C-126/88 Boots Company

Judgment of the Court of 27 March 1990. - Boots Company plc v Commissioners of Customs and Excise. - Reference for a preliminary ruling: High Court of justice, Queen's Bench Division - United Kingdom. - Value added tax - Sixth directive - Taxable amount. - Case C-126/88. European Court reports 1990 Page I-01235

Summary Parties Grounds Decision on costs Operative part

++++

Tax provisions - Harmonization of legislation - Turnover taxes - Common system of value-added tax - Taxable amount - Price discounts and rebates - Concept - Reduction in sale price granted upon the surrender of a coupon obtained free of charge by the customer upon a previous purchase -Included

( Council Directive 77/388, Art . 11 A 3(b ) )

Article 11 A 3 of the Sixth Directive ( 77/388/EEC ), laying down the items not to be included, within the territory of the country, in the taxable amount for the purposes of value-added tax, must be interpreted as meaning that the expression "price discounts and rebates allowed to the customer and accounted for at the time of supply" covers the difference between the normal retail selling price of the goods supplied and the sum of money actually received by the retailer for those goods where the retailer accepts from the customer a coupon given free of charge by the retailer to the customer upon a previous purchase made at the normal retail selling price .

In Case C-126/88

REFERENCE to the Court under Article 177 of the EEC Treaty by the High Court of Justice for a preliminary ruling in the proceedings pending before that Court between

The Boots Company PLC

and

The Commissioners of Customs and Excise

on the interpretation of the Sixth Council Directive ( 77/388/EEC ) of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes - Common system of value-added tax; uniform basis of assessment ( Official Journal 1977, L 145, p . 1 ),

THE COURT

composed of : O . Due, President, Sir Gordon Slynn, C . N . Kakouris, F . A . Schockweiler ( Presidents of Chambers ), T . Koopmans, G . F . Mancini, R . Joliet, T . F . O' Higgins, G . C . Rodríguez Iglesias, Judges,

Advocate General : W . Van Gerven

Registrar : H . A . Ruehl, Principal Administrator

after considering the written observations on behalf of

the United Kingdom of Great Britain and Northern Ireland, by Susan Hay, acting as Agent, assisted by John Laws and Robert Jay, barristers,

the Commission of the European Communities, by Johannes Fons Buhl, Legal Adviser, acting as Agent,

the Boots Company PLC, by J . P . Lawton QC, instructed by Lovell White Durrant, solicitors,

having regard to the Report for the Hearing,

after hearing oral argument presented by The Boots Company PLC, the United Kingdom of Great Britain and Northern Ireland and the Commission at the hearing on 30 November 1989,

after hearing the Opinion of the Advocate General delivered at the sitting on 24 January 1990,

gives the following

Judgment

Grounds

1By an order of 17 December 1987, which was received at the Court on 25 April 1988, the High Court of Justice referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty six questions on the interpretation of certain provisions of the Sixth Council Directive ( 77/388/EEC ) of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes - Common system of value-added tax; uniform basis of assessment ( Official Journal 1977, L 145, p . 1, hereinafter referred to as "the Sixth Directive ").

2The questions were raised in proceedings in which The Boots Company PLC and its subsidiaries ( hereinafter referred to as "Boots ") are challenging decisions of the Commissioners of Customs and Excise ( hereinafter referred to as "the Commissioners ") relating to the assessment of value-added tax ( VAT ) which Boots must pay on certain promotional sales effected in 1984 .

3In appears from the order for reference and the documents relating to the case that Boots retails various kinds of goods through stores located throughout the United Kingdom . It uses inter alia a promotion scheme involving coupons printed on the packaging of certain goods which it distributes ( hereinafter referred to as "premium goods "). The coupons, obtained free of charge by customers upon the purchase of those goods, entitle the persons presenting them upon a subsequent purchase from Boots of the same or different goods specified on the coupons ( hereinafter referred to as "redemption goods ") to a price reduction equal to the nominal value indicated on them .

4The cost of the promotions conducted by Boots is, depending on the case, borne either entirely by Boots or by its suppliers, in which case pursuant to contracts concluded with Boots they reimburse to Boots the nominal value of the coupons returned to them, or partly by Boots and partly by its suppliers .

