The pandemic and related safety and aid measures seemed already behind us, but the tax authority keeps fighting for refunds of the aid awarded earlier.

A payment is not always treated as a consideration for services that are subject to VAT. To establish a taxable supply, there must be a direct link between the service and the consideration received for it. There is no direct link between a payment and the service if it is impossible to predict whether the consideration will be received. In its ruling C-713/21 (Finanzamt X) of 9 February 2023, the Court of Justice of the European Union (CJEU) assessed whether 50% of horse race cash prizes that is assigned to a stable owner should be treated as a consideration for a service chargeable to VAT. This article explores some of the legal niceties examined in the CJEU’s new ruling.

Cashback is one of consumer incentive programmes that are currently popular with manufacturers and wholesalers. This could involve a manufacturer (or a wholesaler) refunding a certain amount of money to the end consumer for buying goods they have manufactured (distributed). The refund may be a fixed price for a particular product or expressed as a percentage of the purchase value. A cashback may also occur as a discount coupon distributed by the manufacturer, which the end customer uses with the retailer, who then seeks reimbursement from the manufacturer. This procedure directly stimulates the end consumer’s choice because the manufacturer’s discount reaches him directly instead of being accumulated in the chain of traders. With many companies expanding their business beyond Latvia, a discount may also be granted to customers in other member states. This article explores whether a cashback made by the manufacturer (wholesaler) to the end customer affects the VAT payable by the manufacturer (wholesaler).