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TMI Blog2005 (1) TMI 672X X X X Extracts X X X X X X X X Extracts X X X X ..... le 11A(1)(a) of the Sixth Directive states that, as a general rule, the taxable amount for supplies of goods and services is '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'. 5. Article 5(6) of the Sixth Directive provides: 'The application by a taxable person of goods forming part of his business assets for his private use or that of his staff, or the disposal thereof free of charge or more generally their application for purposes other than those of his business, where the value added tax on the goods in question or the component parts thereof was wholly or partly deductible, shall be treated as supplies made for consideration. However, applications for the giving of samples or the making of gifts of small value for the purposes of the taxable person's business shall not be so treated.' 6. With respect to the application of goods in the manner defined in Article 5(6), Article 11A(1) of the Sixth Directive lays down a special rule for the determination of the taxable am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not dictated by market conditions. It follows from the latter provision that that value is the cost of the service at the time of the 'application'. 11. The first subparagraph of Paragraph 2 in Chapter 7 of the Swedish law provides that the taxable amount for the supply of goods or services applied in this way is the value calculated pursuant to Paragraph 3(2)(a) or (b) in Chapter 7 of that law. The main proceedings and the questions referred for a preliminary ruling 12. Scandic carries on its business in the hotel and restaurant sectors in Sweden. It offers its staff of approximately 25 persons lunch at a fixed price in a canteen specially set up by the company. 13. For that meal, the members of staff pay a price which exceeds the cost incurred by Scandic. However, it is possible that, in future, the price will be lower than the cost. Wishing to ascertain the tax implications of providing meals to its staff, Scandic asked the Skatter ttsn mnden (a special commission responsible for issuing preliminary decisions in tax matters) whether the provision of meals to its staff was a supply of food (taxed at 12%) or a provision of services (taxed at 25%) and whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided, that the company's supplies are food dispensing services, are Article 2 and Article 6(2)(b) of the Sixth Directive to be interpreted as precluding provisions in the legislation of a Member State under which the application of services for private use means that a taxable person performs, arranges performance or in some other way provides a service for himself or his staff for private purposes or for other non-commercial purposes, where the service is provided for a consideration less than the cost of performing the service?' The questions referred for a preliminary ruling 18. The questions referred to the Court concern the determination of the taxable amount in the case of a supply of goods or a provision of services by a taxable person to the members of his staff for a price which is lower than the cost price. They have been referred, in particular, to enable the national court to assess the compatibility with the Sixth Directive of the Swedish law, which applies the rules laid down in Articles 5(6) and 6(2)(b) of that directive, in cases in which consideration has actually been paid for the supply of goods or the provision of services but in which that conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Naturally Yours Cosmetics Ltd. (supra) paragraph 16; and Julius Fillibeck Sohne GmbH Co. KG (supra), paragraph 14). 22. As the Advocate General rightly stated in point 35 of his Opinion, the fact that the price paid for an economic transaction is higher or lower than the cost price is irrelevant to the question whether a transaction is to be regarded as a 'transaction effected for consideration'. The latter concept requires only that there be a direct link between the supply of goods or the provision of services and the consideration actually received by the taxable person (see, to that effect, Case Apple Pear Development Council v. Commissioners of Customs Excise [2012] 36 STT 678, paragraph 12). 23. Articles 5(6) and 6(2) of the Sixth Directive treat certain transactions for which no consideration is actually received by the taxable person as supplies of goods and provisions of services effected for consideration. The purpose of those provisions is to ensure equal treatment as between a taxable person who applies goods or services for his own private use or for that of his staff and a final consumer who acquires goods or services of the same type (see Case Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uce measures derogating from that directive in order to prevent certain types of tax evasion or avoidance. 27. The Swedish Government also points out that, under Article 11A(1)(a) of the Sixth Directive, subsidies directly linked to the price of taxable supplies form part of the taxable amount. Were an undertaking to subsidise the meals provided to its members of staff through an external catering company, it would pay to that company directly the subsidy amount which supplements the price paid by the staff to the catering company. The subsidy would then be regarded as an amount directly linked to the price and would form part of the taxable amount pursuant to that provision. An undertaking which subsidises meals offered by its own catering services must be taxed in the same way. 28. It should be observed that, under the general rule laid down in Article 11A(1)(a) of the Sixth Directive, the taxable amount for the supply of goods or the provision of a service is formed by the consideration actually received by the taxable person 'from the purchaser, the customer or a third party including subsidies directly linked to the price of such supplies'. 29. The part of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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