taxable amount on ex lege payments to the State health insurance agency
ECJ Cases – Pending
- None
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