4.1.1 Is the supply part of a multiple-element transaction?

Whether a supply is part of a multiple-element transaction is usually easy to establish. A multiple-element transaction is a transaction where more than one supply (of goods or services) is made under the agreement regarding that transaction. This means that all elements should be explicitly included in the agreement.1 This is different for what I refer to as ‘dependent ancillary elements’, such as packaging materials (see Chapter 4).

Examples of multiple-element transactions are: the supply of a telecommunications services package with a telephone, an all-inclusive holiday, the supply of a bicycle including the agreed servicing of a bicycle after six months of use and the supply of an agreed number of future updates with the supply of a standard software package.

As mentioned, in my view, for a supply to be considered part of a multiple-element supply, the element must be part of the agreement regarding the multiple-element supply. If, for example, all visitors to a store are offered a free gift, irrespective of whether they make a purchase or not, and if, after paying for a purchase at the checkout, a paying customer receives such a free gift, I do not consider this gift to be part of the earlier (multiple-element) transaction. The same applies, in my view, to a situation where all people purchasing petrol at a chain of petrol stations are offered tokens that they can save to obtain free gifts if they have saved a sufficient amount of tokens.2 Even though there is obviously some form of legal agreement between the purchasers of the petrol that accept the tokens and the chain of petrol stations, the tokens are in my view not ‘part of the agreement’ regarding the supply of the petrol. The tokens are offered but people have a choice not to accept them. The price of the petrol is not dependent on whether or not purchasers of the petrol accept the tokens or vouchers. The vouchers are not mentioned on the invoice for the purchase of the petrol. Therefore, these vouchers are not an element included in a multiple-element supply, but rather a separate supply that is made conditional to the supply of the petrol but not included in it. It is not part of the supply, but rather the result of it. Note that the supply of the token(s) is not the (end) purpose of the people accepting them. That would be the goods or services obtained when the tokens are redeemed. I will elaborate on this in Chapter 9.

The above reasoning is based on relevant VAT (related) rules. It is also possible to look at multiple-element supplies from a different angle: the relevant accountancy rules.