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

Click HERE For more episodes in this serie: ECJ VAT Cases – Link to the relevant article in the EU VAT Directive 2006/112/EC

Last update: October 16, 2026

Slide deck

Importance of Articles 79, 87 and 90

Neutrality anchor: Articles 79, 87 and 90 ensure VAT is levied only on the consideration actually received, so that the tax authority never collects more VAT than the final consumer actually paid.
Commercial everyday reality: Discounts, rebates, coupons, loyalty points and bonuses are used daily in FMCG, retail and pharma; their VAT treatment directly drives invoicing, credit notes and ERP pricing logic.
Rich and evolving case law: From Elida Gibbs to Lyko and the pending Sandoz Hungária case, the Court keeps refining chain rebates, statutory paybacks and loyalty schemes, creating audit and refund opportunities.

Text of the articles in the VAT Directive 2006/112/EC

Articles 79, 87 and 90 are quoted as they appear in Council Directive 2006/112/EC of 28 November 2006, applicable from 1 January 2007. To our knowledge their wording has not been amended since; this should be confirmed against the latest consolidated version on EUR-Lex before publication.

Article 79

The taxable amount shall not include the following factors:

(a) price reductions by way of discount for early payment;

(b) price discounts and rebates granted to the customer and obtained by him at the time of the supply;

(c) amounts received by a taxable person from the customer, as repayment of expenditure incurred in the name and on behalf of the customer, and entered in his books in a suspense account.

The taxable person must furnish proof of the actual amount of the expenditure referred to in point (c) of the first paragraph and may not deduct any VAT which may have been charged.

Article 87

The taxable amount shall not include the following factors:

(a) price reductions by way of discount for early payment;

(b) price discounts and rebates granted to the customer and obtained by him at the time of importation.

Article 90

In the case of cancellation, refusal or total or partial non-payment, or where the price is reduced after the supply takes place, the taxable amount shall be reduced accordingly under conditions which shall be determined by the Member States.
In the case of total or partial non-payment, Member States may derogate from paragraph 1.

Equivalent provisions in the Sixth VAT Directive 77/388/EEC

The VAT Directive recast the Sixth Directive without changing its substance. Article 79 corresponds to Article 11A(3), Article 87 to Article 11B(4) and Article 90 to Article 11C(1). The general rule on the taxable amount in Article 73 corresponds to Article 11A(1)(a), which explains why the older judgments below interpret Article 11A rather than Articles 79 or 90.

Sixth Directive 77/388/EEC	VAT Directive 2006/112/EC	Subject
Art. 11A(1)(a)	Art. 73	Taxable amount – consideration incl. third-party payments
Art. 11A(3)(a)	Art. 79(a)	Discount for early payment
Art. 11A(3)(b)	Art. 79(b)	Price discounts and rebates at time of supply
Art. 11A(3)(c)	Art. 79(c)	Disbursements in suspense account
Art. 11B(4)	Art. 87	Importation – discounts and rebates
Art. 11C(1), first subpara.	Art. 90(1)	Post-supply reduction of taxable amount
Art. 11C(1), second subpara.	Art. 90(2)	Derogation for non-payment
Art. 5(6)	Art. 16	Gifts / disposals free of charge

Article 11A(3)

The taxable amount shall not include:

(a) price reductions by way of discount for early payment;

(b) price discounts and rebates allowed to the customer and accounted for at the time of the supply;

(c) the amounts received by a taxable person from his purchaser or customer as repayment for expenses paid out in the name and for the account of the latter and which are entered in his books in a suspense account. The taxable person must furnish proof of the actual amount of this expenditure and may not deduct any tax which may have been charged on these transactions.

Article 11B(4) [as amended by Directive 91/680/EEC – wording to be checked against EUR-Lex]

The taxable amount shall not include those factors referred to in A(3)(a) and (b).

Article 11C(1)

In the case of cancellation, refusal or total or partial non-payment, or where the price is reduced after the supply takes place, the taxable amount shall be reduced accordingly under conditions which shall be determined by the Member States.

However, in the case of total or partial non-payment, Member States may derogate from this rule.

