NEGOTIATIONS WITH RETAIL ALLIANCES - AIM - … · Retail alliances are cooperation by and between retailers that negotiate ... plus the recently announced alliance between Carrefour

Draft [N] of [date]

CMS Hasche Sigle

Partnerschaft von Rechtsanwälten

und Steuerberatern mbB

EU Law Office

Avenue des Nerviens 85

B-1040 Brüssel

T +32 2 6500 420

F +32 2 6500 422

S:\MD\buying groups\2014 research\CMS Negotiation with retail alliances _legal review.docx

NEGOTIATIONS WITH RETAIL ALLIANCES

Legal review of the applicable laws

2

CONTENT

IMPORTANT NOTES................................................................................................................................ 4

GENERAL INTRODUCTION .................................................................................................................. 5

PART A: COMPETITION LAW .............................................................................................................. 6

1. Introduction .................................................................................................................................... 6

1.1 EU law vs. national law .................................................................................................. 6

1.2 Competition law concerns regarding retail alliances ...................................................... 6

1.3 Which markets need to be considered? .......................................................................... 6

2. Creation of retail alliances: When are retail alliances not allowed? .............................................. 8

2.1 General rules: Two possible legal tests .......................................................................... 8

2.2 Merger control ................................................................................................................ 8

2.3 Prohibition of anti-competitive agreements ................................................................... 8

2.3.1 Pro- and anti-competitive effects of retail alliances ............................................. 9

2.3.2 Safe harbour rule .................................................................................................. 9

2.3.3 Assessment of retail alliances outside the safe harbour rule .............................. 10

2.3.4 National peculiarities: How does national legal practice concerning

the creation of retail alliances deviate from the EU legal standard? .................. 11

2.4 Is there a minimum legal framework required for retail alliances? .............................. 14

3. What are the borderlines for retail alliances in negotiations with suppliers?............................... 14

3.1 Three legal tests ............................................................................................................ 15

3.1.1 Prohibition of anti-competitive agreements or information exchange ............... 15

3.1.2 Prohibition of abuse of buyer power .................................................................. 15

3.1.3 Prohibition of unfair trading practises ................................................................ 15

3.2 Which law is applicable? .............................................................................................. 16

3.3 Rule of thumb approach ............................................................................................... 16

3.4 The retail alliance is composed of retailers with an aggregate market share

of less than 15 % in the national retail market(s) ......................................................... 17

3.4.1 General rules ...................................................................................................... 17

3.4.2 Rules for the specific conduct ............................................................................ 18


between 15% and 40% in the national retail market(s) ................................................ 23

3.5.1 General rules ...................................................................................................... 23

3.5.2 Rules for specific conduct .................................................................................. 24


above 40% in the national retail market(s) ................................................................... 31

3.6.1 General rules ...................................................................................................... 31

3.6.2 Rules for the specific conduct ............................................................................ 32

3

PART B – TAX LAW ............................................................................................................................... 39

1. Introduction .................................................................................................................................. 39

1.1 International law vs. national........................................................................................ 39

1.2 Tax law issues regarding retail alliances ...................................................................... 39

2. General tax aspects of service flows ............................................................................................ 39

2.1 Underlying agreement .................................................................................................. 39

2.1.1 General principles for all jurisdictions ............................................................... 39

2.1.2 National peculiarities.......................................................................................... 40

2.2 Direct tax – Tax deductibility ....................................................................................... 40


2.2.2 National peculiarities.......................................................................................... 41

2.3 Withholding tax ............................................................................................................ 41

2.4 Transfer pricing ............................................................................................................ 42


2.4.2 National peculiarities: Belgium .......................................................................... 43

2.5 VAT - General principles for all jurisdictions .............................................................. 43

2.5.1 Assumption: All parties are entities subject to VAT .......................................... 43

2.5.2 VAT deduction ................................................................................................... 43

2.5.3 Qualification of the services ............................................................................... 44

2.5.4 Distinction between services and discounts ....................................................... 45

2.5.5 VAT rates ........................................................................................................... 46

2.5.6 Place of supply ................................................................................................... 46

