C-18/92

3. It further appears from the order for ref- In order to meet the wishes of potential cus- erence that: tomers to use credit cards as a means of pay- ment, the plaintiff signed "shop" type agree-

— at one stage Bally had asked the Belgian revenue authorities to clarify the question * Original language: Danish. 1 — Directive 77/388/EEC of 17 May 1977 on the harmonization whether it was required to pay VAT on of the laws of the Member States relating to turnover taxes the full selling price or whether it was — Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1). responsible only for tax on the amount it

I - 2884

BALLY v BELGIAN STATE

received from the organizations issuing (a) in respect of supplies of goods ... every- credit cards after they had deducted their thing which constitutes the consideration commission; and which has been or is to be obtained by the supplier from the purchaser, the customer or a third party for such supplies ...' — the Belgian revenue authorities claim in the main proceedings that the taxable amount is the first-mentioned sum, whilst Bally claims that the taxable amount is the second such sum. Article 11A(2) and (3) lay down, respec- tively, as regards certain specific cases, what is to be included in the taxable amount (for example taxes, other than VAT, and packing, transport and insurance costs) and what is 4. The first question referred to the Court is not to be included therein (for example price as follows: reductions by way of discount for early pay- ment).

'1. Article 11(1)(a) of the directive: 6. It may perhaps be helpful to show by cer- tain figures the practical significance of the differing points of view.

E C U 100, that is, that the VAT due is E C U states in addition that it is particularly the 20, whereas Bally's view would imply that card holders, that is, the purchasers, who the taxable amount is only E C U 95, that is, benefit from the services provided by the that the VAT due is E C U 19. card-issuers, and that it is unreasonable for the company to have to pay VAT on sums paid to the card-issuers, simply because they are exempt. It may also be appropriate to stress that:

— the vendor has claimed from the pur- chaser, that is, the final consumer, VAT The Belgian Finance Minister, the United on the full amount and that the purchaser Kingdom and the Commission agree that has signed a 'credit card slip' for E C U Article 11A must be interpreted as meaning 120; that the taxable amount is the full amount of the consideration, namely E C U 100. There are certain differences in the reasons they give. These differences arise inter alia in a — Bally receives from the issuer of the different view as to whether the consider- credit card E C U 114, since the commis- ation for the goods supplied is received from sion of 5 % , according to the information the purchaser or from a third party, namely received, is calculated, in pursuance of the card-issuers. the existing agreements between Bally and the issuers of the credit cards, as the selling price including VAT; and

8. In my view there can be no reasonable — in accordance with a possible exception doubt that Article 11A must be interpreted in the directive, it seems that in Belgium as meaning that the taxable amount is the VAT is not levied on the card-issuing sum on which Bally demands VAT from the organizations' commission. purchasers, even if they pay by credit card.

of the directive. The detailed provisions of credit-card payment slip, namely the selling Article 11A(1) to (3) aim in the first place at price plus VAT. solving the problems which not infrequently arise in practice, when the taxable person, the supplier, has to determine the taxable amount in relation to the person who has to Moreover, in my opinion, Bally is misunder- pay the VAT for the article supplied. 2 standing the position when it expresses the view that the fact that the services of the card-issuer are not subject to VAT is of essential importance for assessing this case. If such services were subject to VAT the conse- quences at first sight would be only that the 9. Accepting Bally's view would mean that commission of 5% would have to be subject there may be a difference between the tax- to VAT and that Bally would therefore have able amount used when demanding VAT to pay a larger sum to the card-issuers. from final consumers and that which deter- mines the amount of VAT payable by the taxable person to the authorities. It seems to me hard to reconcile with the system of the directive to accept that such a difference can 11. The United Kingdom stressed during exist and in any case Bally did not succeed in the oral procedure, correctly in my view, that showing that there should be such a differ- the Court should ensure that the reasons it ence in this situation. gives for its answers to the question referred to it should not as such have a content as to be able to influence the legal description of the legal relationships, which in other respects are quite complicated, between card- holders, card-issuers and the suppliers affili- ated to the latter. The reasons I have given 10. In my view there are no compelling rea- for my suggested answer do not seem to me, sons for following the company's point of and in any event are not intended, to be view. In this connection it seems to me that capable of being taken as support for any there is no problem in regarding the com- particular view as to how the legal relation- mission which the card-issuer deducts from ships between the parties involved are to be the amount on the credit-card payment slip described outside the sphere of VAT. as Bally's payment for the services rendered to it by the card-issuer. It is a fact that the commission payable is laid down in an agreement between Bally and the card-issuer on which the card-holder, that is, the pur- 12. The Commission called attention in its chaser of the goods, has no influence. Bally written observations to the fact that in cer- has thus also assumed the obligation to pay tain circumstances — namely where a sup- commission on the full value shown on the plier generally gives cash customers a dis- count equal to the card issuer's commission — there might be grounds for modifying the solution supported by the Commission itself 2 — The case-law of the Court on the interpretation of Article 11A relates moreover to such situations, for example the in this case. The United Kingdom Govern- judgments in Joined Cases 138 and 139/86 Direct Cosmetics ment stated during the oral procedure that it [1988] ECR 3937 and in Case 230/87 Naturally Yours Cos- metics [1988] ECR 6365. did not agree with the Commission on this

13. The second question from the court of reference is worded as follows: As previously mentioned, the purpose of Article 11A(3) is to make it clear that the supplier of goods is not to include certain sums in the taxable amount used as against the purchaser. The purpose of subparagraph (c) is thus to make it clear that there are 'Article 11(3)(c) of the Sixth Directive: sums which the supplier does as a matter of pure fact receive from purchasers but which nevertheless are not to be included in the taxable amount because they are only a repayment of expenses which the supplier has incurred in the purchasers' interest and Must the amount of the commission or dis- which cannot therefore be regarded as a part count retained by the issuing organization of the consideration for the goods delivered. from the price displayed be regarded as pay- ment for the expense incurred on behalf of the affiliated trader so as to ensure him a guaranteed payment and accordingly not form part of the taxable amount under Arti- cle 11(3)(c) of the Sixth Directive?'

This case relates to a quite different situation since the purchaser has in fact paid VAT on a taxable amount from which no deduction of the kind referred to in Article 11A(3)(c) has 14. Article 11A(3)(c) provides that the tax- been made. able amount is not to include:

'the amounts received by a taxable person from his purchaser or customer as repay- It may be added that, as has already been ment for expenses paid out in the name mentioned, it cannot be regarded as natural and for the account of the latter and which to consider the commission paid as an are entered in his books in a suspense amount paid out 'in the name and for the account ...'. account' of the purchaser.