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Tax & Legal

Tax & Legal

Supermarket discount model “Membership” is subject to the standard tax rate VAT


In its judgment of 18 December 2019 (XI R 21/18) published on 22 May 2020, the Supreme Tax Court ruled that the granting of a right to purchase goods at a reduced price (in the form of a “membership”) constitutes an independent service for VAT purposes and not just a service ancillary to the subsequent sale of goods. Even if the supermarket sells goods that are subject to both the standard tax rate (19%) and the reduced tax rate (7%), the standard tax rate is to be applied to the membership fee. Continue reading