5In its tax return made in accordance with Section 29 of the Value-Added Tax Act 1983, Boots included, in respect of the coupons, in its "gross takings" only the sums received from its suppliers in exchange for the coupons which had been surrendered to it upon sales in respect of which the suppliers bore all or part of the promotion costs . It did not include in its gross takings the nominal value of the coupons, which it destroyed when all or part of the promotion costs were borne by itself, since it took the view that the consideration for redemption goods was limited to the amount actually paid by the purchaser .

6The Commissioners, however, took the view that the consideration for redemption goods comprised not only the sum of money paid but also the value of the coupon surrendered . They considered that Section 10(3 ) of the Value-Added Tax Act 1983 was applicable . That section provides that : "If the supply is not for a consideration or is for a consideration not consisting or not wholly consisting of money, the value of the supply shall be taken to be its open market value ". Pursuant to that section, the Commissioners adopted with regard to Boots decisions requiring it to adjust its "gross takings" by adding to its cash receipts the differences between the cash takings from sales of redemption goods and their open market value . In their decisions the Commissioners assessed the tax adjustment imposed on Boots at UKL 10 727.03 for the calendar year 1984 .

7In a judgment of 18 March 1986 the London Value-Added Tax Tribunal, to which Boots had appealed against the decisions of the Commissioners, upheld the Commissioners' assessment . Against that judgment Boots appealed to the High Court of Justice disputing that it was subject to VAT on the open market value of redemption goods in so far as the cost of those promotions was borne entirely or partly by itself .

8Before the High Court of Justice Boots argued that, as far as sales of redemption goods were concerned, it ought to have been assessed to tax on the basis of the reduced price actually paid by the purchaser . It submitted in particular that since the coupons had no value to it, they did not form part of the consideration for the purposes of the Sixth Directive and that the reduction on the price of redemption goods was a "rebate" or "discount" within the meaning of Article 11 A 3(b ) of the Sixth Directive . It also argued that Section 10(3 ) of the Value-Added Tax Act 1983, pursuant to which the Commissioners had assessed VAT, was incompatible with Article 11 of the Sixth Directive .

9Taking the view that the case involved an interpretation of the relevant Community legislation, the High Court of Justice decided, pursuant to Article 177 of the EEC Treaty, to stay the proceedings until the Court had ruled on the following questions :

"¹ Is Article 11 A 1(a ) of the Sixth Council Directive to be interpreted so that 'everything which constitutes consideration which has been or is to be obtained by the supplier from the purchaser, the customer or a third party' consists only of the payment of money by the customer?

² Does a retailer obtain consideration from a customer within the meaning of Article 11 A 1(a ) of the Sixth Council Directive when he accepts from the customer a coupon entitling him to a price reduction on a purchase of the goods specified on the coupon, which coupon was given by the retailer to the customer at the time of purchase of other goods from the retailer at their normal retail selling price?

³ Is the expression 'price discounts and rebates allowed to the customer and accounted for at the time of supply' in Article 11 A 3(b ) of the Sixth Council Directive to be interpreted to cover the difference between the normal retail selling price of the goods supplied and the sum of money actually received by the retailer for those goods where a coupon, obtained as above, is surrendered at the same time?

⁴ Where a retailer supplies redemption goods to a customer for a sum of money which is less than the normal retail selling price of the goods because at the time of the supply the customer surrenders a coupon acquired at the time of purchase of other goods from the same retailer,

( a ) is the taxable amount in Article 11 A 1(a ) of the Sixth Council Directive the sum of money received by the retailer for the redemption goods, or

( b ) the sum of money received by the retailer for the redemption goods together with the value of the coupon, and if that is the case, how is the value of the coupon to be determined, or

( c ) if neither of the above applies, what is the taxable amount in these circumstances?

⁵ If 'consideration' may include not only the payment of money but also the surrender of the coupon to the supplier of the goods in question do the provisions of Article 11 A 1(a ) prevent a Member State from evaluating the taxable amount by reference to the price which the customer would have to pay to obtain the goods for a consideration wholly in money?

⁶ Does a national rule, in existence on 1 January 1978, providing that 'if the supply of a good is not for a consideration or is for a consideration not consisting or not wholly consisting of money, the value of the supply shall be taken to be its open market value' , constitute a derogation from the provisions of Article 11 of the Sixth Council Directive which should, under Article 27 of the Sixth Council Directive, have been notified to the Commission of the European Communities before 1 January 1978?"

