7.11 Conclusion

In this Chapter, I have examined barter transactions from a VAT perspective. I have come to the conclusion that I do not agree with the way the CJEU looks at barter transactions, where they consider a supply to be a payment at the same time. In my view, under the EU VAT system, this is not possible. I think that a barter transaction between two taxable businesses should be treated as two supplies for consideration, where the payments are (implicitly) settled. This also allows the businesses to easily assess the amounts of deductible VAT regarding these transactions. If the businesses won’t agree on a price for the barter transaction, the ‘open market value’ of the transaction(s) should be used to establish the taxable amount (as well as the deductible VAT amount). In my view, the same taxable amount should be applied in a barter transaction for both sides of the transaction (i.e. for the supplies made by suppliers). This is in line with the economic and commercial reality of such transactions, or at least more in line than the current VAT treatment is.

When a ‘payment in kind’ for a supply of goods or services has no real economic value but where it is more a condition for qualifying for a discount or a supply, the supply is not considered a barter transaction because, the ‘payment in kind’ is not the consideration for a supply. Where the ‘payment in kind’ does have an (agreed) economic value, businesses should apply the above rules for determining the taxable amount (and, if applicable, the amount of deductible VAT).

If the price for a barter transaction is affected because the parties to the transaction are related and (at least) one of them does not have the right to fully deduct input VAT, EU Member States should be allowed to disregard the agreed price for the (barter) transaction and to use the ‘open market value’ of the supply as taxable amount.

Also, granting access to or allowing the use of user data or customer loyalty can be consideration for a supply from an EU VAT perspective.