# C_2018052EN.01000602.xml

| 12.2.2018 | EN | Official Journal of the European Union | C 52/6 |
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12.2.2018

EN

Official Journal of the European Union

C 52/6

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Judgment of the Court (Third Chamber) of 14 December 2017 (request for a preliminary ruling from the First-tier Tribunal (Tax Chamber) — United Kingdom) — Avon Cosmetics Ltd v Commissioners for Her Majesty’s Revenue and Customs

(Case C-305/16) (1)

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((Reference for a preliminary ruling - Value added tax (VAT) - Sixth Directive 77/388/EEC - Article 11A(1)(a) - Taxable amount - Article 17 - Right to deduct - Article 27 - Special derogating measures - Decision 89/534/EEC - Marketing structure based on the supply of goods through non-taxable persons - Taxation on the open market value of the goods as determined at the final stage of the marketing chain - Inclusion of the costs incurred by those persons))

(2018/C 052/08)

Language of the case: English

Referring court

Referring court

First-tier Tribunal (Tax Chamber)

Parties to the main proceedings

Parties to the main proceedings

Applicant: Avon Cosmetics Ltd

Applicant:

Defendant: Commissioners for Her Majesty’s Revenue and Customs

Defendant:

Operative part of the judgment

Operative part of the judgment

| 1. | Articles 17 and 27 of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment, as amended by Council Directive 2004/7/EC of 20 January 2004, must be interpreted as not precluding a measure, such as that at issue in the main proceedings, authorised by Council Decision 89/534/EEC of 24 May 1989 authorising the United Kingdom to apply, in respect of certain supplies to unregistered resellers, a measure derogating from Article 11A(1)(a) of the Sixth Directive, pursuant to Article 27 of that directive, which derogates from Article 11A(1)(a) of that directive and under which the taxable amount for valued added tax (VAT) purposes of a direct sales company is the open market value of the goods sold at the stage of final consumption, where those goods are marketed through resellers not subject to VAT, even if that derogating measure does not take account, in one way or another, of the input VAT relating to demonstration items purchased by those resellers from that company; |
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1.

Articles 17 and 27 of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment, as amended by Council Directive 2004/7/EC of 20 January 2004, must be interpreted as not precluding a measure, such as that at issue in the main proceedings, authorised by Council Decision 89/534/EEC of 24 May 1989 authorising the United Kingdom to apply, in respect of certain supplies to unregistered resellers, a measure derogating from Article 11A(1)(a) of the Sixth Directive, pursuant to Article 27 of that directive, which derogates from Article 11A(1)(a) of that directive and under which the taxable amount for valued added tax (VAT) purposes of a direct sales company is the open market value of the goods sold at the stage of final consumption, where those goods are marketed through resellers not subject to VAT, even if that derogating measure does not take account, in one way or another, of the input VAT relating to demonstration items purchased by those resellers from that company;

| 2. | Examination of the first question has disclosed no factor of such a kind as to affect the validity of Decision 89/534; |
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2.

Examination of the first question has disclosed no factor of such a kind as to affect the validity of Decision 89/534;

| 3. | Article 27 of Sixth Directive 77/388, as amended by Directive 2004/7, must be interpreted as not requiring the Member State which seeks authorisation to derogate from Article 11A(1)(a) of that directive to inform the European Commission that non-taxable resellers incur VAT on purchases of demonstration items from a direct sales company that are used for the purposes of their economic activity, in order that account be taken, in one way or another, of that input tax in the detailed rules of the derogating measure. |
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3.

Article 27 of Sixth Directive 77/388, as amended by Directive 2004/7, must be interpreted as not requiring the Member State which seeks authorisation to derogate from Article 11A(1)(a) of that directive to inform the European Commission that non-taxable resellers incur VAT on purchases of demonstration items from a direct sales company that are used for the purposes of their economic activity, in order that account be taken, in one way or another, of that input tax in the detailed rules of the derogating measure.

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(1)  OJ C 270, 25.7.2016.

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