2.5.7 Invoicing ............................................................................................................ 47

3. Table – General and country-specific tax principles ................................................................... 51

4. Specific Scenarios ........................................................................................................................ 57

4.1 Scenario I: Retail alliance/retail alliance members invoice SPC –

SPC re-invoices LS ....................................................................................................... 57

4.2 Scenario II: LR invoices LS ......................................................................................... 58

4.3 Place of supply for the services .................................................................................... 59

4

IMPORTANT NOTES

This memo is only meant to provide general guidance and is based on abstract cases. The underlying law

may change due to new legislation and court decisions and individual cases may need to be treated differ-

ently due to their specific circumstances. Against this background, the memo cannot replace legal advice

in the individual case. Please always seek advice from the legal and/or tax department of your company or

consult an external lawyer and/or tax advisor, in particular in case of any doubts.

The memo does not concern the sale and procurement of private labels as their assessment follows some

different principles.

The memo reflects the status of the applicable law as per March 2015.

Any comments may be addressed to:

CMS Hasche Sigle / EU Law Office

Dr Michael Bauer

Avenue des Nerviens 85

B 1040 Brussels

[email protected]

T: +32 2 6500 421

M: +49 173 28 31 322

mailto:[email protected]

5

GENERAL INTRODUCTION

The purpose of this memo is to provide guidance for suppliers companies in negotiations with retail alli-

ances concerning the applicable competition and tax law standards. The memo focuses on a number of

relevant European jurisdictions such as Belgium, France, Germany, Italy, the Netherlands and Switzerland

and provides a number of typical scenarios and settings which the supplier will typically face in negotia-

tions and agreements with retail alliances.

Retail alliances are cooperation by and between retailers that negotiate with suppliers to achieve more fa-

vourable conditions concerning the procurement of branded goods at national and/or European level. At

European level, the most important European retail alliances are AGENOR (a.o. Intermarché, Edeka),

AMS (a.o. Ahold, Esselunga, Migros), EMD (a.o. Markant, Casino), CORE (a.o. System U, Colruyt, RE-

WE), COOPERNIC (a.o. Leclerc, Delhaize) plus the recently announced alliance between Carrefour and

Cora. This is completed by retail alliances which mainly act on the national level. Unlike retail alliances at

national level, the European retail alliances generally only negotiate international service agreements on

behalf of their retailers but do not perform joint purchasing in the real sense. This memo concerns both

European and national retail alliances.

The first part of the memo concerns competition laws which help to ensure free and fair competition by

prohibiting business practices which may lessen competition to the detriment of companies and ultimately

consumers. National competition authorities are increasingly active in enforcing competition laws also with

regard to retail alliances. Although similar in their approach, there is no single European competition stat-

ute which covers all aspects yet. A harmonised standard exists only with regard to anti-competitive agree-

ments but might also be applied differently by each national competition authority in its decision making

practise. Hence, the retail alliances and its retailers need to comply with a set of national competition law

rules and practises. This memo describes the borderlines based on competition law for both the assessment

of the creation of retail alliances as well as their conduct towards suppliers when legally established. Please

note that the competition rules set out below only consider potential anti-competitive conduct by retail alli-

ances and/or their members but do not provide any reference to infringements by the suppliers. Against this

background, it is to be noted that the memo should only be used and applied by suppliers in negotiations

with retail alliances but not utilised as a universal competition law guide.

The second part of the memo describes the relevant rules from a tax law perspective, which identifies the

relevant service and payments flows with regard to the suppliers and explains its tax impact on all the juris-

dictions. Hence, the memo does not provide any reasoning for retail alliances and their members as regards

tax issues. The tax part concerns, in particular, direct tax (deduction of expenses) and VAT. In addition, the

memo explains the impacts of transfer pricing and withholding tax. However, it is to be noted that with the

exception of VAT, tax law rules in the European Union and neighbouring countries such as Switzerland are

not harmonised and, therefore, might be applied differently by each national tax authority. Nevertheless, a

number of general tax aspects are similar for all jurisdictions and are covered by this memo unless other-

wise stated.

