Roadtrip through ECJ cases: Focus on Promotional activities/Discounts (Art. 79, 87, 90(1))

C‑230/87 (Naturally Yours Cosmetics) – The taxable amount is a subjective value which must be capable of being expressed in monetary terms

• Facts: Naturally Yours sold cosmetics through beauty consultants who organised private sales parties. The company supplied a pot of cream to each consultant at a heavily reduced price, on the understanding that the consultant would give it to the hostess who arranged the party as a “dating gift.” The tax authority questioned whether the reduced price alone was the correct taxable amount for that promotional cream.
• Question: The referring court asked whether, where a supplier delivers goods at a price below the normal wholesale price in exchange not only for money but also for a service (arranging a sales party), the taxable amount consists only of the money received, or whether it also includes the monetary value of the service rendered by the consultant to the supplier in return.
• Decision: The Court held that the taxable amount is a subjective value—the consideration actually received—which must be capable of being expressed in monetary terms and directly linked to the supply. Where part of the consideration is a service, its value equals the amount the supplier is willing to forgo, here the difference between the normal wholesale price and the reduced price actually charged.

C‑33/93 (Empire Stores) – Delivery without additional payment of an article to a person who registers himself or another as a new customer

• Facts: Empire Stores, a mail‑order company, ran two schemes. Under the “self‑introduction” scheme a new customer received a free article; under the “introduce‑a‑friend” scheme an existing customer received a free article for recruiting a new one. The articles were supplied without any additional payment beyond the catalogue purchases, and the question concerned how to value these “free” goods for VAT purposes when goods rather than money changed hands.
• Question: The referring court asked whether the taxable amount of the free article was limited to the price the customer paid for goods ordered from the catalogue, or whether it also covered the value of the additional service (self‑introduction or recruiting a new customer), and, if so, how that non‑monetary consideration supplied in a barter‑type transaction should be measured for VAT.
• Decision: The Court ruled that the consideration for the free article was the service of registering oneself or another as a new customer, which is distinct from the monetary payment for catalogue goods. Because that consideration is non‑monetary, its subjective value equals the purchase price the supplier itself paid to acquire the article supplied free, not the retail price it would have charged customers.

C‑288/94 (Argos Distributors) – The taxable amount of a voucher is the sum actually received by the supplier upon the sale of the voucher

• Facts: Argos sold gift vouchers at face value, but offered discounts to buyers purchasing in bulk (for example, companies buying large quantities). Customers later presented these vouchers, at their full face value, as payment for goods in Argos stores. The dispute concerned whether Argos should account for VAT on the face value of the vouchers or on the lower, discounted amount it had actually received when it originally sold them.
• Question: The referring court asked, under Article 11A(1)(a) of the Sixth Directive, whether the taxable amount for goods supplied against a voucher is the voucher’s stated face value, or the sum Argos genuinely obtained when it first issued and sold the voucher—potentially at a discount—so that the true consideration reflects the money actually received by the supplier.
• Decision: The Court held that the taxable amount is the subjective value actually received by Argos when it sold the voucher, not the nominal face value. Where vouchers were sold at a discount, the taxable amount is the discounted sum obtained. This confirmed the consistent principle that VAT is levied on the consideration genuinely received by the supplier, reflecting economic reality rather than nominal figures.

C‑86/99 (Freemans) – Discount obtained at the time the action is performed – Price reduction after the action has taken place

• Facts: Freemans sold goods by mail order using agents who bought at catalogue price under a self‑financed credit scheme. Freemans credited each agent’s separate account with 10% of every payment—a discount on the agent’s own purchases—which the agent could withdraw in cash or set against balances. Agents could not simply pay the catalogue price less the discount upfront; the credit accrued only as instalments were paid. [vatupdate.com]
• Question: The referring court asked whether the taxable amount at the time of supply was the full catalogue price, or the catalogue price reduced by the 10% self‑purchase discount, given that the discount was credited automatically but only became available to the agent later, when payments were made and the credited sum was actually withdrawn or used. [vatupdate.com]
• Decision: The Court held the taxable amount is the full catalogue price. The 10% credit is not a discount “obtained at the time of the supply” under Article 11A(3)(b); it is a later price reduction. The taxable amount may only be reduced under Article 11C(1) (now Article 90) when the agent actually draws on, or otherwise uses, the credited amount. [vatupdate.com]

