Flashback on ECJ cases C-380/99 (Bertelsmann) – The taxable amount for the supply of a bonus in kind includes the delivery cost

On July 3, 2021, the ECJ issued its decision in the case C-380/99 (Bertelsmann).

Context: Sixth VAT Directive – Article 11A(1)(a) – Taxable amount – Delivery costs of bonuses in kind

Article in the EU VAT Directive

Article 11A(1)(a) of the Sixth VAT Directive (Article 73 of the EU VAT Directive 2006/112/EC).

Article 73 (Taxable amount)
In respect of the supply of goods or services, other than as referred to in Articles 74 to 77, the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price of the supply.

Facts

Bertelsmann is the controlling company of a group of companies carrying on business as book and record clubs. During the years 1985 to 1990, group companies gave bonuses in kind, such as books, records and bicycles, to existing club members in return for the introduction of new members. Those companies bought the bonuses in kind from third-party suppliers and bore the costs of delivering those bonuses to the introducing members.
In the notices of assessment for the years 1985 to 1990, the Finanzamt decided that the supplies of the bonuses in kind constituted transactions akin to an exchange and included in the taxable amount of those transactions the costs of delivering the bonuses borne by those companies besides their purchase price.
Since it considered that the inclusion of the costs of delivery in the taxable amount of supplies of bonuses in kind was not in accordance with the Sixth Directive, Bertelsmann brought, without prior administrative procedure, a ‘leap-frog’ action (‘Sprungklage’) before the Finanzgericht Münster (Finance Court, Munster).

Questions

Is Article 11A(1)(a) of the Sixth Council Directive of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes (77/388/EEC) to be interpreted as meaning that the taxable amount in respect of the supply of a bonus payable in kind, which is sent to the recipient in exchange for recruiting a new client, includes not only the purchase price of the bonus but also the delivery costs?

AG Opinion

Article 11A(1)(a) of the 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 is to be interpreted as meaning that the taxable amount in respect of the supply of a bonus payable in kind, which is sent to the recipient in exchange for recruiting a new customer, includes not only the purchase price of the bonus but also the delivery costs.

Decision

Article 11A(1)(a) of the 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, is to be interpreted as meaning that the taxable amount for the supply of a bonus in kind constituting consideration for the introduction of a new customer includes, besidesthe purchase price of that bonus, the costs of delivery, when they are paid by the supplier of the bonus.

Summary

The taxable amount for the delivery of a premium in kind, which constitutes the consideration for bringing in a new customer, also includes, in addition to the purchase price of that premium, the shipping costs, if those costs are borne by the supplier of the premium.

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