ECJ cases – Decided

Click on Number + Name case to open the newsitem of the case

C-230/87 – Naturally Yours Cosmetics (1988) – The taxable amount is a subjective value which must be capable of being expressed in monetary terms

Facts: Naturally Yours sold cosmetics to beauty consultants, who resold them at private parties organised by hostesses. As a reward for organising a party, the consultant could obtain a pot of cream for the hostess at a much lower wholesale price than normal. The UK authorities considered that the hostess’s service of organising the party formed part of the consideration for the cream.
Issue: Where goods are supplied at a reduced price in return for a non-monetary service (arranging a party), is the taxable amount limited to the money actually paid, or does it also include the value of that service? If so, how should that value be measured in monetary terms under the Second/Sixth Directive?
Decision: The Court held that the consideration consists of the money paid plus the service of the hostess. Because there is a direct link between the reduced price and the service, the value of that service forms part of the taxable amount. That value is subjective and corresponds to the difference between the normal wholesale price and the reduced price actually charged.
Articles discussed: Sixth Directive Art. 11A(1)(a) (now VAT Directive Art. 73); Second Directive Art. 8(a) – to be checked against the judgment.

C-126/88 – Boots Company (1990) – Concept of “price discounts and rebates” – price discount on surrender of a voucher obtained free of charge with a previous purchase

Facts: Boots, a UK retailer, ran a promotion under which customers buying certain products received a money-off coupon free of charge. On a later purchase, the coupon could be surrendered to obtain a reduction of the price. The UK authorities argued that the face value of the coupon was part of the consideration for the later sale and should be taxed.
Issue: Does a coupon, given free with an earlier purchase and later surrendered against a reduced price, constitute part of the consideration for the second supply, or is it a ‘price discount or rebate allowed to the customer and accounted for at the time of supply’ that is excluded from the taxable amount?
Decision: The Court held that the coupon is not consideration. It represents a price discount granted at the time of the second supply. Only the cash actually paid by the customer forms the taxable amount. A coupon issued free of charge with a previous purchase falls within the concept of ‘price discounts and rebates’ under Article 11A(3)(b) of the Sixth Directive.
Articles discussed: Sixth Directive Art. 11A(1)(a) and Art. 11A(3)(b) (now VAT Directive Arts. 73 and 79(b)).

C-33/93 – Empire Stores (1994) – Delivery, without additional payment, of an article to a person who registers himself or another as a new customer

Facts: Empire Stores, a UK mail-order company, offered a ‘free’ article (e.g. a household item) to persons who introduced a new customer or who themselves became a new customer and made a first purchase. The articles were bought by Empire from third parties. The question arose how the supply of these introductory gifts should be valued for VAT.
Issue: Is the supply of an article given in return for introducing a new customer (or for becoming one) a supply for consideration, and if so, is the taxable amount the price Empire paid for the article, or its normal retail value, or something else?
Decision: The Court held that the article is supplied in return for a service (the introduction of a customer), so it is a supply for consideration rather than a gift. The consideration is non-monetary and must be valued subjectively. Where the article was purchased from a third party, its value corresponds to the price paid by the supplier for that article.
Articles discussed: Sixth Directive Art. 2(1), Art. 5(6) and Art. 11A(1)(a) – to be checked against the judgment.

C-288/94 – Argos Distributors (1996) – Taxable amount of a voucher is the sum actually received by the supplier upon the sale of the voucher

Facts: Argos sold vouchers in bulk to businesses, which used them as staff incentives. The vouchers were sold at a discount from their face value, depending on the volume purchased. Holders could redeem the vouchers in Argos stores at face value. The UK authorities sought to tax the redemption supplies on the full face value of the vouchers.
Issue: When goods are paid for with a voucher that was originally sold at a discount, is the taxable amount of the redemption supply the face value of the voucher or the amount actually received by the supplier when it sold the voucher?
Decision: The Court held that the consideration for the goods is the money actually received by Argos for the voucher, i.e. the discounted price. The taxable amount is a subjective value: what the supplier actually received. Argos cannot be taxed on the face value, as the difference was never received; any other result would breach the principle that tax is levied on actual consideration.
Articles discussed: Sixth Directive Art. 11A(1)(a) and Art. 11A(3)(b) (now VAT Directive Arts. 73 and 79).

