2.6.3 What is a ‘typical consumer’?

In a number of its cases, the CJEU refers to the perception of a ‘typical consumer’ as a relevant factor in determining the VAT consequences of a multiple-element transaction as based on ‘economic reality’.1 In this respect, the CJEU has repeatedly stated that in order to determine whether a business is supplying the customer – envisaged as being a typical consumer (emphasis by me, JB) – with several distinct principal services or with a single service, the essential features of the transaction must be ascertained and regard must be had to all the circumstances in which that transaction takes place.2

The term ‘typical consumer’ is not explained or defined by the CJEU in any of the cases where it is used for determining the VAT consequences of a multiple-element transaction.3 In the dictionary, synonyms for ‘typical’ are ‘normal’, ‘average’, ‘ordinary’, ‘standard’ and ‘regular’.4 The term ‘average consumer’ is also used by the CJEU in other case law, mostly for determining whether, for the application of the principle of fiscal neutrality (as in: treating similar transactions the same from a VAT perspective), transactions are sufficiently ‘similar’.5 According to the CJEU, for the latter purpose, as the average consumer’s assessment is liable to vary according to different factors that are specific to each national market, it is the average consumer in each Member State who must be taken as a reference. In my opinion, this is similar to ‘typical consumers’ whose views are relevant for determining the VAT consequences of multiple-element supplies, because an approach based on ‘economic reality’ can be similar to a means of prevention of distortion of competition, in the sense that they are both reflections of the principle of neutrality, as I will explain in Section 2.6.1.5. Neutrality dictates that (sufficiently) similar transactions are treated the same for VAT purposes, and economic reality can be used to assess whether transactions are similar.

In summary, the ‘typical consumer’ is, in my view, supposed to refer to the normal or average customer, i.e. the way a ‘regular person’ would perceive a transaction. This is not necessarily an easy or straight forward concept to apply.