C-126/88

OPINION OF MR VAN GERVEN —CASE C-12Ć/88

OPINION OF MR ADVOCATE GENERAL VAN GERVEN delivered on 24 January 1990 *

Mr President, (c) ... Members of the Court,

(d) .·· ' 1. The High Court of Justice has submitted to this Court a number of questions concerning the interpretation of Article (ii) Article 11 A 3(b) of the directive: 11 A of Title VIII ('Taxable amount') of the Sixth Council Directive on the harmon­ ization of the laws of the Member States '3. The taxable amount shall not include: relating to turnover taxes. ' The questions concern in particular the following two provisions: (a) ...

(i) Article 11 A 1 (a) of the directive : (b) price discounts and rebates allowed to the customer and accounted for at the time of the supply; 'A — Within the territory of the country

(c) ... ' 1. The taxable amount shall be:

cash price equal to the amount printed on reduction equal to the value printed on the the coupon. At times the costs of this coupon. promotion are borne entirely or partly by the manufacturer of the goods concerned, at others entirely or partly by Boots itself. The parties are agreed that turnover tax is payable on the amount that Boots charges At the hearing Boots' representative the manufacturers for the proportion of the explained that the amount shown on the price reductions to be financed by them. coupon represents 5 to 31 % of the sale The dispute therefore concerns only the price of the goods subsequently purchased, price reductions granted upon the presen­ depending on the profit margin. It was tation of coupons which are borne by Boots. further pointed out at the hearing that the coupon-bearing goods and the goods subsequently purchased are not necessarily of the same kind but when supplied are in fact subject to the same rate of turnover tax.

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OPINION OF MR VAN GERVEN —CASE C-126/88

that "everything which constitutes (a) is the taxable amount in Article consideration which has been or is to 11 A 1(a) of the Sixth Council be obtained by the supplier from the Directive the sum of money purchaser, the customer or a third received by the retailer for the party" consists only of the payment of redemption goods, or money by the customer?

(b) the sum of money received by the retailer for the redemption goods (2) Does a retailer obtain consideration together with the value of the from a customer within the meaning of coupon, and if that is the case, how Article 11 A 1(a) of the Sixth Council is the value of the coupon to be Directive when he accepts from the determined, or customer a coupon entitling him to a price reduction on a purchase of the goods specified on the coupon, which coupon was given by the retailer to the (c) if neither of the above applies, what customer at the time of purchase of is the taxable amount in these other goods from the retailer at their circumstances? normal retail selling price?

(5) If "consideration" may include not only the payment of money but also the (3) Is the expression "price discounts and surrender of the coupon to the supplier rebates allowed to the customer and of the goods in question, do the accounted for at the time of supply" in provisions of Article 11 A 1 (a) prevent Article IIA 3(b) of the Sixth Council a Member State from evaluating the Directive to be interpreted to cover the taxable amount by reference to the difference between the normal retail price which the customer would have selling price of the goods supplied and to pay to obtain the goods for a the sum of money actually received by consideration wholly in money? the retailer for those goods where a coupon, obtained as above, is surrendered at the same time?

7. Both the second question and the third question are intended to ascertain whether The first question upon the purchase of goods in which a coupon obtained upon an earlier purchase is surrendered the amount printed on that coupon must be included in the taxable 6. By its first question the High Court amount. The second question is more inquires whether the only consideration particularly concerned with ascertaining envisaged by Article 11 A 1(a) of the Sixth whether that amount falls within the taxable Directive is the payment of money. All the amount because the surrender of the parties are agreed that this question must be coupon is to be regarded as consideration answered in the negative. I take the same within the meaning of Anicie 11 A 1(a) of view, for the following reasons. the directive. The point of the third question, on the other hand, is to ascertain whether that amount is excluded from the taxable amount on the ground that the coupon embodies a price discount or rebate Article 11 A 1(a) of the Sixth Directive allowed to the customer within the meaning expressly states that everything which has of Article 11 A 3(b) of the directive. been or is to be obtained by the supplier from the purchaser is liable to constitute consideration. According to the Court's judgment of 23 November 1988 in the In my view, the third question should be 2 Naturally Yours Cosmetics case, the examined before the second. For if it is provision concerned of the Sixth Directive determined that the coupon embodies a may be interpreted by taking into account right to a price discount and for that reason the corresponding provisions of the Second the amount printed thereon is excluded 3 Council Directive of 11 April 1967. In from the taxable amount, the second Annex A to the Second Directive it is question no longer needs to be examined. expressly stated (in point 13 regarding Article 8(a)) that the expression