C-317/94 – Elida Gibbs (1996) – Money-back and discount coupons – taxable amount to be adjusted

Facts: Elida Gibbs, a UK manufacturer of toiletries, sold to wholesalers and retailers. It issued money-off coupons that retailers accepted from consumers and that Elida Gibbs reimbursed, as well as cash-back coupons under which it paid consumers directly. The manufacturer itself had no contractual relationship with the final consumers who used the coupons.
Issue: Can a manufacturer that reimburses the value of money-off or cash-back coupons to retailers or final consumers reduce the taxable amount of its own original supply, even though the reduction is granted further down the chain and not to its direct customer?
Decision: The Court held that the taxable amount of the manufacturer’s supply is the price received less the coupon value reimbursed. The tax authorities may not collect more VAT than the tax actually paid by the final consumer. The intermediate supplies in the chain are unaffected, and VAT neutrality is preserved.
Articles discussed: Sixth Directive Art. 11A(1)(a), Art. 11C(1) and Art. 2 (First Directive) (now VAT Directive Arts. 73 and 90(1)).

C-48/97 – Kuwait Petroleum (GB) (1999) – Sales promotion and consideration – redemption goods are not a price discount [NEW]

Facts: Kuwait Petroleum ran a ‘Q8’ promotion: for every 12 litres of fuel purchased, customers received a voucher. Vouchers could be redeemed for goods from a gift catalogue. The fuel price was the same whether or not vouchers were taken. Kuwait argued that part of the fuel price paid for the redemption goods; the UK authorities treated the goods as free gifts.
Issue: Are redemption goods supplied for consideration (part of the fuel price) or free of charge under Article 5(6)? And can the redemption be treated as a ‘price discount or rebate’ under Article 11A(3)(b) that reduces the taxable amount?
Decision: The Court held that ‘rebates’ and ‘price discounts’ cannot cover a reduction equal to the full cost of the redemption goods. Where no part of the fuel price represents the vouchers or goods, their supply is a disposal free of charge, treated as a supply for consideration under Article 5(6) unless the goods are of small value.
Articles discussed: Sixth Directive Art. 2(1), Art. 5(6), Art. 11A(3)(b) and Art. 27 (now VAT Directive Arts. 2(1), 16, 79(b) and 395).

C-86/99 – Freemans (2001) – Discount obtained at the time of supply – price reduction after the supply

Facts: Freemans, a UK mail-order company, sold goods through agents who bought for themselves and others. Agents paid the catalogue price in instalments and were credited with a 10% commission on each payment, which they could withdraw in cash or use against future purchases. The UK authorities disputed when and how the discount reduced the taxable amount.
Issue: Is the taxable amount the full catalogue price, with a later reduction, or the catalogue price less the discount from the outset, given that the discount is only credited when payments are made and may be used in different ways?
Decision: The Court held that the taxable amount is the catalogue price less the 10% discount credited to the agent’s account when the agent pays. The discount is a price reduction obtained at the time of supply under Article 11A(3)(b), irrespective of whether the agent later withdraws it or uses it for future purchases; any subsequent reduction falls under Article 11C(1).
Articles discussed: Sixth Directive Art. 11A(1)(a), Art. 11A(3)(b) and Art. 11C(1) – to be checked against the judgment.

C-380/99 – Bertelsmann (2001) – The taxable amount for the supply of a bonus in kind includes the delivery cost

Facts: Bertelsmann, a German book and record club, rewarded existing members who recruited new members with a bonus in kind (a premium item), sent to them on dispatch of the new member’s first order. The new member paid for his own order, including shipping. The dispute concerned the value of the bonus for VAT purposes.
Issue: How should the taxable amount of a bonus in kind, given as consideration for the recruitment of a new member, be determined, and in particular, should the delivery costs borne by the club for sending the bonus be included?
Decision: The Court held that the bonus is supplied in return for the recruitment service, so the consideration is non-monetary. Its value is the purchase price paid by the club for the bonus, and this includes the delivery costs the club incurred in sending it, since the member would have to pay those costs to obtain the item himself.
Articles discussed: Sixth Directive Art. 11A(1)(a) (now VAT Directive Art. 73).

