On 16 January 2014, the European Court of Justice ruled that a discount, provided by an intermediary in its own name and for its own account to the traveler regarding a travel service that is provided directly by the tour operator, cannot be deducted from the VATable amount.
The German agency Ibero Tours GmbH (hereinafter: Ibero) offers holidays composed by tour operators. Ibero receives an intermediation service fee from the tour operators for each holiday sold.
In order to boost the sale of holidays, Ibero grants discounts to the travelers, in its own name and for its own account. Ibero initially paid VAT on the fee received without taking into account the discount granted to the travelers. Therefore Ibero requested a refund of the overpaid VAT to the German tax authorities over the period 2002 to 2005.
The payment made by Ibero, as a part of the travel price that, in the eyes of the traveler, has the form of a price reduction for that travel. Nevertheless, it affects neither the consideration received by the tour operator for the sale of that travel nor the fee received by Ibero for its intermediation service. The court of Justice ruled that the discount be paid, not reducing the taxable amount of the received intermediation service fee by Ibero or the consideration received by the actual tour operator.
In the Netherlands, the State Secretary for Finance already decided that such discount cannot reduce the taxable amount. Several Dutch courts ruled accordingly. This judgment actually confirms the accuracy of the earlier Dutch Rulings.