Opinion of Mr Advocate General Van Gerven

Mr President,

Members of the Court,

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:

Background

2. The 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).

3. The 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.

4. Boots 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:

5. I 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

6. By 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.

The second and third questions

7. Both 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 Article 11 A 1(a) of the directive. The point of the third question, on the other hand, is to ascertain whether that amount is excluded from the 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.

8. The 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.

9. Article 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.

10. I 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).

11. As 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)).

12. Turnover 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:

13. How 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.

14. In 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.

15. There 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).

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

17. From the answer to the third question it also follows that from the three possible answers set out in the fourth question the answer set out in (a) must be chosen.

18. I do not consider it necessary for me to go into the fifth question since it assumes that the previous questions are to be answered in a way which I do not propose.

19. Nor do I consider it necessary to examine the sixth question. To my mind the provision of national law in question does not appear applicable to a supply of goods involving a price discount.

Conclusion

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

1 Original language: Dutch.

2 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).

3 Judgment of 23 November 1988 in Case 230/87 Naturally Yours Cosmetics Limited v Commissioners of Customs and Excise [1988] ECR 6365, paragraph 10

4 Second Council Directive (67/228/EEC) of 11 April 1967 on the harmonization of legislation of Member States concerning turnover taxes — Structure and procedures for application of the common system of value-added tax (OJ, English Special Edition 1967, p. 16).

5 See the judgment of 5 February 1981 in Case 154/80 Staatssecretaris von Financiën v Coöperatieve Aardappelenbewaarplaats [1981] ECR 445, at p. 453, paragraph 9.

6 Article 11 C(l) of the directive deals with price reductions which are granted after the supply takes place and which are likewise excluded from the taxable amount.

7 Sec the first paragraph of Article 2 of the First Council Directive (67/227/EEC) of 11 April 1967 on the harmonization of legislation of Member Slates concerning turnover laxes (OJ, English Special Edition 1967, p. 14).

8 See Case 154/80 (cited above in footnoic 4), paragraph !3. Sec also Case 230/87 (cilcd above in footnote 2), paragraph 16.

9 Case 154/80 (cited above m footnote 4), paragraph 12, and Case 230/87 (cited above in footnote 2), paragraph 12; see also the judgment of 1 April 1982 in Case 89/81 Staatstecrelans van Financien v Hong Kong Trade Development Council (1982) ECR 1277, paragraph 10