10Reference is made to the Report for the Hearing for a fuller account of the facts of the case before the national court, the relevant provisions of Community law and national law, the course of the procedure and the observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court .

Characteristics of the coupons

11In order to provide a helpful answer to the problem of interpretation raised by the questions submitted to the Court, that problem must be defined with reference to the national court' s findings of fact as to what the coupons represent in the relations between Boots and its customers from the economic and legal point of view .

12According to the documents before the Court, by the coupon given to the customer upon the sale of premium goods, Boots engages to grant the bearer of the coupon, upon the subsequent purchase of one of the articles indicated on it, a price reduction equal to the nominal value also indicated on the coupon . Thus the coupon is constitutive of the bearer' s right to a price reduction equal to the amount indicated on the coupon .

13From the economic point of view, since the obligation assumed by Boots forms part of a promotion scheme the cost of which is borne by Boots itself, it affords Boots no advantage other than the prospect of increasing its turnover by increasing the volume of its sales of premium goods and redemption goods . It is only where the coupon surrendered to Boots is then recovered by its supplier, when the latter bears all or part of the promotion costs, that the coupon has monetary value for Boots equal to the amount actually paid by the supplier to Boots pursuant to their own contract . In the case in question, the coupon represents for Boots only an obligation to grant a reduction, which is allowed with the aim of attracting the customer .

14In the lights of those facts, it is now appropriate to recall what the rules of the Sixth Directive relating to the basis of assessment essentially provide .

The taxable amount

15According to Article 11 A 1(a ) of the Sixth Directive, the taxable amount within the territory of the country is to be, in respect of supplies of goods, everything which constitutes the consideration which has been or is to be obtained by the supplier from the purchaser . Paragraphs 2 and 3 of Article 11 A enumerate certain items which are to be included in the taxable amount and other items which are not to be included . Paragraph 3(b ) of Article 11 A provides that the taxable amount is not to include "price discounts and rebates allowed to the customer and accounted for at the time of the supply ". Thus, the items referred to in paragraph 2 of Article 11 A are treated by the directive itself as constituting the "consideration" and therefore the taxable amount and the items referred to in paragraph 3 are excluded, likewise ex lege, from that concept of consideration .

16It follows that each time the question of classifying a specific item arises, it is first necessary to examine whether the item falls within one of the categories referred to in paragraphs 2 and 3 and it is only when the answer to that question is in the negative that reference must be made to the general concept in paragraph 1(a ).

17In the present case, having regard to the factual circumstances described by the national court and the arguments put forward by Boots, which maintains that the promotion scheme based on coupons constitutes nothing other than a rebate or discount, it is necessary to examine first the third preliminary question .

The third question

18 "Discounts and rebates" which, according to Article 11 A 3(b ) of the Sixth Directive, are not to be included in the taxable amount, constitute a reduction of the price at which an article is lawfully offered to the customer, since the seller agrees to forego the sum represented by the rebate in order precisely to induce the customer to buy the article .

19That provision is merely an application of the rule laid down in Article 11 A 1(a ) of the Sixth Directive, as interpreted by the Court in its decisions ( for the most recent, see the judgment of 23 November 1988 in Case 230/87 Naturally Yours Cosmetics Limited v Commissioners of Customs and Excise (( 1988 )) ECR 6365 ), according to which the taxable amount is the consideration actually received .

20The United Kingdom states that the promotion scheme used by Boots should be distinguished from the typical case of a price discount or rebate since the reduction allowed to the purchaser is granted in exchange for the coupon which has a value .

21That viewpoint cannot be accepted . It is clear from the coupon' s legal and economic characteristics described above that, although a "nominal value" is indicated on it, the coupon is not obtained by the purchaser for consideration and is nothing other than a document incorporating the obligation assumed by Boots to allow to the bearer of the coupon, in exchange for it, a reduction at the time of purchase of redemption goods . Therefore, the "nominal value" expresses only the amount of the reduction promised .

22The answer to the third question must therefore be that Article 11 A 3(b ) of the Sixth Directive must be interpreted as meaning that the expression "price discount and rebates allowed to the customer and accounted for at the time of the supply" covers the difference between the normal retail selling price of the goods supplied and the sum of money actually received by the retailer for those goods where the retailer accepts from the customer a coupon which he gave to the customer upon a previous purchase made at the normal retail selling price .

The other questions

23Having regard to the answer given to the third question, the other questions do not call for a reply .