C-62/00 – Marks & Spencer (2002) – Adoption of national measures correctly implementing a directive does not exhaust the effects of the directive

Facts: Marks & Spencer sold gift vouchers at a discount to businesses and had accounted for VAT on the face value of redeemed vouchers. After Argos (C-288/94), it claimed repayment of overpaid VAT. The UK then introduced, with retroactive effect, a three-year limitation period for repayment claims, without any transitional arrangements, which cut most of the claim.
Issue: Can a taxable person still rely on the Sixth Directive’s taxable-amount rules after national law has been brought in line, and is a retroactive shortening of the repayment period without transitional arrangements compatible with EU law?
Decision: The Court held that individuals may rely on a directive provision even after its correct implementation, if national application does not achieve the result sought. A retroactive reduction of the limitation period without transitional arrangements infringes the principles of effectiveness and legitimate expectations. Marks & Spencer could therefore pursue its claim.
Articles discussed: Sixth Directive Art. 11A(1)(a) and general principles (effectiveness, legitimate expectations) – to be checked against the judgment.

C-427/98 – Commission v Germany (2002) – Adjustment of taxable amount in case of money-off coupons

Facts: After Elida Gibbs, Germany did not provide in its legislation for manufacturers to reduce the taxable amount when they reimbursed money-off or money-back coupons to retailers or consumers. The Commission brought infringement proceedings, arguing that Germany had failed to fulfil its obligations under the Sixth Directive.
Issue: Does the failure to allow manufacturers to reduce their taxable amount for reimbursed coupon values infringe Articles 11A(1)(a) and 11C(1) of the Sixth Directive, as interpreted in Elida Gibbs? Can practical difficulties or fraud risks justify that failure?
Decision: The Court held that Germany had failed to fulfil its obligations. Member States must provide for the reduction of the manufacturer’s taxable amount in line with Elida Gibbs. Practical difficulties or risk of fraud do not justify the failure, though Member States may lay down conditions to verify the reimbursement.
Articles discussed: Sixth Directive Art. 11A(1)(a) and Art. 11C(1) (now VAT Directive Arts. 73 and 90(1)).

C-398/99 – Yorkshire Co-operatives (2003) – The nominal value of the coupon must be included in the taxable amount in the hands of the retailer

Facts: Yorkshire Co-operatives, a retailer, accepted manufacturers’ money-off coupons from customers buying the relevant products. The customer paid a reduced price, and the retailer was then reimbursed the coupon’s face value by the manufacturer. The question was whether the retailer’s taxable amount was the reduced price paid by the customer or the full price.
Issue: For the retailer, is the taxable amount of the sale limited to the cash received from the customer, or does it also include the coupon value reimbursed by the manufacturer, which is a payment from a third party?
Decision: The Court held that the retailer receives the full price: partly in cash from the customer and partly from the manufacturer for the coupon. The coupon’s nominal value is part of the consideration under Article 11A(1)(a), including consideration from a third party. The retailer’s taxable amount is therefore the full price.
Articles discussed: Sixth Directive Art. 11A(1)(a) and Art. 11A(3)(b) (now VAT Directive Arts. 73 and 79(b)).

C-588/10 – Kraft Foods Polska (2012) – Reduction of the taxable amount conditional on acknowledgment of receipt of the correcting invoice

Facts: Kraft Foods Polska granted price reductions after supply and issued correcting invoices. Polish law allowed the supplier to reduce its taxable amount only if it held, before filing its return, acknowledgment that the customer had received the correcting invoice. Kraft could not obtain such acknowledgment for all correcting invoices.
Issue: Is a national condition making the reduction of the taxable amount after a post-supply price reduction contingent on the supplier holding acknowledgment of receipt of the correcting invoice compatible with Article 90(1) and with the principles of VAT neutrality and proportionality?
Decision: The Court held that Article 90(1) does not preclude such a condition in principle. However, neutrality and proportionality preclude refusing the reduction where it is impossible or excessively difficult to obtain acknowledgment, and the supplier shows, by other evidence, that it exercised due diligence and that the customer was aware of the reduction.
Articles discussed: VAT Directive 2006/112/EC Art. 90(1), with reference to Arts. 73, 79 and 273 – to be checked against the judgment.