C‑380/99 (Bertelsmann) – The taxable amount for the supply of a bonus in kind includes the delivery cost

• Facts: Bertelsmann controlled book and record clubs that, between 1985 and 1990, gave existing members bonuses in kind—books, records, bicycles—for introducing new members. The companies bought these bonuses from third‑party suppliers and also bore the cost of delivering them to the introducing members. The German tax authority treated these as exchange‑type transactions and included the delivery costs, alongside the purchase price, in the taxable amount. [vatupdate.com]
• Question: The referring court asked whether Article 11A(1)(a) of the Sixth Directive means that the taxable amount for a bonus in kind—sent to a recipient in return for recruiting a new customer—comprises only the purchase price of the bonus, or whether it must also include the delivery costs incurred and paid by the supplier in getting the bonus to the introducing member. [vatupdate.com]
• Decision: The Court ruled that the taxable amount for the supply of a bonus in kind, given as consideration for introducing a new customer, includes not only the bonus’s purchase price but also the delivery costs, where those costs are borne by the supplier. Both elements together represent the value of the consideration in this barter‑type transaction, ensuring the taxable amount reflects the full economic outlay. [vatupdate.com]

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

• Facts: Yorkshire, a retail co‑operative, accepted manufacturers’ money‑off coupons issued to the public directly or via newspapers. Customers paid the retail price less the coupon’s value; Yorkshire then obtained reimbursement of the coupon’s nominal value from the manufacturers. Relying on Elida Gibbs, Yorkshire sought a partial VAT refund, arguing only the amounts paid by customers constituted its consideration and the manufacturer sums were mere price reductions. [vatupdate.com]
• Question: The referring court asked whether, in the retailer’s hands, the taxable amount for goods sold against manufacturers’ reduction coupons is limited to the cash actually paid by the customer, or whether it must also include the nominal value of the coupon subsequently reimbursed to the retailer by the manufacturer, and whether the Elida Gibbs reasoning applied at retailer level. [vatupdate.com]
• Decision: The Court held the retailer’s taxable amount includes both the cash received from the customer and the reimbursement received from the manufacturer, i.e. the coupon’s nominal value. Elida Gibbs concerned reducing the manufacturer’s taxable amount, not the retailer’s; from the retailer’s perspective, the manufacturer’s reimbursement is third‑party consideration directly linked to the supply and therefore fully taxable. [vatupdate.com]

C‑62/00 (Marks & Spencer) – Adoption of national measures correctly implementing a directive does not exhaust the effects of a directive

• Facts: Marks & Spencer had overpaid VAT (notably on gift vouchers and teacakes) and sought repayment. The UK retroactively curtailed the limitation period for reclaiming overpaid VAT from six years to three, without transitional arrangements, cutting off part of M&S’s claim. The dispute concerned both the retroactive time limit and the extent to which taxpayers could still rely directly on the Directive.
• Question: The referring court asked whether a taxpayer may rely on directly effective Directive provisions after a Member State has purportedly implemented them correctly, and whether Community law—particularly the principles of effectiveness and the protection of legitimate expectations—precludes national legislation retroactively shortening the period for reclaiming overpaid VAT without adequate transitional provisions for claims already accrued.
• Decision: The Court held that correct national implementation does not exhaust a directive’s effects; individuals may still invoke it where national measures are applied incompatibly. Retroactively reducing the limitation period without transitional arrangements breached the principles of effectiveness and legitimate expectations, since it deprived taxpayers, without warning, of accrued rights to recover VAT levied in breach of directly effective EU provisions.

