Case C-520/10

Lebara Ltd

v

Commissioners for Her Majesty’s Revenue & Customs

(Reference for a preliminary ruling from the First-tier Tribunal (Tax Chamber))

‛Taxation — Sixth VAT Directive — Article 2 — Supply of services for consideration — Telecommunications services — Prepaid phonecards displaying information for making international calls — Marketing through a network of distributors’

Summary of the Judgment

1. Tax provisions — Harmonisation of laws — Turnover taxes — Common system of value added tax — Chargeable event for, and chargeability of, the tax

   (Council Directive 77/388, Arts 2(1) and 10(2), second para.)

2. Tax provisions — Harmonisation of laws — Turnover taxes — Common system of value added tax — Taxable transactions — Supply of services effected for consideration — Meaning

   Council Directive 77/388, Arts 2(1) and 6(1))

1.  It follows from point (1) of Article 2 of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, as amended by Directive 2003/92, that it is supplies of goods or services that are subject to value added tax, rather than payments made by way of consideration for such supplies. However, under the second subparagraph of Article 10(2) of the Sixth Directive, where a payment is to be made on account, the VAT may become chargeable without the supply’s having yet taken place, provided that all the relevant information concerning the chargeable event — namely, the future delivery or future performance — are already known.

   (see para. 26)

2.  Point (1) of Article 2 of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, as amended by Directive 2003/92, must be interpreted as meaning that a telecommunications services operator which offers telecommunications services consisting in selling to a distributor phonecards which display all the information necessary for making international telephone calls by means of the infrastructure provided by that operator and which are resold by the distributor, in its name and on its own behalf, to end users, either directly or through other taxable persons such as wholesalers or retailers, carries out a supply of telecommunications services for consideration to the distributor. On the other hand, that operator does not carry out a second supply of services for consideration, this time to the end user, where that user, having purchased the phonecard, exercises the right to make telephone calls using the information on the card.

   In the circumstances in which the telecommunications services operator receives only one actual payment in the course of supplying its telecommunications services, it cannot be treated as carrying out two supplies of services for consideration for the purposes of Article 6(1) of the Sixth Directive, one to the distributor and one to the end user. The recipient of the sole supply of services made for consideration by that operator is the person which is linked to that operator by a legal relationship in the course of which there is reciprocal performance. In that regard, it cannot be held that, by its payment to the telecommunications services operator, the distributor transfers to the telecommunications services operator only the remuneration paid by the end user, and thereby creates a direct link between operator and end user. On the contrary, there is reciprocal performance between the telecommunications services operator and the distributor at the time of the initial sale of the phonecards to the distributor.

   (see paras 31-33, 39, 41, 43, operative part)

Case C-520/10

Lebara Ltd

v

Commissioners for Her Majesty’s Revenue & Customs

(Reference for a preliminary ruling from the First-tier Tribunal (Tax Chamber))

‛Taxation — Sixth VAT Directive — Article 2 — Supply of services for consideration — Telecommunications services — Prepaid phonecards displaying information for making international calls — Marketing through a network of distributors’

Summary of the Judgment

1. Tax provisions — Harmonisation of laws — Turnover taxes — Common system of value added tax — Chargeable event for, and chargeability of, the tax

   (Council Directive 77/388, Arts 2(1) and 10(2), second para.)

2. Tax provisions — Harmonisation of laws — Turnover taxes — Common system of value added tax — Taxable transactions — Supply of services effected for consideration — Meaning

   Council Directive 77/388, Arts 2(1) and 6(1))

1.  It follows from point (1) of Article 2 of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, as amended by Directive 2003/92, that it is supplies of goods or services that are subject to value added tax, rather than payments made by way of consideration for such supplies. However, under the second subparagraph of Article 10(2) of the Sixth Directive, where a payment is to be made on account, the VAT may become chargeable without the supply’s having yet taken place, provided that all the relevant information concerning the chargeable event — namely, the future delivery or future performance — are already known.

   (see para. 26)

2.  Point (1) of Article 2 of Sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, as amended by Directive 2003/92, must be interpreted as meaning that a telecommunications services operator which offers telecommunications services consisting in selling to a distributor phonecards which display all the information necessary for making international telephone calls by means of the infrastructure provided by that operator and which are resold by the distributor, in its name and on its own behalf, to end users, either directly or through other taxable persons such as wholesalers or retailers, carries out a supply of telecommunications services for consideration to the distributor. On the other hand, that operator does not carry out a second supply of services for consideration, this time to the end user, where that user, having purchased the phonecard, exercises the right to make telephone calls using the information on the card.

   In the circumstances in which the telecommunications services operator receives only one actual payment in the course of supplying its telecommunications services, it cannot be treated as carrying out two supplies of services for consideration for the purposes of Article 6(1) of the Sixth Directive, one to the distributor and one to the end user. The recipient of the sole supply of services made for consideration by that operator is the person which is linked to that operator by a legal relationship in the course of which there is reciprocal performance. In that regard, it cannot be held that, by its payment to the telecommunications services operator, the distributor transfers to the telecommunications services operator only the remuneration paid by the end user, and thereby creates a direct link between operator and end user. On the contrary, there is reciprocal performance between the telecommunications services operator and the distributor at the time of the initial sale of the phonecards to the distributor.

   (see paras 31-33, 39, 41, 43, operative part)