6.4.4 What is a ‘gift of small value’

By its very meaning, the concept ‘small’ can only be applied in relation to other quantities. In the dictionary, small is defined as ‘insignificant’ or ‘unimportant’.1 Again, these concepts can only be used in relation or comparison to other concepts (which are more significant or more important).

When the EU VAT Directive (or any of its predecessors) does not contain explicit guidance for defining uniformly and precisely the requirements which must be satisfied for a gift to be considered ‘of small value’, Member States have a certain margin of discretion as regards those requirements, provided that they do not fail to have regard to the aims and role of the provision at issue within the scheme of the Directive.2

In this respect, the CJEU has ruled that Member States are allowed to fix a monetary ceiling for gifts made to the same person in the course of a specific period of time or as forming part of a series or succession of gifts.3 This is different from the supply of samples because, in my view, excluding the supply of ‘gifts of small value’ is a purely practical simplification whereas excluding the supply of free samples from taxation is based on the specific economic reality underlying the supply of samples, i.e. a necessary prerequisite for assessing the quality of the product represented.

According to the CJEU, Member States are not allowed to treat gifts by a business to different recipients as being gifts made to the same person, e.g. their employer. This would deprive the relevant provision of its effectiveness, especially where Member States have established a monetary ceiling for all gifts made to the same person in the course of a fixed period. Classifying the supply of free goods as ‘gifts of small value’ depends on the fact of knowing who is the distributor’s intended final recipient. The relationship between recipients has no effect on that classification.4