Costs

Costs

24The costs incurred by the United Kingdom and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable . Since the proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the proceedings pending before the national court, the decision on costs is a matter for that court .

Operative part

On those grounds,

THE COURT,

in answer to the questions submitted to it by the High Court of Justice, by order of 17 December 1987, hereby rules :

Article 11 A 3(b ) of the Sixth Council Directive ( 77/388/EEC ) of 17 May 1977, on the harmonization of the laws of the Member States relating to turnover taxes - Common system of value-added tax; uniform basis of assessment, must be interpreted as meaning that the expression "price discounts and rebates allowed to the customer and accounted for at the time of the supply" covers the difference between the normal retail selling price of the goods supplied and the sum of money actually received by the retailer for those goods where the retailer accepts from the customer a coupon which he gave to the customer upon a previous purchase made at the normal retail selling price .

OPINION OF MR ADVOCATE GENERAL VAN GERVEN

on

on

delivered oonn 24 January 1990 * Mr President, Members of the Court,

Introduction

1 The High Court of Justice has submitted to this Court a number of questions concerning the interpretation of Article 11 A of Title VIII ('Taxable amount') of the Sixth Council Directive on the harmonization of the laws of the Member States relating to turnover taxes. ' The questions concern in particular the following two provisions:

(i) Article 11 A 1 (a) of the directive :

'A — Within the territory of the country

1The taxable amount shall be:

(a) in respect of supplies of goods and services other than those referred to in (b), (c) and (d) below, everything which constitutes the consideration which has been or is to be obtained by the supplier from the purchaser, the customer or a third party for such supplies including subsidies directly linked to the price of such supplies;

(b) ...

(b) ...

((bb)) ......

* Original language: Dutch.

(c) ...

(d) .·· '

(ii) Article 11 A 3(b) of the directive:

'3. The taxable amount shall not include:

(a) ...

(b) price discounts and rebates allowed to the customer and accounted for at the time of the supply;

((cc)) ...... '' ((cc)) ...... ''

Background Background BBaacckkggrroouunndd

2The questions submitted for a preliminary ruling arose in a case between the Boots Company pic ('Boots') and the Commissioners of Customs and Excise ('the Commissioners').

The Boots Group operates a chain of stores in which medicinal products, toilet articles and various other goods are sold. In order to promote sales, Boots regularly uses a form of promotion in which coupons are used. A customer who presents such a coupon when purchasing the goods specified on it is granted a reduction in the cash price equal to the amount printed on the coupon. At times the costs of this promotion are borne entirely or partly by the manufacturer of the goods concerned, at others entirely or partly by Boots itself. The parties are agreed that turnover tax is payable on the amount that Boots charges the manufacturers for the proportion of the price reductions to be financed by them. The dispute therefore concerns only the price reductions granted upon the presentation of coupons which are borne by Boots.

3The coupons accepted in Boots' stores are distributed amongst the public in various ways. In some cases they appear in the press or in leaflets distributed free of charge. The practice is accepted by the United Kingdom authorities in that when goods are purchased upon surrender of a coupon distributed in that way turnover tax is payable only on the sum of money which the customer pays to Boots and the value indicated on the coupon is not therefore included in the taxable amount, that is to say the amount on which tax is due. At the hearing the United Kingdom representative left open the question whether that practice is in accordance with the provisions of the directive.

In other cases the coupons are printed on, or added to, the packaging of the goods sold in Boots' stores (hereinafter referred to as 'coupon-bearing goods'). A customer who buys such goods obtains the coupon at the same time, without any extra payment. Upon the purchase of the goods specified on the coupon and the surrender of the coupon Boots accepts that such a coupon, like a coupon distributed in the press or in a leaflet, provides entitlement to a price reduction equal to the value printed on the coupon.

At the hearing Boots' representative explained that the amount shown on the coupon represents 5 to 31 % of the sale price of the goods subsequently purchased, depending on the profit margin. It was further pointed out at the hearing that the coupon-bearing goods and the goods subsequently purchased are not necessarily of the same kind but when supplied are in fact subject to the same rate of turnover tax.

