The granting of a discount to a further buyer (intermediate discount) entitles to a reduction of the VAT base by the amount of the rebate granted, as explained by the personal interpretation of the Director of National Tax Information dated 20 April 2018
The applicant for interpretation is a company trading household items. Its recipients are mainly large networks selling electronic articles to retail customers (consumers). It uses different marketing strategies. one These are promotional discounts. It was in this context that tax doubts arose.
Determination of the tax base for granting rebates
The promotional rebates proposed by the applicant are that, for example, the customer who buys the washing machine and fridge at the same time will receive a reduction of the sum to be paid by a certain amount. The reduction is actually granted by the applicant’s counterparty (electronics store).
The applicant shall then reimburse the counterparty with the same amount by which the counterparty reduced the price to the consumer. The entire operation (discount) is not carried out directly between the applicant and the consumer. The realtor's role here is full of household appliances.
The applicant wanted to be informed of the VAT issue (fixing the tax base) if such a discount was granted. The request for interpretation indicated that the discount does not entail any corrective invoice. The taxpayer is based only on the accounting notes received from the stores that have actually reduced.
Judgment of the Court of Justice in similar cases
The applicant also referred to the case law of the EU Court of Justice on similar but not identical cases. For example, in the judgment C-427/98 it was concluded that ‘it would therefore not be compatible with the Directive if the tax base used to calculate the tax due by the producer as a taxable person were to exceed the amount definitively received by him’.
The case law of the CJEU set out by the applicant pointed to the general principle that VAT must be proportionate to the remuneration actually received by the taxable person. For this reason, the granting of a discount also reduces the VAT tax base.
The settlement of discounts from the tax side may be problematic due to the existence of many different options in which this discount is actually granted. The caselaw cited shows a specific line, i.e. reducing the VAT base regardless of the form of the price reduction. However, each case is individual and an individual interpretation may be requested for greater safety.
Author:
Paweł Kula
From 2016 related to Russell Bedford Poland. Graduate of law studies, Tax Advisor No. 12969. He specializes in excise duty and transfer pricing documentation. Author of tax-related articles published on industry websites.