Avon Cosmetics Ltd v Revenue and Customs Commissioners

European Union – Value added tax. Articles 17 and 27 of Sixth Council Directive (EEC) 77/388, as amended, should be interpreted as not precluding a measure authorised by Council Decision (EEC) 89/534. That decision authorised the UK to apply, in respect of certain supplies to unregistered resellers, a measure derogating from art 11A(1)(a) of that directive, under which the taxable amount for VAT purposes of a direct sales company was the open market value of the goods sold at the stage of final consumption, where those goods were marketed through resellers not subject to VAT, even if that derogating measure did not take account, in one way or another, of the input VAT relating to demonstration items purchased by those resellers from that company. The Court of Justice of the European Union so held in a preliminary ruling in proceedings between Avon Cosmetics Ltd and the UK Revenue and Customs Commissioners.

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