C‑436/24 (Lyko Operations) – Loyalty points in customer reward schemes are not VAT vouchers

• Facts: Lyko Operations AB operates a customer loyalty programme in Sweden where customers earn points based on their purchases. Points can be redeemed only for low‑value bonus products, and only when the customer makes a new purchase. The points have no monetary value, are non‑transferable, cannot be exchanged for cash, and merely give access to additional goods as a bonus rather than functioning as independent payment instruments. [vatupdate.com]
• Question: The Swedish Supreme Administrative Court asked whether such loyalty points qualify as a “voucher” under Article 30a of the VAT Directive. If they did, it further asked how the taxable amount should be determined under Article 73a when the points are redeemed—raising the broader issue of the boundary between voucher schemes and ordinary discount or bonus mechanisms. [vatupdate.com]
• Decision: The Court held the loyalty points are not “vouchers” under Article 30a. A key voucher condition is an obligation on the supplier to accept the instrument as consideration; here the points only entitle customers to a bonus item conditional on a new purchase, so they operate as a discount mechanism. The scheme therefore falls outside the special voucher rules, and the second question needed no answer. [vatupdate.com]

C‑126/88 (Boots) – Concept of price discounts and rebates – Price discount on surrender of a voucher obtained free of charge with a previous purchase

• Facts: Boots ran promotions where coupons printed on product packaging (or in press advertisements) entitled customers, on a later purchase, to a stated reduction on the price of specified goods. The customer obtained the coupon free of charge with an earlier purchase and surrendered it against the next one. The dispute concerned whether the coupon’s nominal value formed part of Boots’ taxable amount on the discounted sale.
• Question: The referring court asked whether the surrender of such a coupon, obtained free of charge, constitutes consideration additional to the reduced cash price, so that the coupon’s face value must be added to the taxable amount, or whether it merely represents a price discount or rebate within Article 11A(3)(b) of the Sixth Directive, excluded from the taxable amount.
• Decision: The Court held the coupon obtained free of charge constitutes a price discount or rebate under Article 11A(3)(b), not additional consideration. The taxable amount is therefore the reduced cash price actually paid by the customer; the coupon’s nominal value is excluded. Boots received no separate consideration for the coupon, so only the money genuinely received forms the taxable base.

C‑427/98 (Commission v Germany) – Adjustment of taxable amount in case of money‑off coupons

• Facts: The Commission brought infringement proceedings against Germany over its rules on reducing the taxable amount where manufacturers reimburse money‑off coupons redeemed by final consumers through the distribution chain. The Commission argued Germany’s approach did not properly give effect to the Elida Gibbs principle allowing manufacturers to reduce their taxable amount by the coupon value they ultimately reimburse, thereby overstating VAT relative to what consumers actually bear.
• Question: The dispute concerned whether Germany failed to fulfil its obligations by not permitting manufacturers to reduce their taxable amount by the reimbursed value of money‑off coupons, and how the Elida Gibbs methodology should apply where intermediate or final supplies in the chain are exempt (for instance exports or intra‑Community supplies) that could otherwise create a mismatch or revenue loss.
• Decision: The Court confirmed the Elida Gibbs principle that a manufacturer may reduce its taxable amount by coupons it reimburses, but dismissed the Commission’s action. It accepted that reduction is not warranted where the coupon relates to an exempt supply (such as an export or intra‑Community supply), since allowing it there would undermine fiscal neutrality and cause an unjustified loss of tax revenue.

