VAT taxable amount follows actual consideration paid; below-cost sales cannot be reclassified as private-use supplies.

Under the Sixth Council Directive 77/388/EEC, the taxable amount for a supply is the consideration actually received, reflecting the subjective value paid by the purchaser or third party. The deeming rules for private-use or free-of-charge supplies apply only where no actual consideration is received, and are meant to prevent unequal treatment between business use and private use of business assets or services. Where a supply is made for consideration, even if that amount is below cost price, it remains a taxable transaction for consideration and cannot be reclassified as a private-use application. National rules treating such transactions as private use solely because the price is below cost are therefore precluded.

---

---

Issues: Whether, under the Sixth Council Directive 77/388/EEC, national rules may treat a supply of goods or services as an application for private use where an actual consideration is paid but the consideration is lower than the cost price of the goods or services.

Analysis: The taxable amount under the directive's general rule is the consideration actually received for a supply, namely the subjective value paid by the purchaser, customer or third party. Articles 5(6) and 6(2)(b) apply only where no consideration is actually received and deem certain free-of-charge uses to be supplies for consideration in order to preserve equal treatment between a taxable person using business assets or services privately and an ordinary consumer. Where the transaction is in fact made for consideration, even if the amount is lower than cost, it remains a transaction effected for consideration and does not fall within those deeming provisions. The cost incurred by the supplier itself cannot be treated as part of the taxable amount, and the risk of avoidance through symbolic pricing is not resolved by extending those provisions beyond their text.

Conclusion: National legislation that treats transactions for which actual consideration is paid as private-use applications, merely because the consideration is below cost, is precluded by the directive.

Ratio Decidendi: Provisions deeming private-use or free-of-charge supplies to be taxable apply only where no actual consideration is received; if an actual consideration exists, the taxable amount is the consideration actually paid, not the supplier's cost.

---