4Boots takes the view that when a customer buys the goods specified on the coupon upon surrender of a coupon obtained upon an earlier purchase, turnover tax must be charged only on the sum of money actually paid by the purchaser. It therefore considers that the taxable amount must be determined in the same way as when goods are purchased upon surrender of a coupon distributed in the press or in a leaflet. The Commissioners, on the other hand, consider that the situations are different in view of the fact that in one case the customer must first purchase an article but not in the other. The Commissioners made and issued to Boots an assessment in the sum of UKL 10 727.03 for the calendar year 1984. The Value-Added Tax Tribunal upheld that assessment. Boots has appealed against that judgment to the High Court of Justice. It is in that appeal that the High Court has submitted the following questions to the Court:

'(1) Is Article 11 A 1(a) of the Sixth Council Directive to be interpreted so that "everything which constitutes consideration which has been or is to be obtained by the supplier from the purchaser, the customer or a third party" consists only of the payment of money by the customer?

(2) Does a retailer obtain consideration from a customer within the meaning of Article 11 A 1(a) of the Sixth Council Directive when he accepts from the customer a coupon entitling him to a price reduction on a purchase of the goods specified on the coupon, which coupon was given by the retailer to the customer at the time of purchase of other goods from the retailer at their normal retail selling price?

(3) Is the expression "price discounts and rebates allowed to the customer and accounted for at the time of supply" in Article IIA 3(b) of the Sixth Council Directive to be interpreted to cover the difference between the normal retail selling price of the goods supplied and the sum of money actually received by the retailer for those goods where a coupon, obtained as above, is surrendered at the same time?

(4) Where a retailer supplies redemption goods to a customer for a sum of money which is less than the normal retail selling price of the goods because at the time of the supply the customer surrenders a coupon acquired at the time of purchase of other goods from the same retailer, (a) is the taxable amount in Article 11 A 1(a) of the Sixth Council Directive the sum of money received by the retailer for the redemption goods, or

(b) the sum of money received by the retailer for the redemption goods together with the value of the coupon, and if that is the case, how is the value of the coupon to be determined, or

(c) if neither of the above applies, what is the taxable amount in these circumstances?

(5) If "consideration" may include not only the payment of money but also the surrender of the coupon to the supplier of the goods in question, do the provisions of Article 11 A 1 (a) prevent a Member State from evaluating the taxable amount by reference to the price which the customer would have to pay to obtain the goods for a consideration wholly in money?

(6) Does a national rule, in existence on 1 January 1978, providing that "if the supply of a good is not for a consideration or is for a consideration not consisting or not wholly consisting of money, the value of the supply shall be taken to be its open market value", constitute a derogation from the provisions of Article 11 of the Sixth Council Directive which should, under Article 27 of the Sixth Council Directive, have been notified to the Commission of the European Communities before 1 January 1978?'

5I refer to the Report for the Hearing for a fuller account of the facts, the course of the procedure and the observations submitted to the Court, which are set forth hereinafter only in so far as is necessary for the reasoning.

The first question

6By its first question the High Court inquires whether the only consideration envisaged by Article 11 A 1(a) of the Sixth Directive is the payment of money. All the parties are agreed that this question must be answered in the negative. I take the same view, for the following reasons.

Article 11 A 1(a) of the Sixth Directive expressly states that everything which has been or is to be obtained by the supplier from the purchaser is liable to constitute consideration. According to the Court's judgment of 23 November 1988 in the Naturally Yours Cosmetics case, the provision concerned of the Sixth Directive may be interpreted by taking into account the corresponding provisions of the Second Council Directive of 11 April 1967. In Annex A to the Second Directive it is expressly stated (in point 13 regarding Article 8(a)) that the expression 'consideration' means 'the value of inter alia the goods received in exchange'. It is accordingly quite clear that forms of consideration other than payments in money are envisaged by Article 11 A 1(a) of the Sixth Directive.

The second and third questions

7Both the second question and the third question are intended to ascertain whether upon the purchase of goods in which a coupon obtained upon an earlier purchase is surrendered the amount printed on that coupon must be included in the taxable amount. The second question is more particularly concerned with ascertaining whether that amount falls within the taxable amount because the surrender of the coupon is to be regarded as consideration within the meaning of Anicie 11 A 1(a) of the directive. The point of the third question, on the other hand, is to ascertain whether that amount is from the excluded taxable amount on the ground that the coupon embodies a price discount or rebate allowed to the customer within the meaning of Article 11 A 3(b) of the directive.

In my view, the third question should be examined before the second. For if it is determined that the coupon embodies a right to a price discount and for that reason the amount printed thereon is excluded from the taxable amount, the second question no longer needs to be examined.

