© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
D2. Amount liable to VAT
CONSIDERATION​​
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Taxable amount includes everything which constitutes consideration
"In respect of the supply of goods or services, other than as referred to in Articles 74 to 77, the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price of the supply." (PVD Article 73)
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- Unlicensed user of copyrighted works required to pay triple cost of licence: full sum is consideration
"[49] Consequently, the price to be taken into consideration and subject to VAT in circumstances such as those in the main proceedings is the price determined by law in the case of unlicensed communication of works such as the protected works in question, that is to say, three times the price that the user would have been required to pay in the case of licensed communication to the public." (Cristian General Serv T-643/24)
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- Unauthorised use of parking space/overstaying - penalty charge is consideration
"[32] Accordingly, the total amount of the sums which the motorists have undertaken to pay as consideration for the parking service provided by Apcoa, including, where appropriate, the control fees for parking in breach of the regulations, represents the terms and conditions under which they actually benefited from a parking space, even if they chose to make excessive use of it by exceeding the permitted parking time, by failing to provide proper evidence of their right to park or by parking in a reserved space, in a space which they were not entitled to use or in an obstructive manner, contrary to the general terms and conditions for use of the car parks concerned.
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[34] Furthermore, the amount of those control fees corresponds to the remuneration for part of the costs associated with the supply of the services provided to them by Apcoa. As observed by the Advocate General in point 61 of his Opinion, that amount necessarily takes into account the higher cost of operating car parks which is caused by parking that does not satisfy the normal terms and conditions for use of the service offered. That consideration also seeks to ensure that Apcoa receives contractual remuneration for the service carried out in circumstances attributable to the user, which are not such as to change the economic and commercial realities of their relationship." (Apcoa Parking Danmark C-90/20)
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Card fees​
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- Card fees required to be paid to another that do not affect total price paid are part of taxable amount
"Where a supplier of goods or services, as a condition of accepting payment by credit or debit card, requires the customer to pay an amount to himself or another undertaking, and where the total price payable by that customer is unaffected irrespective of how payment is accepted, that amount shall constitute an integral part of the taxable amount for the supply of the goods or services, under Articles 73 to 80 of Directive 2006/112/EC." (IR Article 42)
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Credit transactions​
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SUBSIDIES​​​
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- Payment through credit card does not change taxable amount
"[35] The fact that the purchaser has paid the price agreed not directly to the supplier but through the card issuer and the method of payment used in the relations between the purchaser and the supplier cannot change the taxable amount. It is not a requirement of the Sixth Directive and Directive 2006/112 that, for a supply of goods or services to be effected ‘for consideration’, the consideration for the supply must be obtained directly from the person to whom the goods or services are supplied. Under Article 11A(1)(a) of the Sixth Directive and Article 73 of Directive 2006/112, the payment of the consideration for a supply of goods may be made not only by the purchaser but also by a third party, in this instance the card issuer (see Bally, paragraphs 16 and 17, and Loyalty Management UK and Baxi Group, paragraph 56).
[36] Consequently, the fact that payment of the price of the goods supplied by Dixons within the framework of the transactions at issue in the main proceedings was made by third parties, in the case in point AmEx and Streamline, cannot lead to the conclusion that that payment does not constitute the consideration obtained by Dixons for the supply of those goods." (Dixon Retail Plc C-494/12)
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Subsidies directly linked to the price of the supply are part of taxable amount​
"In respect of the supply of goods or services, other than as referred to in Articles 74 to 77, the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price of the supply." (PVD Article 73)
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- Purpose is to prevent payment of subsidy entailing lower return from VAT
"[23] As regards the question whether that compensation constitutes a subsidy directly linked to the price of the supply, within the meaning of Article 73 of the VAT Directive, it is apparent from the case-law of the Court that, by providing that the taxable amount for VAT purposes includes, in the cases which it determines, certain subsidies paid to taxable persons, Article 73 is intended to subject the full value of goods or services to VAT and hence to prevent payment of a subsidy entailing a lower return from the tax (see, by analogy, judgment of 9 October 2019, C and C (VAT and agricultural subsidies), C‑573/18 and C‑574/18, EU:C:2019:847, paragraph 30 and the case-law cited)." (PSA C-615/23)
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- To be directly linked must be paid specifically to the operator to enable it to supply particular goods/services
"[24] In accordance with its terms, that provision applies where the subsidy is directly linked to the price of the supply in question. For that to be the case, the subsidy must first be paid specifically to the subsidised operator to enable it to supply particular goods or services. Only in that case can the subsidy be regarded as consideration for the supply of goods or services and therefore be taxable (see, by analogy, judgment of 9 October 2019, C and C(VAT and agricultural subsidies), C‑573/18 and C‑574/18, EU:C:2019:847, paragraph 31 and the case-law cited)." (PSA C-615/23)
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- Price must be fixed in such a way that it diminishes in proportion to subsidy granted
"[24] Moreover, it is necessary to verify that the purchasers of the goods or services benefit from the subsidy granted to the recipient. The price payable by the purchaser must be fixed in such a way that it diminishes in proportion to the subsidy granted to the seller or supplier of the goods or services, which therefore constitutes an element in determining the price demanded by the latter. Thus, it must be ascertained whether, objectively, the fact that a subsidy is paid to the seller or supplier allows the latter to sell the goods or supply the services at a price lower than he or she would have to demand in the absence of subsidy (see, by analogy, judgment of 9 October 2019, C and C (VAT and agricultural subsidies), C‑573/18 and C‑574/18, EU:C:2019:847, paragraph 32 and the case-law cited)." (PSA C-615/23)
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- Consideration represented by subsidy must be identifiable
"[26] Moreover, the consideration represented by the subsidy must, at the very least, be identifiable (see, by analogy, judgment of 9 October 2019, C and C (VAT and agricultural subsidies), C‑573/18 and C‑574/18, EU:C:2019:847, paragraph 33 and the case-law cited)." (PSA C-615/23)
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- Compensation that has no direct effect on price of supply is not a directly linked subsidy
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"[29] As the referring court has found, such compensation has no direct effect on the price of the transport services provided, set by the organiser of those services, the purpose of that compensation being above all to cover the losses linked to that activity.
