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Reduction of the taxable amount EU VAT case law

27 cases of the Court of Justice and the General Court of the European Union on this point of VAT law, from 1996 to 2025.

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Under each case, what the Court decided, from its summary. The summaries are AI-generated and are not official documents: open the case for the Court’s own text.

T-646/24 MS KLJUČAROVCI

Judgment · 3 December 2025 · Slovenia

Triangular simplification in a four party chain, and fraud

Article 141(c) does not require the person to whom the subsequent supply is made to take physical possession or receipt. Transport to that person's own customer in the same Member State does not prevent the condition being met, and the intermediary's knowledge of the onward supply is irrelevant, transactions being taxed on their objective characteristics. However, the authorities and courts of the Member State of identification must refuse both the Article 42 and 141 scheme and the second paragraph of Article 41 reduction where the acquirer knew or should have known it was participating in fraud in the chain. Useful for traders and advisers structuring chain transactions.

C-248/23 Novo Nordisk (VAT – Contributions paid pursuant to an ex lege obligation)

Judgment · 12 September 2024 · Hungary

Statutory clawback payments by pharmaceutical companies as a price reduction

Article 90(1) precludes such legislation. Even though the payments may be included in the taxable amount as a tax under Article 78(a) and Article 401 does not stand in the way, their ex lege character is irrelevant. The health insurance agency is the actual beneficiary and the final consumer, the payments serve the same subsidy purpose as contractual price volume payments, and the company never freely disposed of that part of the consideration. Collection via the tax authority, which transfers the sums immediately, does not change this. Confirms and extends Boehringer Ingelheim (C-717/19) to purely statutory clawbacks. Relevant to life sciences and healthcare indirect tax advisers.

C-314/22 Consortium Remi Group

Judgment · 29 February 2024 · Bulgaria

Bad debt relief, limitation periods, invoice correction and interest

A limitation period is permissible, penalising the insufficiently diligent, but it may only start when the taxable person could, acting diligently, assert the right to reduction. Absent national rules that starting point must be identifiable with reasonable probability. Requiring prior invoice correction and prior notice to the debtor is precluded where, absent specific national provisions, compliance is impossible in time for reasons beyond the taxable person's control. Refund carries default interest, running from when the reduction is claimed in the current period's return. Relevant wherever a Member State has used the Article 90(2) derogation but denies relief outright.

C-482/21 Euler Hermes

Judgment · 9 February 2023 · Hungary

Bad debt relief claimed by a trade credit insurer

Article 90(1) and fiscal neutrality do not preclude such legislation. The portion of the debt for which the insurer paid compensation was in fact received by the suppliers as consideration (consideration may come from a third party), so there is no non-payment for that part and no relief for the suppliers either. Assignment under civil law does not make the insurer the taxable person entitled to reduce the taxable amount. Treating it as such would breach neutrality. Credit insurers and factoring or debt purchase businesses cannot recover the VAT element of indemnified debts by standing in the supplier's shoes.

C-398/20 ELVOSPOL

Judgment · 11 November 2021 · Czechia

Bad debt relief and claims arising shortly before insolvency

Article 90 precludes such a condition where it is not ruled out that the claim may ultimately prove definitively irrecoverable. A blanket six-month cut-off bears no relation to how the claim is actually treated in the insolvency proceedings, so it does not address uncertainty of recovery under Article 90(2). Nor is it justified under Article 273. The timing of the claim alone raises no presumption of evasion, and forcing the creditor to bear unreceived VAT exceeds what is strictly necessary. Suppliers with Czech bad debt claims caught by the six-month rule have grounds to reopen refused adjustments.

C-324/20 X-Beteiligungsgesellschaft (VAT – Successive payments)

Judgment · 28 October 2021 · Germany

Chargeability on a one-off service paid in instalments

Article 64(1) does not cover a one-time supply paid in instalments. It applies only where the nature of the service itself justifies periodic payment, that is, continuous or recurrent supplies performed over defined periods where the completion date is not unambiguous. Article 90(1) does not assist. An instalment not yet fallen due is not non-payment, since the agreed consideration is unchanged. Pre-financing the VAT does not alter that. The supplier owes output tax regardless of receipt. Relevant to anyone structuring one-off services (brokerage, corporate finance, agency, consultancy) with deferred or staged fee payments.