8The first point to be made is that the terms 'price discount' and 'price rebate' used in Article 11 A 3(b) of the directive appear in a provision of Community law which does not refer to the law of the Member States for the determination of its meaning and scope. The interpretation of those terms may not therefore be left to the discretion of each Member State.

9Article 11 A 3(b) lays down two conditions which must be fulfilled cumulatively: (a) there must be a price discount or price rebate allowed to the customer; (b) the price discount or rebate must be accounted for at the time of the purchase or the provision of the service.

The second condition does not present any particular difficulty in the present case once it is accepted that the first condition is fulfilled. On that hypothesis the customer then obtains a 'price discount' or 'price rebate' at the time of the purchase of the goods specified on the coupon: upon surrender of the coupon he must pay only the amount equal to the sale price less the amount printed on the coupon.

Whether the first condition is fulfilled is, however, a disputed question. Boots and the Commission take the view that a price discount or rebate is indeed involved here. The United Kingdom, however, takes the view that a price discount or rebate exists only when the sale price is actually reduced and that a price reduction which is dependent on the surrender of a coupon does not fall under the provision concerned. Even if a price discount or price rebate can be granted by means of a coupon, the United Kingdom still considers that there can be no question of such a price discount or rebate being allowed if the customer must first purchase coupon-bearing goods in order to be able to claim it.

10I do not find the United Kingdom's arguments convincing. I share Boots' and the Commission's view that, in the circumstances of the case, a price discount or rebate within the meaning of Article IIA 3(b) of the directive is involved. In order to demonstrate this, I shall (under points 11 and 12) first define more precisely both terms as well as the term 'coupon' (point 13). I shall then examine whether a discount or rebate can be granted by means of a coupon that has to be surrendered (point 14). Finally, I shall examine the importance to be attached to the fact that the customer obtains the coupon only upon the purchase of an article (point 15).

11As far as I am aware, the terms 'price discount' and 'price rebate' have no clearly distinct meaning. In any case, a difference between the two terms does not seem to matter in this case. From the juxtaposition of two different terms it may in fact be concluded that a restrictive meaning may not be given to either of them and that for example both the case in which part of the price indicated is not paid and the case in which part of the price already paid is returned to the customer at the time of purchase are meant. Thus, both terms together refer to price reductions in the narrow sense of the word (with the exception of 'price reductions by way of discount for early payment', which are expressly mentioned in Article 11 A 3(a)). The nature of the price reductions referred to in Article 11 A 3(b) can be defined more precisely by referring to the characteristics of the turnover tax system described below.

12Turnover tax is a general tax on consumption which is intended to fall upon the spending of the final consumer. In that regard Article 2 of the Sixth Directive defines which supplies are subjected to the tax:

'(1) the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such;

(2) . . . ' (my emphasis).

From the expression 'for consideration' as well as from the definition of taxable amount set out above (in paragraph 1) the Court has deduced that the consideration actually received by the person supplying the goods or the services, which, moreover, must be capable of being expressed in money, ranks as the basis of assessment. The Court has further stated that there is no basis of assessment for supplies of goods or services without a direct link between the goods or service supplied and the consideration.

It is clear from the foregoing why Article 11 A 3(b) excludes price reductions from the taxable amount: there is no (or at any rate no separate) consideration capable of being expressed in money given by the purchaser of the goods or the recipient of the service for the price reduction even if it is granted by the supplier of the goods or the service for commercial reasons (namely in order to increase his turnover).

13How are 'coupons' to be viewed in this context? From the legal point of view, the coupons accepted in Boots stores may be described as follows. They are (transferable) certificates of entitlement incorporating for the holder thereof, upon the purchase from a particular retailer of goods which are specified on the coupons, a right to a price reduction equal to the amount printed on them. For the retailer who issues the coupons himself (which is the case here) the coupons represent the obligation to grant a price reduction when they are surrendered upon subsequent purchases of goods specified on them.

Having regard to the decisions of the Court mentioned above in paragraph 12, it must, however, be assumed that a coupon no longer incorporates a right to a price reduction if and to the extent to which the issuer, in return for the obligation he enters into in issuing the coupon, obtains consideration évaluable in monetary terms — and thus not only the expectation of increased turnover. Allow me to categorize the situation under consideration with reference to the foregoing description.