C-300/12 – Ibero Tours (2014) – Granting of price discounts to customers – taxable amount for services by an intermediary

Facts: Ibero Tours, a German travel agent, acted as an intermediary for tour operators and received commission from them. To attract customers, it granted travellers price discounts on the holidays it sold, funded from its own commission. The travellers paid the reduced price; the tour operator’s VAT position remained based on its full price.
Issue: Can an intermediary that grants a discount to the final consumer out of its own commission reduce the taxable amount of its intermediary services, applying the Elida Gibbs principles by analogy?
Decision: The Court held that Elida Gibbs does not apply. The travel agent is not part of a chain of supplies of the same service: it supplies intermediary services to the tour operator, while the tour operator supplies the travel service to the traveller. The discount granted to the traveller does not reduce the commission received for the intermediary service.
Articles discussed: Sixth Directive Art. 11A(1)(a) and Art. 11C(1) (now VAT Directive Arts. 73 and 90(1)).

C-462/16 – Boehringer Ingelheim Pharma (2017) – Discounts reduce the VAT value of pharmaceutical supplies

Facts: Boehringer Ingelheim, a German pharmaceutical company, supplied medicines via wholesalers and pharmacies. German law obliged it to grant statutory discounts to public and private health insurers. German VAT law allowed a reduction of the taxable amount for discounts to public insurers but not for discounts to private insurers reimbursing insured persons.
Issue: Under Article 90(1) and the Elida Gibbs principles, may a pharmaceutical company reduce its taxable amount for statutory discounts granted to private health insurers, which are not its customers and not parties to the supply chain, where the private insurer reimburses the insured person?
Decision: The Court held that the discount reduces the consideration actually received by the pharmaceutical company, so its taxable amount must be reduced. Refusing the reduction for private insurers while allowing it for public insurers breaches the principle of equal treatment. The tax authorities may not collect more VAT than was received.
Articles discussed: VAT Directive 2006/112/EC Art. 90(1) and Art. 73.

C-684/18 – World Comm Trading Gfz (2020) – Global rebates required local adjustments

Facts: World Comm Trading, a Romanian company, purchased mobile phones from an EU supplier and accounted for VAT on the purchases. The supplier later granted it rebates, documented by credit notes. The Romanian tax authorities required an adjustment of the input VAT deducted, while the company argued that no adjustment was needed because the supplier’s taxable amount had not been corrected.
Issue: Where a supplier grants a rebate after the supply, must the purchaser adjust the input VAT it originally deducted, even if the supplier has not reduced its own taxable amount, and how does Article 90 interact with the deduction-adjustment rules in Articles 184 to 186?
Decision: The Court held that the VAT Directive requires the adjustment of the deduction where the price is reduced after the supply. The purchaser must adjust its input VAT to reflect the rebate obtained, irrespective of whether the supplier corrected its own taxable amount. The rebate is a factor that changes the amount of the deduction. To be checked against the judgment.
Articles discussed: VAT Directive 2006/112/EC Art. 90 and Arts. 184–186 – to be checked against the judgment.

C-717/19 – Boehringer Ingelheim RCV (2021) – Reduction of the taxable amount – agreement between pharmaceutical company and health insurer

Facts: The Hungarian branch of Boehringer Ingelheim sold medicines that were subsidised by the Hungarian national health insurance fund. Under a contract with the fund, the company paid back part of its turnover from those medicines. Hungarian law did not allow the company to reduce its taxable amount for these payments.
Issue: Does Article 90(1) preclude national legislation that refuses a reduction of the taxable amount for payments that a pharmaceutical company makes to the public health insurer under an agreement relating to subsidised medicines supplied through the distribution chain?
Decision: The Court held that payments made to the health insurer, which finance the subsidy on the same medicines, are a reduction of the price after the supply within Article 90(1). The company does not receive the full consideration, so the taxable amount must be reduced. Member States cannot refuse the reduction.
Articles discussed: VAT Directive 2006/112/EC Art. 90(1) and Art. 73.

