In some industries (e.g. manufacturing, FMCG), promotional campaigns supporting sales are regularly used, providing for the transfer of prizes to consumers or business entities whose organization is entrusted to specialized advertising agencies. As part of an organized action (e.g. a contest or lottery), the task of such an agency is, among others, to purchase and transfer of prizes. What are the VAT effects of such an action? Can the inclusion of the value of prizes in the agency’s invoice for the marketing service performed involve a VAT risk for the principal? It is worth thinking about it already at the stage of planning the action and estimating its costs.
In accordance with the uniform practice of tax authorities and administrative courts, shaped on the basis of the judgment of the Court of Justice of the European Union (” CJEU”) of 7 October 2010 in joined cases C-53/09 and C-55/09 Loyalty Management UK Ltd and Baxi Group Ltd, payments made by the principal of the campaign of an advertising agency in the part in which they cover the value of prizes provided to clients by the agency , are not included in the taxable amount of the service provided by the agency to the principal.
Source: martinitax.pl
