Flashback on ECJ Cases – C-461/12 (Granton Advertising) – No exemption for the sale of a discount card

On June 12, 2014, the ECJ issued its decision in the case C-461/12 (Granton Advertising).

Context: Reference for a preliminary ruling — Sixth VAT Directive — Exemptions — Article 13(B)(d)(3) and (5) — ‘Other securities’ and ‘other negotiable instruments’ — Sales promotion scheme — Discount card — Taxable amount)

Article in the EU VAT Directive

Articles 13(B)(d)(3) and (5) of the Sixth Directive (Art. 135(1)(d), 135(1)(f) of the EU VAT Directive 2006/112/EC)

Article 135
1. Member States shall exempt the following transactions:
(d) transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection;
(f) transactions, including negotiation but not management or safekeeping, in shares, interests in companies or associations, debentures and other securities, but excluding documents establishing title to goods, and the rights or securities referred to in Article 15(2);


  • The facts in the main proceedings took place between 2001 and 2005, during which time Granton Advertising, a company incorporated under Netherlands law (known until 7 June 2004 as Granton Marketing BV), issued and sold ‘Granton’ cards (‘the Granton cards’). Those cards — which were sold to consumers at a price of between EUR 15 and EUR 25 — entitled their holder to a certain number of goods and services on preferential terms from retailers and businesses, such as restaurants, cinemas, hotels or saunas, which had concluded an agreement to that effect with Granton Advertising (‘the affiliated businesses’). The Granton cards were available in sales offices which were paid by Granton Advertising for each Granton card sold.
  • It can be seen from the terms of the model agreement concluded between Granton Advertising and the affiliated business, quoted by the referring court, that the affiliated businesses’ objective, in collaborating with Granton Advertising, was to attract customers to purchase their goods and services. For that purpose, the affiliated businesses agreed to accept valid Granton cards presented to them and to provide the goods and/or services specified on each Granton card, up to the maximum upper limit on the value of transactions indicated on that card.
  • It can be seen, moreover, from the terms of that model agreement that Granton Advertising was responsible for the manufacture, production, promotion and sale of the Granton cards. Once the agreement was signed, Granton Advertising did not charge the affiliated businesses anything in respect of the Granton cards, nor did it receive any fees from those businesses.
  • As regards the characteristics of those cards, the referring court indicates that each Granton card entitled its holder to a discount on orders from the businesses specified on the card in question. The discount was given on the offers specified on each card, which differed depending on the arrangements agreed between the affiliated business and Granton Advertising. Those discounts were obtained by presenting the card, by surrendering a coupon which accompanied the card or by having the card signed by the affiliated business concerned. In many cases, Granton card holders could also obtain, as other benefits, two units of the good or service proposed for the price of one. Furthermore, the Granton cards were designed in such a way that the holder benefited even if it were used only once. In a certain number of cases, during the period of validity of the card, often six months, the offer or offers specified thereon could be used several times or even daily.
  • In addition, the Granton cards were not personal but transferable. They could not, however, be exchanged for money or goods.
  • In 2005, the Inspector carried out an audit of Granton Advertising’s accounts. Considering that the sale of Granton cards by that company constituted a transaction subject to VAT, the Inspector sent it an additional VAT assessment. After the lodging of the objection made by Granton Advertising, the amount of that additional assessment was set at EUR 643 567.
  • Granton Advertising, taking the view that the sale of Granton cards was exempt from VAT, brought an action before the Rechtbank Breda (Court of First Instance, Breda) against the Inspector’s decision. However, the Rechtbank Breda dismissed Granton Advertising’s action, holding that the Granton cards did not constitute ‘other securities’ or ‘other negotiable instruments’ within the meaning of the Sixth Directive, given, inter alia, the context in which those concepts are used in the directive and their meaning in Dutch as well as in other language versions of the directive. Moreover, according to the Rechtbank Breda, those concepts must be interpreted restrictively.
  • Granton Advertising brought an appeal against that decision of the Rechtbank Breda before the referring court, the Gerechtshof te ’s-Hertogenbosch (Court of Appeal, ’s-Hertogenbosch). That court takes the view that the concepts ‘other securities’ or ‘other negotiable instruments’ could be given a broader interpretation than that adopted by the Rechtbank Breda. That court nevertheless considers that neither the legislative history of the directive, nor the academic literature, nor the existing case-law allows the scope of those concepts to be determined in a context such as that of the main proceedings.


Should the expression ‘other securities’ in Article 13 B(d)[5] of the Sixth Council Directive 77/388/EEG 2 (as of 1 January 2007, Article 135(1)(f) of the Eighth Directive 2006/112/EG, subsequently amended) be interpreted as covering a Granton card, being a transferable card which is used for the (partial) payment for goods and services, and if so, is the issuing and sale of such a card therefore exempt from the levying of turnover tax?
If not, should the expression ‘other negotiable instruments’ in Article 13 B(d)(3), of the Sixth Council Directive 77/388/EEG (as of 1 January 2007, Article 135(1)(d) of the Eighth Directive 2006/112/EG, subsequently amended) be interpreted as covering a Granton card, being a transferable card which is used for the (partial) payment for goods and services, and if so, is the issuing and sale of such a card therefore exempt from the levying of turnover tax?
If a Granton card is an ‘other security’ or ‘other negotiable instrument’ in the aforementioned sense, is it important for the question of whether the issuing and sale thereof is exempt from the levying of turnover tax that, when that card is used, a levy on (a proportionate part of) the fee paid for it is, for all practical purposes, illusory?

AG Opinion

A discount card such as the Granton card is neither an ‘other security’ within the meaning of Article 13(B)(d)(5) of the Sixth Directive nor an ‘other negotiable instrument’ within the meaning of Article 13(B)(d)(3) of that directive.


Article 13(B)(d) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization 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 sale of a discount card, such as that at issue in the main proceedings, does not constitute a transaction in ‘other securities’ or concerning ‘other negotiable instruments’, within the meaning, respectively, of paragraphs 5 and 3 of that provision, which refers to certain transactions which the Member States must exempt from value added tax.


The sale of a discount card is not a transaction concerning ‘other securities’ or ‘other commercial papers’ which Member States are required to exempt from VAT.


Similar ECJ cases


How did countries implement the case?  Your feedback appreciated!  Let us know

  • Netherlands – Taxlive: The Court of Appeal of ‘s-Hertogenbosch rules on appeal that the issue and sale of the Grantoncards is not exempt from VAT. Granton Advertising bv also unsuccessfully invokes the principle of legitimate expectations and the principle of equality. The Supreme Court ruled that the pleas or complaints cannot lead to cassation (art. 81 RO Act).



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