C‑317/94 (Elida Gibbs) – Money‑back and discount coupons – Taxable amount to be adjusted

• Facts: Elida Gibbs, a manufacturer, ran promotions using money‑off coupons (redeemed by retailers on the consumer’s purchase) and cash‑back coupons (redeemed directly by the consumer). In both cases the manufacturer bore the cost by reimbursing the stated coupon amount. Its goods reached consumers via wholesalers or retailers, and the question was how these reimbursements affected the manufacturer’s own taxable amount for VAT. [vatupdate.com]
• Question: The referring court asked what the manufacturer’s taxable amount is where it sells goods at its supplier price to retailers or wholesalers, but subsequently reimburses money‑off or cash‑back coupons in favour of the retailer or final consumer—specifically, whether that taxable amount must be reduced by the amounts the manufacturer reimburses under the coupon schemes. [vatupdate.com]
• Decision: The Court held the manufacturer’s taxable amount equals its selling price less the amount actually reimbursed under the coupons. By the fundamental principle of VAT neutrality, the tax authority cannot collect more than the tax borne by the final consumer. This landmark ruling established that promotional reimbursements down the chain reduce the manufacturer’s taxable base even without a direct contractual link to the consumer. [vatupdate.com]

C‑300/12 (Ibero Tours) – Granting of price discounts to customers – Taxable amount for services by an intermediary

• Facts: Ibero Tours, a travel agent, acted as an intermediary arranging travel services supplied by tour operators to travellers, earning commission from the operators. To attract customers, Ibero Tours funded price reductions to travellers out of its own commission. It argued that, following Elida Gibbs, these self‑funded discounts should reduce the taxable amount of the intermediary services it supplied to the tour operators.
• Question: The referring court asked whether the Elida Gibbs principles apply to an intermediary who grants, from its own funds, a price reduction to the final consumer of the principal service, so that the intermediary may correspondingly reduce the taxable amount of its own (intermediary) service supplied to the tour operator, or whether that reasoning is confined to supply chains.
• Decision: The Court held Elida Gibbs does not apply. A travel agent acting as intermediary cannot reduce the taxable amount of its intermediary service by discounts it grants travellers, because it is not part of the chain of supply of the travel service itself. The discount does not reduce the consideration (commission) the agent receives for its distinct intermediary service to the tour operator.

C‑462/16 (Boehringer Ingelheim Pharma) – Discounts reduced the VAT value of pharmaceutical supplies

• Facts: Boehringer Ingelheim Pharma supplied medicinal products in Germany through wholesalers and pharmacies to persons covered by private health insurance. Under German law, the company was legally obliged to grant rebates to the private health insurers, who had reimbursed their insured members for the medicines. The company argued these mandatory rebates reduced the consideration it ultimately retained and therefore its taxable amount.
• Question: The referring court asked whether Article 90 of the VAT Directive, in light of Elida Gibbs and the neutrality principle, entitles a pharmaceutical company to reduce its taxable amount by discounts it is legally required to grant to a private health insurance company—even though that insurer is not a direct customer or a link in the chain of supply of the medicines.
• Decision: The Court held that the company may reduce its taxable amount by the statutory rebate granted to the private health insurer. Applying Elida Gibbs and the neutrality principle, the private insurer is to be treated as the final consumer, so the manufacturer’s consideration is reduced by the mandatory discount. VAT cannot exceed the amount the manufacturer ultimately retains from the supply.

C‑684/18 (World Comm Trading) – Revision of input VAT on later‑awarded rebates

• Facts: World Comm Trading, a Romanian distributor, bought Nokia products supplied both intra‑Community (from Finland, Germany, Hungary) and domestically within Romania. Nokia granted quarterly volume discounts calculated across all supplies regardless of place of supply, issuing a single credit invoice each quarter bearing its Finnish VAT number, even where some discounted goods had been supplied domestically in Romania. The Romanian authority required adjustment of the distributor’s input VAT deduction. [vatupdate.com]
• Question: The referring court asked whether Articles 90 and 184–186 of the VAT Directive require a taxable person to adjust its initial input VAT deduction following volume rebates on domestic supplies, and whether that adjustment can be resisted on the ground that the supplier’s rebate invoice referenced a foreign VAT number and no separate local (Romanian) invoice had been issued for the domestic element. [vatupdate.com]
• Decision: The Court held that, following a price reduction on domestic supplies, the distributor must adjust its input VAT deduction under Articles 184–186. The fact that the supplier’s rebate invoice bore a foreign VAT number, or that a formally compliant local invoice was lacking, cannot prevent the tax authority from requiring that adjustment, since VAT neutrality demands the deduction reflect the actual, reduced consideration. [vatupdate.com]

