EGC – C-914/25 (Modelo Continente Hipermercados) – Questions – VAT adjustment on discount coupons; valid proof for consumers?

The General Court issued the preliminary ruling request in the case T-914/25 (Modelo Continente Hipermercados).

Articles in the Sixth VAT Directive 2006/112/EC

Article 11(A)(3)(b): This article outlines that the taxable amount shall not include price discounts and rebates allowed to the customer and accounted for at the time of the supply. It establishes the principle that discounts granted to customers must be reflected in the taxable amount for VAT.
Article 11(C)(1): This article addresses the adjustment of the taxable amount in cases of discounts and rebates, stating that VAT should be reduced accordingly and that the relevant legal formalities must be followed.

Corresponding articles in the EU VAT Directive 2006/112/EC

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.

Facts and background

Appellant: Modelo Continente Hipermercados S.A. (MCH) is involved in a dispute regarding the application of VAT on discount coupons issued to customers during initial purchases.
Discount Coupons: MCH issued discount coupons to customers that could be redeemed on subsequent purchases. These coupons represented a nominal value that included VAT.
Initial Sale and VAT Adjustment: At the time of the initial sale, MCH charged VAT based on the total value of the purchase. When customers used the discount coupons in subsequent transactions, MCH sought to adjust the VAT to reflect the value of the discount included in the coupons.
Tax Authority’s Position: The Autoridade Tributária e Aduaneira (AT) argued that MCH could not prove that customers were informed of the VAT adjustments made when using the coupons, as the coupons were issued to the bearer and did not identify the recipients.
Judicial Proceedings: MCH appealed against a lower court’s decision that rejected its claim to exclude the value of discounts from the taxable amount, asserting that the discounts were applied after the first transaction and were thus not valid under Article 16(6)(b) of the VAT Code.

Questions

Interpretation of Article 11(A)(3)(b): Should this article be understood to require that discounts must materialize at the time of granting, or can they be valid if they apply at a later point in time, such as when a customer redeems a discount coupon during a subsequent purchase?
Application of Article 11(C)(1): If discounts can materialize later, does this mean that the transaction falls within the scope of this provision? Can VAT be adjusted according to the formal requirements of Portuguese law, specifically Article 71(5) of the VAT Code, particularly concerning sales made to final consumers who are not taxable persons for VAT purposes?
Requirement for Documentation: If the previous question is answered affirmatively, does Article 11(C)(1) permit the Portuguese Tax and Customs Administration to require that documents issued in the name of the customer, showing the discount, be provided as proof of VAT refund? This question arises in light of the fact that Portuguese law does not require such documentation for the initial sale associated with the discount or the subsequent transaction where the discount is applied.

Source

Curia

Other ECJ cases referred to:

Boots Company: C-126/88 – This case dealt with the VAT treatment of discount coupons and established that the taxable amount should not include discounts granted to customers accounted for at the time of supply.
Elida Gibbs: C-317/94 – This case is referenced regarding the principle that VAT should be levied on the net amount actually received from the purchaser.
Argos: C-517/15 – The Argos case is cited concerning the understanding that discounts are not means of payment or consideration for VAT purposes and should be excluded from the taxable amount.