CJEU – Recent Developments in Value Added Tax 2020

S. 1801. Vodafone Portugal

The Vodafone Portugal case seems to confirm that the CJEU, in its conclusions, is giving considerable significance to the economic reality of the circumstances. In this case, the Court considered that in order to identify whether or not an independent and identifiable service is being provided, one has to look at the economic reality of the circumstances, i.e. why is the cancellation remuneration actually being charged?

A contract between a supplier of telecom services and a customer usually provides a tie-in clause whereby the customer binds himself to procure the services of the supplier for a specified period in return for the supplier providing a service (or services) at a price that is less than that normally charged for the same service where no contract exists.

The Court considers the taxable value of the service as comprising the whole amount to be paid for the duration of the contract, and refers to individual payments by the customer as “instalments”. It also considers any specified remuneration mentioned in the contract for discontinuation on behalf of the customer as part of the whole value of the contract, as it represents a sort of minimum considerat...