Commissioners for Her Majesty’s Revenue and Customs v Loyalty Management UK Ltd (C-53/09) and Baxi Group Ltd (C-55/09).
Date: 2010-10-07
38. It must be recalled that the principle of the common system of VAT involves the application to goods and services, up to and including the retail trade stage, of a general tax on consumption exactly proportional to the price of the goods and services, whatever the number of transactions which take place in the production and distribution process before the stage at which tax is charged (see, inter alia, Case C‑475/03 Banca popolare di Cremona  [2006] ECR I‑9373, paragraph 21).
39. It must also be recalled that consideration of economic realities is a fundamental criterion for the application of the common system of VAT (see, first, as regards the meaning of place of business for the purposes of VAT, Case C‑260/95 DFDS  [1997] ECR I‑1005, paragraph 23, and Case C‑73/06 Planzer Luxembourg [2007] ECR I‑5655, paragraph 43, and, secondly, as regards the identification of the person to whom goods are supplied, by analogy, Case C‑185/01 Auto Lease Holland  [2003] ECR I‑1317, paragraphs 35 and 36).
40. In the light of the foregoing, it is necessary, in order to provide an answer to the questions referred, to determine, in the first place, the nature of the transactions carried out within the context of the loyalty rewards schemes at issue in the cases in the main proceedings.
45. It is clear from the wording of that provision that ‘supply of goods’ does not refer to the transfer of ownership in accordance with the procedures prescribed by the applicable national law but covers any transfer of tangible property by one party which empowers the other party actually to dispose of it as if the recipient were the owner of the property (see Case C‑320/88 Shipping and Forwarding Enterprise Safe  [1990] ECR I‑285, paragraph 7, and Auto Lease Holland , paragraph 32).
51. In that regard, it follows from the case-law that a supply of goods or services ‘for consideration’, within the meaning of Article 2.1 of the Sixth Directive, presupposes the existence of a direct link between the goods or service provided and the consideration received (see, inter alia, in relation to supplies of services, Case 102/86 Apple and Pear Development Council  [1988] ECR 1443, paragraph 12).
53. In that context, it should be borne in mind that, in relation to a loyalty rewards scheme whereby an oil company handed over goods to purchasers of fuel in exchange for points which those purchasers had obtained, the number dependent on the quantity of fuel purchased, by paying the retail price at the pump, the Court held that the oil company could not reasonably maintain that the price paid by the purchasers of fuel in fact contained an element representing the value of the points or the goods supplied in exchange for those points because the fuel purchaser, whether he took the points or not, had to pay the same retail price (see, to that effect, Case C‑48/97 Kuwait Petroleum  [1999] ECR I‑2323, paragraph 31).
54. The Court held that the sale of fuel giving rise to the award of points to customers, on the one hand, and the supply of goods in exchange for those points, on the other hand, were two separate transactions (see, to that effect, Kuwait Petroleum , paragraph 28).
56. However, as the United Kingdom Government points out, it is not a requirement of the Sixth Directive that, for a supply of goods or services to be effected ‘for consideration’, within the meaning of Article 2.1 of that directive, the consideration for that supply must be obtained directly from the person to whom those goods or services are supplied. Article 11.A(1)(a) of that directive provides that the consideration may be obtained from a third party.
60. In that regard, it is clear from the Court’s case-law that, where a transaction comprises a bundle of features and acts, regard must be had to all the circumstances in which the transaction in question takes place in order to determine, firstly, if there were two or more distinct supplies or one single supply and, secondly, whether, in the latter case, that single supply is to be regarded as a supply of goods or services (see, to that effect, Case C‑111/05 Aktiebolaget NN  [2007] ECR I‑2697, paragraph 21 and case-law cited).