6

PART A: COMPETITION LAW

1. INTRODUCTION

1.1 EU law vs. national law

In general, competition law rules in the European Union and neighbouring countries such as

Switzerland are largely harmonised. Nonetheless some peculiarities on the national level concern-

ing both national law and the decision-making practice of national competition authorities exist.

Such differences relate in particular to the laws that regulate the abuse of market and in particular

buying power where EU law leaves more freedom to the Member States. Against this back-

ground, this memo focuses on the relevant countries such as Belgium, France, Germany, Italy, the

Netherlands and Switzerland.

Competition law takes an effect-based approach. The competition law rules of a country, there-

fore, in principle, apply whenever effects of an agreement or behaviour occur in the respective

country. Any such application of national competition law cannot be avoided by choice of law.

For example, if a retail alliance comprising retailers from the Netherlands and Germany, operat-

ing shops in Belgium, Germany and the Netherlands, negotiates with a supplier located in France,

the laws of Belgium, Germany and the Netherlands apply.

1.2 Competition law concerns regarding retail alliances

There are two aspects of retail alliance which could give rise to competition concerns:

1.3 Which markets need to be considered?

Competition concerns are always assessed with regard to the relevant product market and its geo-

graphic scope as those define the setting for the assessment of the anti-competitive behaviour.

In this regard, two product markets are to be distinguished:

First, the creation of the retail alliance

as such may have a negative impact on

competition and hence may not be per-

missible.

Second, even where the creation of the

retail alliance as such is not anti-

competitive, the retail alliances need to

observe certain competition law rules

in dealings with suppliers.

Purchasing market, where retailers pur-

chase products from suppliers.

Retail market, where retailers sell prod-

ucts to end-customers.

7

The two markets are to be defined as follows:

Purchasing market

By product category: The relevant purchasing markets are the markets for the procure-

ment of certain categories of products from suppliers. The product categories are defined

along the lines of standards applied by the industry and/or market research institutes.1

By sales channel: In general, no distinction regarding sales channels exists. However,

separate markets are possible if distinct products and/or packaging exist for specific sales

channels.

By geography: Purchasing markets are generally defined as national markets since prod-

ucts are usually sourced nationally. Only where products are mainly sourced cross-border,

could the markets be defined as EU-wide markets.

Retail (selling) market

By sales channel: In general a distinction is made between (i) food retailers carrying a full

range of food and non-food products, (ii) neighbourhood stores and specialised retailers

that do not carry a full range of products and (iii) cash & carry markets what are generally

not open to consumers.

Among the full range retailers, no distinction is made according to different sales concepts

(hard and soft discount, supermarkets, hypermarkets). However, the question of what

segment a retailer belongs to may be important in the competitive assessment (for exam-

ple: if members of a retail alliance all belong to the group of hard discounters)

By geography: Retail markets are generally defined as local markets.2

1 In REWE/ADEG of 23 June 2008, case no. M.5047, the European Commission distinguished 20 separate product categories on the purchasing

market. Recent decision by national competition authorities in EDEKA/Tinkgut of 28 October 2010, case no. B2-52-10, and EDEKA/Tengelman of

30 June 2008, case no. B2-333-07, even indicate 29 product categories on the purchasing market, which has been confirmed by the recent Sector

Inquiry into the food retail sector of September 2014. 2 In REWE/ADEG of 23 June 2008, case no. M.5047, the Commission considers a radius of approximately 20 to 30 minutes by car.

8

2. CREATION OF RETAIL ALLIANCES: WHEN ARE RETAIL ALLIANCES NOT AL-

LOWED?

2.1 General rules: Two possible legal tests

The creation of a retail alliance needs to observe two different sets of legal rules:

2.2 Merger control

All existing retail alliances appear not to be established within the framework of a corporate

structure and/or did not require merger control approval for other reasons. Hence, this paper will

only address the applicable rules based on the general prohibition of anti-competitive agreements.

2.3 Prohibition of anti-competitive agreements

In general, the creation of a retail alliance is legally permissible if certain rules are observed.

However, the creation of the retail alliance is prohibited if the cooperation has been established to

"hide" an illegal cartel, in particular, if the retailers fix resale prices and/or allocate markets.