C‑717/19 (Boehringer Ingelheim, Hungary) – Reduction of the taxable amount even if not established on a commercial policy

• Facts: Boehringer Ingelheim RCV supplied subsidised medicines in Hungary and made payments to the state health insurance body (NEAK) under voluntary funding agreements, calculated by reference to the volume of subsidised products. It sought to reduce its VAT taxable amount by these payments. The Hungarian authority resisted, partly because the payments were not classic promotional discounts and no invoice evidenced them. [vatupdate.com]
• Question: The referring court asked whether Article 90(1) permits reducing the taxable amount where a pharmaceutical company pays part of the price to the state health insurer under a voluntary agreement (not framed as a commercial‑policy discount), and whether Article 273 allows national law to make such reduction conditional on holding an invoice in the company’s name evidencing the payment. [vatupdate.com]
• Decision: The Court held that Article 90(1) allows the reduction even if the payments do not arise from a commercial‑policy discount, since the company does not ultimately retain that part of the price. Under the neutrality and proportionality principles, the absence of an invoice cannot bar the reduction where the taxpayer can prove the transaction through other documentary evidence, so overly strict formal conditions are precluded. [vatupdate.com]

C‑802/19 (Firma Z) – Adjustments of taxable amount – Domestic and intra‑Community supplies of medicinal products – Discounts under health insurance schemes

• Facts: Firma Z, a pharmacy established in the Netherlands, supplied prescription medicines by mail order to persons in Germany covered by statutory health insurance. It granted rebates to those insured members. The supplies to the statutory health insurance funds were treated as exempt intra‑Community supplies in Germany. Firma Z argued the rebates to insured persons reduced its taxable amount, relying on the Boehringer C‑462/16 reasoning.
• Question: The referring court asked whether a pharmacy making an exempt intra‑Community supply into Germany may reduce its taxable amount under Article 90 by discounts granted to statutory‑health‑insured persons, and whether the Boehringer C‑462/16 principle (private insurance) can be extended to a statutory scheme where the taxable domestic transaction and the recipient of the discount are not aligned in the same supply chain.
• Decision: The Court held Firma Z could not reduce its taxable amount. Unlike Boehringer C‑462/16, the pharmacy’s supply to the statutory health insurance fund was an exempt intra‑Community supply, not a taxable transaction in Germany. Since the discount to insured persons did not relate to a taxable domestic supply by the pharmacy, there was no taxable amount to adjust, so no reduction was permissible.

C‑248/23 (Novo Nordisk) – Reduction of taxable amount on ex‑lege payments to the state health insurance agency

• Facts: Novo Nordisk supplied subsidised medicines in Hungary and, in addition to contractual payments, made statutory (“ex lege”) payments to the state health insurance body (NEAK), calculated as a percentage of the public‑funding subsidy on its products. These mandatory payments were imposed by law rather than agreed commercially. Novo Nordisk sought to treat them as reducing its VAT taxable amount for the subsidised medicines supplied.
• Question: The referring court asked whether Article 90(1) of the VAT Directive covers compulsory, statutory payments a pharmaceutical company makes to the state health insurance agency—calculated on the turnover of publicly subsidised medicines—so that they qualify as a retroactive price reduction reducing the taxable amount, in the same way as the contractual payments previously accepted in the Boehringer line of case law.
• Decision: The Court held that such ex‑lege payments, made by a pharmaceutical company to the state health insurance agency and calculated on the turnover of subsidised medicines, do reduce the taxable amount under Article 90(1). Consistent with Boehringer, the company does not retain that portion of the price; the statutory nature of the payment does not prevent it from constituting a price reduction after the supply.