C-802/19 – Firma Z (2021) – Adjustments of taxable amount – domestic and intra-Community supplies of medicinal products – discounts under health insurance schemes

Facts: Firma Z, a pharmaceutical company established in Germany, supplied medicines either via wholesalers in Germany or directly by way of exempt intra-Community supplies to pharmacies in another Member State, which then supplied German patients. It granted statutory discounts to health insurers in Germany and sought to reduce its taxable amount for all such discounts.
Issue: Can a pharmaceutical company reduce its taxable amount for discounts granted to a health insurer when the medicines were supplied through an exempt intra-Community supply to a pharmacy established in another Member State, rather than through a domestic taxable supply chain?
Decision: The Court held that a reduction of the taxable amount under Article 90(1), applying the Elida Gibbs principles, is not available where the first supply in the chain is an exempt intra-Community supply, because no VAT was charged on that supply that could be reduced. For taxable domestic supplies via wholesalers, the reduction is available.
Articles discussed: VAT Directive 2006/112/EC Arts. 73, 90(1) and 138 – to be checked against the judgment.

C-248/23 – Novo Nordisk (2024) – Reduction of the taxable amount on ex lege payments to the State health insurance agency

Facts: Novo Nordisk, a Hungarian pharmaceutical company, was obliged by law to pay a percentage of its turnover from subsidised medicines to the State health insurance agency. These statutory payments were used to finance subsidies on medicines. Hungarian law did not allow a reduction of the taxable amount for the payments, which were treated as taxes rather than price reductions.
Issue: Does Article 90(1) preclude national legislation that refuses a reduction of the taxable amount for payments made ex lege (by statute) by a pharmaceutical company to the State health insurer, where those payments relate to subsidised medicines supplied in the chain?
Decision: The Court held that such ex lege payments may constitute a price reduction after the supply within Article 90(1), where they are directly linked to the supplies of the subsidised medicines and reduce the consideration effectively received. National legislation denying the reduction in such cases is precluded. To be checked against the judgment.
Articles discussed: VAT Directive 2006/112/EC Art. 73 and Art. 90(1) – to be checked against the judgment.

C-436/24 – Lyko Operations (2026) – Loyalty points in customer reward schemes are not VAT vouchers

Facts: Lyko Operations, a Swedish retailer of hair-care and beauty products, planned a loyalty programme. Customers earn points on purchases, which can be redeemed for low-value products in a ‘points shop’, but only together with a new purchase. Points are personal, non-transferable, cannot be bought or exchanged for cash, and expire after two years.
Issue: Do such loyalty points qualify as a ‘voucher’ under Article 30a of the VAT Directive, and if so, how is the taxable amount to be determined under Article 73a when the points are redeemed?
Decision: On 5 March 2026 the Court held that the points are not vouchers. A voucher requires an obligation to accept it as consideration for a supply. Lyko’s points only give access to a bonus item conditional on a new purchase and function as a discount mechanism. The second question did not need to be answered.
Articles discussed: VAT Directive 2006/112/EC Arts. 30a, 30b and 73a.

ECJ / General Court cases – Pending

T-361/26 – Sandoz Hungária (2026) – Reduction of the taxable amount – ex lege payments funding medicine subsidies

Context: Request for a preliminary ruling lodged on 19 May 2026 by the Fővárosi Törvényszék (Budapest High Court) and handled by the General Court. Hungarian law requires companies promoting medicines to make a fixed monthly payment per employed medical representative, which is transferred to the national health insurance fund (NEAK) to fund the purchase-price subsidy on prescribed medicines. Sandoz filed a corrected return reducing its VAT by HUF 161,031,000.
Questions: Does Article 90(1) preclude national legislation under which a pharmaceutical company that pays ex lege a portion of its revenue to the national health insurer, as payment for employing medical representatives, may not subsequently reduce its taxable amount, even though the insurer uses the full amount to fund discounts on that company’s products?
Relevance: The case tests how far Novo Nordisk (C-248/23) and Boehringer Ingelheim (C-717/19) extend to levies calculated by reference to sales staff rather than to sales. The outcome will matter for any statutory payment that indirectly funds consumer price reductions. No hearing date or opinion is known at the time of writing.
Articles discussed: VAT Directive 2006/112/EC Art. 73, Art. 90(1) and Art. 90(2) (as listed in the VATupdate article).