C-717/19 Boehringer Ingelheim

Judgment · 6 October 2021 · Hungary

Reduction of the taxable amount for voluntary payments to a State health insurance agency

Article 90(1) of the VAT Directive precludes both conditions. Article 90(1) is not limited to price reductions imposed by law. A voluntary contractual payment reducing the consideration actually retained is a price reduction after the supply, the health insurance agency being treated as final consumer. Member States' discretion cannot extend to conditions that deny the reduction to an entire category of taxpayers. Where no invoice has been issued, neutrality and proportionality require the taxpayer to be allowed to prove the transaction by other means, particularly where the counterparty is a State entity. Confirms and extends Boehringer Ingelheim Pharma (C-462/16) to voluntary rebate arrangements with public payers, relevant to pharmaceutical and medical device suppliers operating under price volume or clawback agreements with State reimbursement bodies across the EU.

C-844/19 technoRent International and Others

Judgment · 12 May 2021 · Austria

Default interest on late VAT refunds where national law is silent

Articles 90(1) and 183, read with fiscal neutrality, require interest where either type of refund is not made within a reasonable period. A refund following a reduction of the taxable amount is treated exactly like excess input VAT. Article 27(2) of Directive 2008/9 is a catch-all for non-established claimants and cannot be applied by analogy outside its scope. The conditions (rate, starting point) remain for national law, and the referring court must interpret domestic law in conformity, short of contra legem. Silence in national law is no answer to an interest claim.

C-802/19 Firma Z

Judgment · 11 March 2021 · Germany

Discounts to insured persons and reduction of the taxable amount

The pharmacy cannot reduce its taxable amount. The pharmacy's supply to the fund was an exempt intra-Community supply, so there was no taxable amount capable of adjustment, and the onward supply by the fund to its insured persons fell outside the scope of VAT altogether. The conditions of Article 90(1) were therefore not met, and there was no need to consider whether a chain of transactions within the meaning of Elida Gibbs existed. Offsetting a reduction against the taxable amount of a different transaction is precluded. Elida Gibbs relief presupposes a taxable amount of the discount-giver that can be reduced.

C-507/20 FGSZ

Order · 3 March 2021 · Hungary

When the limitation period for bad debt relief starts to run

By reasoned order under Article 99, the Court held that where a Member State imposes a limitation period for asserting the right to reduce the taxable amount in respect of a definitively irrecoverable debt, that period must run from the date the debt became definitively irrecoverable, not from the date performance of the payment obligation was originally due. A diligent taxable person, here applying six days after the liquidator's finding, and absent abuse, cannot be deprived of the reduction. Article 90(1) has direct effect.

C-335/19 E. (VAT – Reduction of the taxable amount)

Judgment · 15 October 2020 · Poland

Bad debt relief and the status of debtor and creditor

Article 90 precludes all of those conditions. VAT registration of debtor or creditor is unconnected with whether non-payment is definitive, and symmetry with the debtor's input tax adjustment under Article 185(2) does not require either party to retain taxable status. Excluding relief pending the outcome of insolvency proceedings is disproportionate. A reasonable probability of non-payment, with upward re-evaluation if payment follows, suffices. Article 90(1) has direct effect and the conditions must be set aside even if other national provisions are affected. Suppliers with unpaid Polish invoices can claim relief notwithstanding the customer's deregistration, liquidation or insolvency, and notwithstanding their own loss of taxable status, relying directly on Article 90(1).

C-146/19 SCT

Judgment · 11 June 2020 · Slovenia

Bad debt relief where the claim was not lodged in the debtor's insolvency

Extinction of the claim through failure to lodge it produces a definitive reduction of the debtor's obligations, so this is not "non-payment" under Article 90(2) but falls under Article 90(1). Requiring lodgement is in principle a legitimate formality under Articles 90(1) and 273, but refusal is precluded where the taxable person shows the claim would not have been recovered even if lodged. Article 90(1) has direct effect. National courts must interpret national law consistently or disapply it. Creditors in Member States that condition bad debt relief on procedural steps in the debtor's insolvency now have an escape route. Relevant to insolvency practitioners, credit control and finance teams, and advisers handling write-offs.

C-292/19 Porr Építési Kft.

Order · 29 January 2020 · Hungary

Definitively irrecoverable debts must give a reduction of the taxable amount

The Court holds that a Member State must allow the reduction where the taxable person can show that the claim is definitively irrecoverable, which is for the referring court to verify. Such a situation is not a case of non payment capable of falling within the derogation in Article 90(2), because that derogation rests on the uncertainty of whether payment will eventually be made, and here that uncertainty is gone. The order draws the line that makes Article 90(2) workable.

C-242/18 UniCredit Leasing

Judgment · 3 July 2019 · Bulgaria

Reduction of the taxable amount on termination of a finance lease

A final notice of adjustment does not bar reduction under Article 90(1). It is not a formality justified by Article 273. Both the arrears up to termination and the termination compensation (itself taxable consideration for the leasing supply) are cases of non-payment, so a Member State which has not legislated for reduction on non-payment may refuse it. But the derogation cannot apply where the taxable person shows a reasonable probability that the debt will not be honoured, subject to upward re-evaluation if payment occurs. Lessors and other suppliers in Member States which exclude bad debt relief cannot be refused relief indefinitely.