9. Article 11 A 3(b) lays down two 10. I do not find the United Kingdom's conditions which must be fulfilled cumulat­ arguments convincing. I share Boots' and ively: (a) there must be a price discount or the Commission's view that, in the circum­ price rebate allowed to the customer; (b) the stances of the case, a price discount or price discount or rebate must be accounted rebate within the meaning of Article for at the time of the purchase or the IIA 3(b) of the directive is involved. In provision of the service. order to demonstrate this, I shall (under points 11 and 12) first define more precisely both terms as well as the term 'coupon' (point 13). I shall then examine whether a discount or rebate can be granted by means The second condition does not present any of a coupon that has to be surrendered particular difficulty in the present case once (point 14). Finally, I shall examine the it is accepted that the first condition is importance to be attached to the fact that fulfilled. On that hypothesis the customer the customer obtains the coupon only upon then obtains a 'price discount' or 'price the purchase of an article (point 15). rebate' at the time of the purchase of the goods specified on the coupon: upon surrender of the coupon he must pay only the amount equal to the sale price less the amount printed on the coupon. 11. As far as I am aware, the terms 'price discount' and 'price rebate' have no clearly distinct meaning. In any case, a difference between the two terms does not seem to matter in this case. From the juxtaposition Whether the first condition is fulfilled is, of two different terms it may in fact be however, a disputed question. Boots and the concluded that a restrictive meaning may Commission take the view that a price not be given to either of them and that for discount or rebate is indeed involved here. example both the case in which part of the The United Kingdom, however, takes the price indicated is not paid and the case in view that a price discount or rebate exists which part of the price already paid is only when the sale price is actually reduced returned to the customer at the time of 5 and that a price reduction which is purchase are meant. Thus, both terms dependent on the surrender of a coupon together refer to price reductions in the does not fall under the provision concerned. narrow sense of the word (with the Even if a price discount or price rebate can exception of 'price reductions by way of be granted by means of a coupon, the discount for early payment', which are United Kingdom still considers that there expressly mentioned in Article 11 A 3(a)).

'(1) the supply of goods or services effected 13. How are 'coupons' to be viewed in this for consideration within the territory of context? From the legal point of view, the the country by a taxable person acting coupons accepted in Boots stores may be as such; described as follows. They are (transferable) certificates of entitlement incorporating for the holder thereof, upon the purchase from a particular retailer of goods which are (2) . . . ' (my emphasis). specified on the coupons, a right to a price reduction equal to the amount printed on them. For the retailer who issues the coupons himself (which is the case here) the From the expression 'for consideration' as coupons represent the obligation to grant a well as from the definition of taxable price reduction when they are surrendered amount set out above (in paragraph 1) the upon subsequent purchases of goods Court has deduced that the consideration specified on them. actually received by the person supplying the goods or the services, which, moreover, must be capable of being expressed in 7 money, ranks as the basis of assessment. The Court has further stated that there is no basis of assessment for supplies of goods or services without a direct link between the goods or service supplied and the Having regard to the decisions of the Court 8 consideration. mentioned above in paragraph 12, it must, however, be assumed that a coupon no 6 — Sec the first paragraph of Article 2 of the First Council longer incorporates a right to a price Directive ( 67 67// 227 227// EEC EEC)) of II April 1967 on the harmon- reduction if and to the extent to which the ization of legislation of Member Slates concerning turnover laxes (OJ OJ,, English Special Edition 1967 1967,, p. 14). 14). issuer, in return for the obligation he enters 154//80 (cited above in footnoic 4), paragraph ! 3 . 7 — Sec Case 154 into in issuing the coupon, obtains Sec also Case 230 230// 87 (cilcd above in footnote 2 ), 16.. paragraph 16 consideration évaluable in monetary 154//80 (cited above m footnote 4 ), paragraph 12 8 — Case 154 12,, terms — and thus not only the expectation and Case 230// 87 230 (cited above in footnote 2 ), paragraph 1212;; see also the judgment of 1 April 1982 in of increased turnover. Allow me to cat­ 89//81 Staatstecrelans van Financien v Hong Kong Case 89 egorize the situation under consideration Trade Development Council 1982)) (1982 ECR 1277,, paragraph 10 with reference to the foregoing description.

The other questions 15. There remains the question whether a coupon given upon an earlier purchase may likewise be regarded as a price reduction certificate. The United Kingdom points out that in this case the customer must in fact 16. The answer to the third question spend money in order to acquire the coupon suggested above leads me to comment and that the issuer/supplier receives briefly on the other questions. consideration in the form of an increase in turnover. In those circumstances, there is, in its view, no question of a price discount or rebate within the meaning of Article 11 A 3(b). As already stated above (in point 7), an answer to the second question is unnecessary in view of the answer to the third question. From the relationship, between Article 11 A 1(a) and Article IIA 3(b) of the Sixth Directive it follows It is true that in those circumstances the that the taxable amount for supplies of customer spends money and that upon the goods or services consists of the sale of coupon-bearing goods the supplier consideration actually received or to be receives a price. However, there is then, to received, not including the price discount

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BOOTS COMPANY

allowed. Once a coupon is recognized as 18. I do not consider it necessary for me to being a price reduction certificate, it is go into the fifth question since it assumes therefore established that it does not that the previous questions are to be constitute consideration for the purposes of answered in a way which I do not propose. Article 11 A.

19. Nor do I consider it necessary to 17. From the answer to the third question examine the sixth question. To my mind the it also follows that from the three possible provision of national law in question does answers set out in the fourth question the not appear applicable to a supply of goods answer set out in (a) must be chosen. involving a price discount.