[30] In those circumstances, it must be held that compensation such as that at issue in the main proceedings is not specifically paid to the operator in order for it to carry out a transport service for a particular recipient of that service and has no influence on the price to be paid by that customer, since that price is not fixed in such a way that it diminishes in proportion to the compensation paid to the provider of that service. By contrast, as the Advocate General observed, in essence, in point 54 of her Opinion, that compensation is granted ex post and is independent of the actual use of the transport services, but depends on the number of vehicle-kilometres offered. Therefore, such compensation is not covered by the concept of ‘subsidies directly linked to the price’ within the meaning of Article 73 of the VAT Directive." (PSA C-615/23)
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- Mere effect on setting prices not sufficient
"[32] As the Advocate General observed in point 58 of her Opinion, it must be held that, necessarily, any subsidy is capable of having an effect on the calculation of prices, whether that is carried out by the recipient of the subsidy or, as in the present case, by the organiser paying that subsidy. As is apparent from the case-law of the Court, the mere fact that financing may affect the price of the goods or services supplied by the body in receipt of that financing is not enough to make it taxable as a subsidy directly linked to the price, for the purposes of Article 73 of the VAT Directive (see, to that effect, judgment of 22 November 2001, Office des produits wallons, C‑184/00, EU:C:2001:629, paragraph 12)." (PSA C-615/23)
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Provider of the subsidy​
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- Must be a third party (does not apply to prices subsidised by the supplier)
"[29] The part of that phrase on which the Swedish Government relies relates to situations involving three parties, namely the party which grants the subsidy, the supplier of the goods or the provider of the services which benefits from it and the purchaser of the goods or services (see Case C‑184/00 Office des produits wallons [2001] ECR I‑9115, paragraph 10). In the present case, only two parties are involved, namely Scandic as the supplier of goods or provider of services and the members of its staff. Moreover, as is clear from Article 11A(1)(a) of the Sixth Directive, the consideration is always paid by ‘the purchaser, the customer or a third party’ and never by the supplier or provider itself. The cost incurred by the taxpayer itself in providing meals to its staff therefore cannot form part of the taxable amount for the transaction in question." (Hotel Scandic C-412/03)
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VALUE​
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- Subjective value actually received
"[28] It is also settled case-law that the taxable amount for the supply of goods or services is represented by the consideration actually received for them. That consideration is thus the subjective value, that is to say, the value actually received, and not a value estimated according to objective criteria. In addition, that consideration must be capable of being expressed in money (see Fillibeck v Finanzamt Neustadt, paragraphs 13 and 14 and the case-law cited)." (Astra Zeneca UK Ltd C-40/09)
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- Salary sacrifice: value is cash remuneration given up
"[29] In the case of the transaction at issue in the main proceedings, there is a direct link between the provision of retail vouchers by Astra Zeneca to its employees and the part of the cash remuneration which the employees must give up as consideration for that provision.
[30] Instead of receiving all their remuneration in cash, the Astra Zeneca employees who have chosen to receive such vouchers must give up part of that remuneration in exchange for those vouchers, that transaction resulting in a specific deduction from their Fund.
[31] Moreover, there is no doubt that Astra Zeneca actually receives consideration for the provision of the retail vouchers at issue and that that consideration is expressed in money, since it corresponds to a fraction of the cash remuneration of its employees." (Astra Zeneca UK Ltd C-40/09)
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SPECIFIC TYPES OF SUPPLY​
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Vouchers​
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- Multi-purpose vouchers: consideration paid or value indicated, less VAT relating to goods/services supplied
"Without prejudice to Article 73, the taxable amount of the supply of goods or services provided in respect of a multi-purpose voucher shall be equal to the consideration paid for the voucher or, in the absence of information on that consideration, the monetary value indicated on the multi-purpose voucher itself or in the related documentation, less the amount of VAT relating to the goods or services supplied." (PVD Article 73a)
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