Freemans plc v Commissioners of Customs & Excise.
Date: 2001-05-29
23 If, at the time of that transfer, the customers paid a reduced price, they would receive a discount; if the seller refunded to them part of the price already paid, the customers would receive a rebate within the meaning of Article 11A(3)(b) of the Sixth Directive (see, to that effect, the judgment in Boots Company, cited above, paragraph 18).
27 It must be pointed out here that Article 11A(3)(b) of the Sixth Directive is merely an application of the rule laid down in Article 11A(1)(a) of that directive as interpreted by the Court in its decisions (see the judgment in Boots Company, cited above, paragraph 19). According to the latter provision, the taxable amount is, with regard to the supply of goods, everything which constitutes the consideration which has been or is to be obtained by the supplier from the purchaser. According to the Court's settled case-law, the definitive taxable amount for the supply of goods is the consideration actually received for them (see Case C-38/93 Glawe [1994] ECR I-1679, paragraph 8, and Case C-288/94 Argos Distributors [1996] ECR I-5311, paragraph 16). Article 11A(1)(a) thus ensures the neutrality of the tax, a principle inherent in the common system of VAT which must be observed when the provisions of the Sixth Directive are to be interpreted (see, to that effect, Case C-317/94 Elida Gibbs [1996] ECR I-5339, paragraphs 26 to 31).
30 Admittedly, as Freemans rightly points out, the Court has held, with regard to gaming machines offering a chance of winning (slot machines), that the consideration is the total stakes inserted less the proportion corresponding to the winnings paid out to players (judgment in Glawe, cited above, paragraph 13). However, it must be pointed out, first, that gambling transactions do not lend themselves easily to the application of VAT, as the Commission stated in its proposal for a Sixth Directive (see Bulletin of the European Communities, Supplement 11/73, p. 16). It thus hardly appears to be appropriate to draw general conclusions from the taxation of those transactions in order to apply them to the taxation of ordinary supplies of goods. Next, it is necessary to take account of the fact that, in the case which gave rise to the judgment in Glawe, cited above, the proportion of stakes not included in the taxable amount was in fact repaid to players who won. The facts of Glawe were thus materially different from those in the present case, in which an element of the price paid by the final consumer is retained by the taxable person, if the consumer does not use it.
33 In that regard, it suffices to state that the wording of Article 11C(1) of the Sixth Directive does not presuppose such a subsequent modification of the contractual relations in order for it to be applicable. In principle, it requires the Member States to reduce the taxable amount whenever, after a transaction has been concluded, part or all of the consideration has not been received by the taxable person (see Case C-330/95 Goldsmiths [1997] ECR I-3801, paragraphs 16, 17 and 18). Moreover, there is no indication that in its judgment in Elida Gibbs, cited above, the Court wished to restrict the scope of application of that provision. On the contrary, it is apparent from the facts of the Elida Gibbs case that there had been no modification of the contractual relations. Nevertheless, the Court held that Article 11C(1) of the Sixth Directive was applicable.
35 However, at the time when it credits the amount in question to the agent's account established in its books, Freemans has not yet actually paid the AOP discount to the agent. Where the agent does not use that amount, Freemans disposes of it by adding it to its profit and loss account. It is only when the customer uses the AOP discount that the discount is actually paid, so that, as Article 11C(1) of the Sixth Directive provides, the taxable amount for the corresponding purchase must be reduced accordingly under conditions to be determined by the Member States.