Commentary

V3.158 Value—price discounts and rebates

Part V3 Supplies, acquisitions and imports

V3.158 Value—price discounts and rebates

V3.158 Value—price discounts and rebates

Directive 2006/112/EC provides that the 'taxable amount' (ie value) shall not include price discounts and rebates allowed to the customer and obtained by him at the time of supply1. 'Discounts and rebates' for this purpose constitute a reduction of the price at which an article is lawfully offered to the customer. The amount of a discount or rebate is the difference between the normal selling price and the consideration actually received2. Where the discount or rebate extended to 100% of the cost of supplying goods (under a voucher scheme) the disposal was free of charge, and therefore came within art 5(6) of the Sixth Directive3 such that VAT was due on the cost of the goods4.

A retailer allows a price discount or rebate when, in part payment for a supply of goods, he accepts a coupon with a stated face value previously issued free of charge at the time of an earlier supply of goods5.

In a case referred to the European Court of Justice, it was held that the taxable amount for supplies of goods and services comprises the total consideration that has been, or is to be, received by the supplier from the purchaser. Where the manufacturer refunds the value of money-off coupons to the retailer, or the value of cash-back coupons to the final consumer, the consideration that the manufacturer receives is the sale price paid for the goods by the wholesaler or retailer as appropriate, less the value of those coupons6. No

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