- Sellers of subscription models often offer promotional gifts to attract new customers
- The question arises whether the promotional gift is a separate supply or part of the main supply
- Tax authorities have previously classified the supply of a magazine with a gift as a single supply at a reduced VAT rate
- Recent case law has rejected a single supply and taxed the promotional gifts separately at the standard rate
- The ECJ ruled that the subscription reward is a dependent ancillary supply to the main supply of the magazine
- Two criteria were established for the qualification of the subscription reward as an ancillary supply
- The legal consequence is that the monthly subscription installment is the uniform consideration for two supplies
- The ECJ’s criteria are likely to apply to promotional gifts in connection with supplies of goods and services
- The classification as an ancillary supply can become problematic if the main supply is VAT-exempt
- If the criteria are not fulfilled, the gift may be subject to VAT as a supply carried out free of charge.
Source: kmlz.de
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
