On Jan 16, 2014, the issued his judgment in C-300/12 (Ibero Tours GmbH) on determining the taxable amount for VAT do not apply when a travel agency acting as an intermediary on its own initiative and grants a discount to the final consumer at his own expense on the main service provided by a tour operator.
Article in the EU VAT Directive
Article 11A(1)(a), 11A(3), 11C(1), 26 of Sixth Council Directive 77/388/EEC
1. The taxable amount shall be:
(a) in respect of supplies of goods and services other than those referred to in (b), (c) and (d) below, everything which constitutes the consideration which has been or is to be obtained by the supplier from the purchaser, the customer or a third party for such supplies including subsidies directly linked to the price of such supplies’.
3. Under Article 11A(3) of the Sixth VAT Directive:
‘The taxable amount shall not include:
(a) price reductions by way of discount for early payment;
(b) price discounts and rebates allowed to the customer and accounted for at the time of the supply;
4. The first subparagraph of Article 11C(1) of the Sixth VAT Directive, entitled ‘Miscellaneous provisions’, stipulates:
‘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.’
5. Article 26 of the Sixth VAT Directive, entitled ‘Special scheme for travel agents’, provides:
‘1. Member States shall apply [VAT] to the operations of travel agents in accordance with the provisions of this Article, where the travel agents deal with customers in their own name and use the supplies and services of other taxable persons in the provision of travel facilities. This Article shall not apply to travel agents who are acting only as intermediaries and accounting for tax in accordance with Article 11A(3)(c). In this Article travel agents include tour operators.
2. All transactions performed by the travel agent in respect of a journey shall be treated as a single service supplied by the travel agent to the traveller. It shall be taxable in the Member State in which the travel agent has established his business or has a fixed establishment from which the travel agent has provided the services. The taxable amount and the price exclusive of tax, within the meaning of Article 22(3)(b), in respect of this service shall be the travel agent’s margin, that is to say, the difference between the total amount to be paid by the traveller, exclusive of value added tax, and the actual cost to the travel agent of supplies and services provided by other taxable persons where these transactions are for the direct benefit of the traveller.
3. If transactions entrusted by the travel agent to other taxable persons are performed by such persons outside the Community, the travel agent’s service shall be treated as an exempted intermediary activity under Article 15(14). Where these transactions are performed both inside and outside the Community, only that part of the travel agent’s service relating to transactions outside the Community may be exempted.
4. [VAT] charged to the travel agent by other taxable persons on the transactions described in paragraph 2 which are for the direct benefit of the traveller shall not be eligible for deduction or refund in any Member State.’
- Ibero Tours GmbH (‘Ibero Tours’) is a German travel agent which offers its clients travel services designed by tour operators. According to the example used by the referring court and the Commission, the gross price of travel is EUR 2 000, including VAT of EUR 275.86. Once the travel has been sold, the tour operator provides the travel service to the client and pays the travel agent a commission as a consideration for its intermediary service. In the example, the gross amount of the commission is EUR 232, including EUR 32 in VAT.
- In order to promote sales, Ibero Tours grants clients reductions in the travel price. In the example, it is presumed that that travel agent offers the consumer a reduction of 3% in the gross travel price, i.e. EUR 60. The reduction is not borne by the tour operator, but by that travel agent.
- In the above example, the consumer pays Ibero Tours the agreed reduced price, namely EUR 1 940. The travel agent then pays the tour operator a sum corresponding to the difference between the total travel price (excluding the reduction, i.e. EUR 2 000) and the commission calculated on the basis of the non-reduced travel price (inclusive of VAT, i.e. EUR 232), which also corresponds to the difference between the reduced price paid by the client (EUR 1 940) and the reduced amount of the commission (EUR 172) following the deduction of the reduction granted to the consumer by Ibero Tours (EUR 60, inclusive of VAT). In the example, that sum corresponds to EUR 1 768 (i.e. EUR 2 000 – EUR 232 = EUR 1 768 or EUR 1 940 – EUR 172 = EUR 1 768).
- Under the special scheme for travel agents in Article 26 of the Sixth VAT Directive, the tour operator must pay the tax authorities VAT on the total travel price and may not take into account the reduction granted by the travel agent to the client, since the travel takes place within the European Union.
- Previously, Ibero Tours had paid the tax authorities the VAT (EUR 32 in the example) applied to the full amount of the commission paid by the tour operator, i.e. EUR 232 in the example, without deducting from it the VAT of EUR 8.28 contained in the reduction granted to the final consumer, i.e. EUR 60 in the example. It took the view that it had thus been taxed on an amount in excess of the sum that it had ultimately received. It also took the view that this had enabled the tax authorities to receive an amount higher than the VAT actually paid by the final consumer. On the basis of the example, it considered that it was entitled to a reimbursement of EUR 8.28, which represents the difference between the VAT calculated on the commission which it receives not taking into account the reduction in the travel price (EUR 32) and on the commission which it retains after including in the calculation the reduction granted to the consumer (EUR 23.72).
- Against this background, Ibero Tours applied to the Finanzamt Düsseldorf-Mitte (Tax Office, Düsseldorf-Mitte; ‘the Finanzamt’) for an adjustment of the VAT assessments for the relevant years 2002 to 2005, arguing that giving the price reductions to the travel clients had led to a reduction in remuneration for the intermediary services which it provided to the tour operators pursuant to Paragraph 17 of the UStG.
(1) The principles relating to the reduction of the taxable amount in the case of undertakings which grant price reductions to the consumer of a downstream service, as laid down in the judgment of 24 October 1996 in Case C‑317/94 Elida Gibbs  ECR I‑5339, are also applicable in the case of an intermediary (here, a travel agent) which, at its own expense, grants a price reduction to the customer (here, a travel client) in the transaction arranged by that intermediary (here, services of the tour operator).
(2) Where a tour operator’s transaction includes an intermediary activity, the right of the latter to claim a reduction of its taxable amount on the ground that it grants price reductions to consumers, in accordance with the judgment of 24 October 1996 in Case C‑317/94 Elida Gibbs  ECR I‑5339, is not affected by the mere fact that the principal transaction comes under the margin scheme laid down by Article 26(2) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment.
(3) In the event of the exemption of the services arranged by the intermediary, it is inherent in the scheme of Sixth Directive 77/388 for a Member State to refuse a reduction of the taxable amount for VAT without having previously included additional conditions to that end in specific legislation.
The provisions of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, must be interpreted as meaning that the principles established by the Court of Justice of the European Union in Case C-317/94 Elida Gibbs concerning the determination of the taxable amount for VAT purposes do not apply when a travel agent, acting as an intermediary, grants to the final consumer, on the travel agent’s own initiative and at his own expense, a price reduction on the principal service provided by the tour operator.