VAT

The Administrative Court of Versailles (France) ruled that hotels have no right to deduct VAT in relation to free hotel stays offered under a ‘hotel loyalty program’

CAA de VERSAILLES, 06.06.2017, 17VE00830, TVA, Programme de fidélité

In the present case, the Administrative Court of Appeal of Versailles (Cour administrative d’appel de Versailles) had to examine a loyalty rewards program in the light of the EU system of VAT.

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The French Council of State (Conseil d’Etat) ruled that promotional gifts are not subject to VAT

Conseil d’État, 10ème et 9ème chambres réunies, 08/06/2016, 380624, Inédit au recueil Lebon

In the present case, the Council of State (Conseil d’Etat) had to examine whether the delivery of promotional gifts could be subject to VAT.

X, a company specialized in the sale of textile goods, considered that items sent to clients as promotional gifts or ‘Refer-a-friend bonus’ should not be subject to VAT. The French fiscal administration refused to grant such tax deduction since Article 238 of Annex II of the General Tax Code previewed that items transferred with no financial counterpart or against a very low level of remuneration, such as commissions, salary, bonus, discounts and gifts, had to be included in the taxable amount for the VAT purposes.

Directive 77/388/CEE
Directive 2006/112/CE

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The French Council of State (Conseil d’Etat) clarified in which conditions French taxpayers may invoke judgments of the European Court of Justice in order to challenge national taxes

(Conseil d’État, 10ème chambre jugeant seule, 02/05/2016, 375579, Inédit au recueil Lebon)

 In the present case the Council of State (Conseil d’Etat) had to clarify the procedural rules governing tax recovery claims and to specify under which conditions a ruling of the European Court of Justice could serve as a legal basis for a tax recovery claim.

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