14In the simplest case in which an issuer/ supplier distributes the coupons free of charge in leaflets, he clearly receives no consideration for the coupons put into circulation. Therefore, there is indeed a price reduction. For I see no reason why a price reduction which, instead of being granted directly, is granted upon the surrender of a coupon put into circulation in that way should not equally well fall under Article 11 A 3(b): neither the aim nor the wording of that article present any bar. The fact that such a coupon distributed free of charge in a leaflet can be regarded as a certificate of entitlement to a price discount is indeed consistent with the practice of the United Kingdom authorities of not including the amount indicated on the coupon in the taxable amount where goods are purchased upon the surrender of a coupon distributed in that way. I accordingly consider that practice to be in accordance with Community law.

15There remains the question whether a coupon given upon an earlier purchase may likewise be regarded as a price reduction certificate. The United Kingdom points out that in this case the customer must in fact spend money in order to acquire the coupon and that the issuer/supplier receives consideration in the form of an increase in turnover. In those circumstances, there is, in its view, no question of a price discount or rebate within the meaning of Article 11 A 3(b).

It is true that in those circumstances the customer spends money and that upon the sale of coupon-bearing goods the supplier receives a price. However, there is then, to use the words of the Court (see point 12 above), a direct link between the full price and the goods then sold and at that moment the full price should be included in the taxable amount. The coupon which the purchaser obtains at that moment is handed over to him by the supplier for possible use in a subsequent purchase and upon the making of that purchase it provides a right to a price reduction, just like a coupon distributed free of charge in a leaflet. The reduced price actually received by the supplier when the subsequent purchase is made upon the surrender of the coupon then constitutes the taxable amount. The coupon, which — and because it — in the given circumstances constitutes an obligation on the part of the supplier, cannot be regarded as consideration, that is to say an for the supplier capable of being advantage expressed in money. It is therefore to be regarded as a price discount or rebate within the meaning of Article 11 A 3(b).

The other questions

16The answer to the third question suggested above leads me to comment briefly on the other questions.

As already stated above (in point 7), an answer to the second question is unnecessary in view of the answer to the third question. From the relationship, between Article 11 A 1(a) and Article IIA 3(b) of the Sixth Directive it follows that the taxable amount for supplies of goods or services consists of the consideration actually received or to be received, not including the price discount allowed. Once a coupon is recognized as 18. I do not consider it necessary for me to being a price reduction certificate, it is go into the fifth question since it assumes therefore established that it does not that the previous questions are to be constitute consideration for the purposes of answered in a way which I do not propose. Article 11 A.

19Nor do I consider it necessary to 17. From the answer to the third question examine the sixth question. To my mind the it also follows that from the three possible provision of national law in question does answers set out in the fourth question the not appear applicable to a supply of goods answer set out in (a) must be chosen. involving a price discount.

Conclusion

Conclusion

20To sum up, I propose that the Court should answer the preliminary questions as follows:

'(1) The taxable amount defined in Article 11 A 1(a) of the Sixth Directive on turnover taxes does not refer exclusively to the payment of a sum of money by the customer.

(2) A retailer grants a price discount or rebate as defined in Article 11 A 3(b) of the Sixth Directive when, upon the surrender of a coupon given upon the sale of a first article, he allows a price reduction upon the sale of a second article specified on the coupon. Only the price actually received by the retailer for the second article then falls within the taxable amount.'

Notes

(1) Sixth Council Directive (77/388/EEC) of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — Common system of value-added tax: uniform basis of assessment (OJ 1977, L 145, p. 1).

(2) Judgment of 23 November 1988 in Case 230/87 2 — Judgment of 23 November 1988 in Case 230/87

(22) — JJuuddggmmeenntt ooff 2233 NNoovveemmbbeerr 11998888 iinn CCaassee 223300//8877 Naturally vv Yours Cosmetics Limited vv Commissioners of Customs and [[11998888]] EECCRR 66336655,, ppaarraaggrraapphh 1100 Excise [[11998888]] EECCRR 66336655,, ppaarraaggrraapphh 1100