C-127/18 A-PACK CZ

Judgment · 8 May 2019 · Czechia

Bad debt relief where the insolvent debtor has lost taxable person status

Article 90 precludes national legislation denying correction of the taxable amount for total or partial non-payment on the ground that the debtor is no longer a taxable person. The derogation in Article 90(2) exists only to address uncertainty as to whether non-payment is definitive. Loss of taxable person status in insolvency points the other way. Article 273 cannot justify a rule that forces a supplier to pay VAT it never received, absent any particular evasion risk.

C-672/17 Tratave

Judgment · 6 December 2018 · Portugal

Prior notice to the debtor as a condition for reducing the taxable amount

The Court held that neutrality and Articles 90 and 273 do not preclude such a prior notification requirement. It falls within the Member States' discretion over formalities, contributes to correct collection, prevention of evasion and elimination of the risk of revenue loss, and allows the State to act in time in the insolvency proceedings. The requirement is subject to not being excessively onerous, which the referring court must verify. No particular form is prescribed. The second question was not answered. On a claim for bad debt relief the domestic notification formalities operate as substantive preconditions rather than administrative afterthoughts, and they have to be evidenced contemporaneously.

C-462/16 Boehringer Ingelheim Pharma

Judgment · 20 December 2017 · Germany

Statutory discounts to private health insurers and the taxable amount

The Court held that Article 90(1) requires the reduction. The manufacturer cannot freely dispose of the full price because the discount is fixed and mandatory by law, so part of the consideration is not received. The absence of any contractual link, or of a modification of contractual relations, does not preclude Article 90(1). On these facts the private insurer is to be treated as the final consumer of the manufacturer's supply, so VAT collected may not exceed what that final consumer paid. Manufacturers subject to statutory or regulated rebate schemes paid to parties outside the invoicing chain, in pharmaceuticals and comparable regulated sectors, can reduce the taxable amount rather than absorbing VAT on rebated amounts.

C-404/16 Lombard Ingatlan Lízing

Judgment · 12 October 2017 · Hungary

Reduction of the taxable amount on termination of a finance lease

The Court held that definitive termination of such a lease, where the lessor recovers the asset and can no longer claim the instalments, is a cancellation or refusal under Article 90(1), not non-payment. The distinction is definitiveness because non-payment leaves the debt in principle still owed and possibly only temporarily unpaid. Article 90(1) has direct effect and can be invoked despite the national derogation. Member States may still impose formalities proving the consideration will definitely not be received. Lessors and asset finance providers who accounted for VAT on the full amount at the outset can claim a reduction when an agreement is definitively terminated for default, including in Member States which have excluded reduction for bad debts.

C-209/14 NLB Leasing

Judgment · 2 July 2015 · Slovenia

Repossession under a finance lease and reduction of the taxable amount

Where the lease provides for transfer of ownership on expiry, or the lessee enjoys all essential powers of ownership with substantially all risks and rewards and the present value of the payments is practically identical to market value, the transaction is an acquisition of capital goods. Article 90(1) does not permit reduction where the taxable person has in fact received all the consideration, or where, absent refusal or cancellation, the recipient is no longer liable for the price. Neutrality does not bar separate taxation of the lease and the onward sale unless they form a single supply, for the national court to decide. Relevant to lessors and to sale and lease back structures over immovable property.

C-589/12 GMAC UK

Judgment · 3 September 2014 · United Kingdom

Direct effect of bad debt relief where national law exempts the resale

Article 11C(1), first subparagraph, is sufficiently precise and unconditional to have direct effect, despite the discretion left to Member States over conditions. A Member State cannot refuse it on the ground that the combined result with national law is one neither system intended. The shortfall stems solely from the national exemption of the auction sale, and a State may not plead its own defective implementation. Whether that national treatment conforms is irrelevant. Abuse remains for the national court, but structuring to limit tax liability is legitimate. Confirms that taxable persons may rely on directly effective Directive provisions transaction by transaction, without the tax authority netting off advantages arising from national rules applied to a linked transaction.

C-337/13 Almos Agrárkülkereskedelmi

Judgment · 15 May 2014 · Hungary

Reduction of the taxable amount where the price is not paid

Article 90 does not preclude national law that omits non-payment of the price, that omission being treated as use of the Article 90(2) derogation, but the legislation must then cover all the other Article 90(1) situations where consideration is not received, which the national court must verify. Article 90(1) is sufficiently precise and unconditional to be relied on directly. Formalities may be imposed to prove that the consideration definitively will not be received, but no more than necessary. Confirms that a Member State may silently derogate for bad debts.

