146. ECJ - Market Price Precludes Alternative Minimum Tax Base

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The tax base to which the applicable VAT rate (currently 16 % general rate; 7 % on certain supplies) is applied to calculate VAT is normally the price charged (net of VAT) for the taxable goods or services supplied. Under sec. 10 (5) UStG, the cost incurred by an entrepreneur in making a taxable supply constitutes an alternative minimum tax base for supplies to certain related persons, as defined in sec. 10 (5) UStG. The provision is intended to prevent entrepreneurs from delivering goods or rendering services to related persons at bargain prices and thereby reducing the VAT normally payable on the transaction. Authorisation for the provision is found in Article 11 Part A (1) (a) of the 6th VAT Directive.