E.g. if the purpose of a retail alliance by and between retailers located in different countries is to

reserve national markets for the existing retailers this would qualify as an allocation of geograph-

ic markets and, hence, constitute an illegal cartel.

TIP:

The law department should be informed immediately in case of any doubt if a retail alliance

is intended to allocate markets and/or fix prices on the retail market.

Beyond these obvious infringements of competition law (which usually lead to high fines for the

participating companies), the creation of a retail alliance may not be permissible if it leads to sig-

nificant anti-competitive effects. This needs to be established on the basis of a detailed assess-

ment along the lines set out in the following paragraphs.

TIP:

The assessment of the legal permissibility of the retail alliance requires an in-depth analysis

of a number of criteria that requires support by lawyers and, maybe, even economists.

In all cases, the creation needs to comply

with the general prohibition of anti-

competitive agreements.

If the retail alliance has been established

within a (lasting) corporate structure (e.g.

creation of new legal entity) it may also

require merger control approval from

the competition authorities and it may not

be established before any necessary ap-

proval has been provided.

9

2.3.1 Pro- and anti-competitive effects of retail alliances

Competition authorities believe that retail alliances between retailers may generate efficiency

gains in the form of supply chain efficiencies and intensified supply competition. These efficien-

cy gains are pro-competitive when they are passed on to consumers.

On the other hand, it is also recognised that retail alliances may lead to restrictive effects on

competition both in the purchasing market and in the retail (selling) market:

Retail alliances may reduce competition in the purchasing market due to various nega-

tive effects such as quality reductions, lessening of innovation and suboptimal supply.

Retail alliances may reduce competition in the retail market by allowing collusion

among retailers and reducing rivalry between retailers.

Where retail alliances have substantial market power, they could also be in a position to

"collude" with individual suppliers to the detriment of other suppliers and/or other

(weaker) retailers.

2.3.2 Safe harbour rule

Retail alliances likely give rise to restrictive effects on competition if the participating retailers -

individually or jointly - have substantial market power.

The European Commission's guidelines for buying cooperation, however, set out a safe harbour

rule. According to this safe harbour rule, it is unlikely in most cases that the members of a retail

alliance will have market power if:

The combined market share does not exceed 15% on all purchasing market(s) and

The combined market share does not exceed 15% on (all) retail market(s).

When applying this rule, it should be noted that:

Retail markets are generally defined as regional markets. Hence, even retailers who focus on

different countries may fall outside the safe harbour rule if they compete in one or more than

one regional market and reach a higher combined market share there. This scenario could ap-

ply, for example, in border regions where local stores of a retailer X in country A compete for

the same customers as the stores from retailer Y from country B. However, it should be noted

that competition authorities have not yet really considered cross-border competition.

The safe harbour rule may also not apply where parallel retail alliances exist in the market

and lead to cumulative effects ("parallel networks of agreements").

TIP:

As a general rule, it can be assumed that the creation of a retail alliance is not permissible if

the leading retailers of one and the same country combine their purchasing activities. How-

ever, if the retail alliance comprises only smaller retailers from different countries, the crea-

tion of the retail alliance is likely to be permissible.

10

2.3.3 Assessment of retail alliances outside the safe harbour rule

Retail alliances outside the safe harbour require a detailed competitive assessment. This assess-

ment must consider the effects on both the purchasing markets and the retail markets.

In general, if the participating retailers do not compete in the retail markets, the creation of

the retail alliance is usually permissible.

However, retail alliances could give rise to restrictive effects of competition when one or more of

the following criteria are fulfilled:

The members of the retail alliance compete in the same retail market.

The members of the retail alliance have high combined market shares in one or more of

the retail markets.

- Combined market shares exceeding 30% could be sufficient.

The retail alliance comprises "regional top dogs", which each have high market shares in

different geographical areas but within one and the same jurisdiction.

The retail alliance includes a market leader who uses the alliance to align the offerings of

a smaller member of the alliance within one and the same jurisdiction.

The members of the retail alliance are close competitors in the retail market.

- The members of the retail alliance are active in the same segments of the market

(hard/soft discount, supermarkets, hypermarkets, etc.).