C-310/11 Grattan

Judgment · 19 December 2012 · United Kingdom

No retrospective reduction of the taxable amount under the Second Directive

Article 8(a) confers no such right. Under Article 5(5) the chargeable event occurred on delivery and the tax debt arose on the basis of assessment fixed at that moment. The Second Directive contained nothing allowing regularisation afterwards. Fiscal neutrality cannot supply what Article 11C(1) of the Sixth Directive later added. Since the sub-customers, as final consumers, paid the unreduced catalogue price and the commission went to the agents, the taxable amount was that full price. Closes off pre-1978 repayment claims resting on post-supply rebates, credits or agents' commission, a Fleming-style claim pattern familiar to UK retailers and their advisers.

C-588/10 Kraft Foods Polska

Judgment · 26 January 2012 · Poland

Acknowledgment of receipt of a credit note as a condition for reducing the taxable amount

The requirement is a condition within Article 90(1) and, in principle, neutrality and proportionality do not preclude it. It helps ensure correct collection, prevent evasion and avoid loss of revenue. But where obtaining the acknowledgment within a reasonable period is impossible or excessively difficult, the supplier must be allowed to prove by other means that he took all necessary steps to satisfy himself that the customer has and knows of the correcting invoice, and that the transaction was actually carried out on the corrected terms. Member States may condition credit note relief on customer acknowledgment, but cannot apply it rigidly where customers are under no legal duty to acknowledge.

C-489/09 Vandoorne

Judgment · 27 January 2011 · Belgium

Bad debt relief under a single-stage tobacco tax label scheme

The Court held that those provisions do not preclude such legislation. Intermediate suppliers under the scheme neither deduct input tax nor owe output tax, so they have no VAT debt capable of refund. That the tax is economically included in the price they paid is irrelevant. Because the taxable amount is fixed by reference to the final retail price, non-payment does not reduce it, and a refund would affect tax revenue at the final consumption stage to a non-negligible extent. Confirms that bad debt relief is structurally unavailable to wholesalers and distributors within Member States operating tax label style single-stage collection for manufactured tobacco.

C-425/06 Part Service

Judgment · 21 February 2008 · Italy

Abuse where the tax advantage is the principal aim, not the only one

The Court held that there can be a finding of an abusive practice where the accrual of a tax advantage constitutes the principal aim of the transaction or transactions at issue. It is not necessary that the tax advantage be the only purpose pursued. Whether the arrangements before it amounted to abuse was left to the national court to determine in the light of that interpretation, taking account of the artificial nature of the operations and the links of a legal, economic or personal nature between the operators involved. The decisive refinement of Halifax.

C-427/98 Commission v Germany

Judgment · 15 October 2002 · Germany

Manufacturers' money-off coupons and reduction of the taxable amount

Germany failed to fulfil its obligations under Article 11 by not permitting adjustment of the taxable amount of the person making the reimbursement. Elida Gibbs is confirmed. The manufacturer's taxable amount is its selling price less the coupon value, with no readjustment for intermediate transactions. The retailer's taxable amount remains the full retail price, including the manufacturer's reimbursement. Where the retail supply is exempt (export or intra-Community) or the customer is a deducting trader, Member States may use Article 11(C)(1) and Article 20(1)(b) to prevent over-deduction. Confirms that coupon-issuing manufacturers may reduce output tax on redemption regardless of the length of the distribution chain, and that no corrective invoicing or input tax adjustment down the chain may be imposed as a precondition. Relevant to FMCG manufacturers, retailers and their advisers designing promotional schemes, and to retailers accounting for the full price including third party reimbursement.

C-317/94 Elida Gibbs

Judgment · 24 October 1996 · United Kingdom

Manufacturers' money-off and cash-back coupons, reduction of the taxable amount

In both schemes the taxable amount is the manufacturer's selling price less the amount stated on the coupon and actually refunded, and it makes no difference whether the goods went first to a wholesaler or straight to a retailer. The tax authorities may not collect more than the VAT ultimately borne by the final consumer. The intermediate transactions are not adjusted. Wholesalers' and retailers' taxable amounts remain unchanged, neutrality being preserved through the ordinary deduction rules. The foundational authority for manufacturer-level discounts granted outside the contractual chain.

Related topics

Taxable amount · Fiscal neutrality · Supply of goods or services · Direct effect · Total or partial non-payment of the price · National derogations · Supply of goods · Principles of fiscal neutrality and proportionality · Tax evasion and abuse · Simplification measures