(3) Second Council Directive (67/228/EEC) of 11 April 1967

(3) Second Council Directive (67/228/EEC) of 11 April 1967

(33) — SSeeccoonndd CCoouunncciill DDiirreeccttiivvee ((6677//222288//EEEECC)) ooff 1111 AApprriill 11996677 oonn tthhee hhaarrmmoonniizzaattiioonn ooff lleeggiissllaattiioonn ooff MMeemmbbeerr SSttaatteess oonn tthhee hhaarrmmoonniizzaattiioonn ooff lleeggiissllaattiioonn ooff MMeemmbbeerr SSttaatteess concerning turnover taxes — Structure and procedures for concerning turnover taxes — Structure and procedures for ccoonncceerrnniinngg ttuurrnnoovveerr ttaaxxeess —— SSttrruuccttuurree aanndd pprroocceedduurreess ffoorr application of the common system of value-added tax (OJ, application of the common system of value-added tax (OJ, aapppplliiccaattiioonn ooff tthhee ccoommmmoonn ssyysstteemm ooff vvaalluuee--aaddddeedd ttaaxx ((OOJJ,, EEnngglliisshh SSppeecciiaall EEddiittiioonn 11996677,, pp.. 1166)).. EEnngglliisshh SSppeecciiaall EEddiittiioonn 11996677,, pp.. 1166))..

(4) See the judgment of 5 February 1981 ¡n Case 154/80

(5) Article 11 C(l) of the directive deals with price reductions Staatssecretaris von Financiën v Coöperatieve Aardappelenbe which are granted after the supply takes place and which waarplaats [1981] ECR 445, at p. 453, paragraph 9. are likewise excluded from the taxable amount.

(6) Sec the first paragraph of Article 2 of the First Council

(6) Sec the first paragraph of Article 2 of the First Council

(66) — SSeecc tthhee ffiirrsstt ppaarraaggrraapphh ooff AArrttiiccllee 22 ooff tthhee FFiirrsstt CCoouunncciill Directive (67/227/EEC) of II April 1967 on the harmon Directive (67/227/EEC) of II April 1967 on the harmon DDiirreeccttiivvee ((6677//222277//EEEECC)) ooff IIII AApprriill 11996677 oonn tthhee hhaarrmmoonn iizzaattiioonn ooff lleeggiissllaattiioonn ooff MMeemmbbeerr SSllaatteess ccoonncceerrnniinngg iizzaattiioonn ooff lleeggiissllaattiioonn ooff MMeemmbbeerr SSllaatteess ccoonncceerrnniinngg ttuurrnnoovveerr llaaxxeess ((OOJJ,, EEnngglliisshh SSppeecciiaall EEddiittiioonn 11996677,, pp.. 1144)).. ttuurrnnoovveerr llaaxxeess ((OOJJ,, EEnngglliisshh SSppeecciiaall EEddiittiioonn 11996677,, pp.. 1144))..

(77) — SSeecc CCaassee 115544//8800 ((cciitteedd aabboovvee iinn ffoooottnnooiicc 44)),, ppaarraaggrraapphh !!33..

(77) — SSeecc CCaassee 115544//8800 ((cciitteedd aabboovvee iinn ffoooottnnooiicc 44)),, ppaarraaggrraapphh !!33.. Sec also Case 230/87 (cilcd above in footnote 2), Sec also Case 230/87 (cilcd above in footnote 2), SSeecc aallssoo CCaassee 223300//8877 ((cciillccdd aabboovvee iinn ffoooottnnoottee 22)),, paragraph 16. paragraph 16. ppaarraaggrraapphh 1166..

(8) Case 154/80 (cited above m footnote 4), paragraph 12,

(8) Case 154/80 (cited above m footnote 4), paragraph 12,

(88) — CCaassee 115544//8800 ((cciitteedd aabboovvee mm ffoooottnnoottee 44)),, ppaarraaggrraapphh 1122,, aanndd CCaassee 223300//8877 ((cciitteedd aabboovvee iinn ffoooottnnoottee 22)),, aanndd CCaassee 223300//8877 ((cciitteedd aabboovvee iinn ffoooottnnoottee 22)),, paragraph 12; see also the judgment of 1 April 1982 in paragraph 12; see also the judgment of 1 April 1982 in ppaarraaggrraapphh 1122;; sseeee aallssoo tthhee jjuuddggmmeenntt ooff 11 AApprriill 11998822 iinn Case 89/81 v Case 89/81 v CCaassee 8899//8811 Staatstecrelans van Financien vv Hong Kong ((11998822)) EECCRR 11227777,, Trade Development Council ((11998822)) EECCRR 11227777,, paragraph 10 paragraph 10 ppaarraaggrraapphh 1100