- The members of the retail alliance are regarded as the first and second choice by a

substantial number of customers.

Other buying agreements exist in the market and dampen competition ("parallel net-

works of agreements").

The retail alliance leads to an increased risk of tacit coordination ("collusion").

- The risk of collusion is higher where the agreement leads to symmetry of terms of

supply, costs and/or product ranges.

- The risk of collusion is lower where the members of the retail alliance do not com-

bine their complete buying activities and also buy outside the cooperation.

The retail alliance has buyer power:

- The retail alliance can make a credible threat to switch purchases to another suppli-

er.

- The retail alliance is an unavoidable gateway to the market(s).

- Buyer power can be higher if private label sourcing is part of the buying agreement

because this eliminates a possible outside option for suppliers.

- Please note that it is not necessary for the retail alliance to be dominant on the buy-

ing market(s) as market shares in the range of 25% can be sufficient.

11

TIP:

The analysis as to whether the creation of a retail alliance as such is in line with competition

law requires an in-depth assessment with the help of lawyers and, maybe, even economists.

2.3.4 National peculiarities: How does national legal practice concerning the creation of retail

alliances deviate from the EU legal standard?

The national rules and practices of the national competition authorities are, in principle, in line

with the standard set out above. However, it should be noted that several authorities have already

started to look deeper into the food retail sector. Moreover, recent French legislative initiatives

foresee a stricter approach towards the creation of retail alliances.

(a) France

Following the announcements of several French retailers to create retail alliances with competi-

tors, both the Economy Minister and the French Senate requested the French competition authori-

ty to submit an opinion on these retail alliances to be issued by the end of the first half of 2015.

Recently the "Macron" draft bill (projet de loi pour la croissance et l’activité, so called "projet de

loi Macron") was approved by the Special Commission of the French National Assembly. It is

expected to be enacted in summer 2015. The "Macron" draft bill grants the French competition

authority some new powers regarding large retailers. Agreements concerning the joint purchase

and/or referencing of products or the sales of services to suppliers will have to be notified to the

French competition authority at least two months prior to their implementation. This prior notifi-

cation will only be mandatory if the combined aggregate worldwide turnover of all the undertak-

ings or groups of natural or legal persons concerned and the combined turnover achieved at the

purchase level in France within the framework of the agreement by all the undertakings con-

cerned exceeds certain thresholds set by decree.

In addition, the "Macron" draft bill intends to give new powers to the French competition authori-

ty if retailers (i) hold a dominant position, (ii) a market share of more than 50% and (iii) raise

competition concerns based on the observation of high prices or margins compared to those usu-

ally observed in the sector concerned. In such case, the French competition authority may, after a

specific adversarial procedure, order the undertakings concerned to modify, complete or terminate

all agreements and decisions by which the economic power which permitted such high prices or

margins was constituted. It may also order the concerned undertakings to proceed to the disposal

of assets if such disposal is the only way to ensure effective competition.

(b) Germany

Following a sector inquiry in the food retail sector, which was published in September 2014, the

German competition authority announced that it was going to adopt a stricter position concerning

the effects on the purchasing and retail markets.

12

Currently two main models of retail alliances can be distinguished:

- First, the "traditional" retail alliances among competitors of approximately the same

size which aim at improving their bargaining position vis-à-vis the manufacturers

solely by bundling their procurement volumes.

- Second, the "new generation" retail alliances which go far beyond the mere bun-

dling of volumes. In particular, these "new" procurement cooperations involving

large companies must be carefully assessed for their competitive effects

In any future cases involving the creation of new retail alliances or the extension of exist-

ing retail alliances under the participation of a large buyer, the German competition au-

thority will carefully examine the effects on the purchasing and retail markets.

In addition, in October 2011, the German competition authority addressed its concerns regarding

a proposed retail alliance between REWE and Wasgau as it would have anti-competitive effects

on the purchasing and retail markets. The German competition authority expressly considered that

the cooperation would increase the undertaking's buyer power enabling the retail alliance to im-

pose benefits on suppliers without compensation. Moreover, due to Wasgau’s withdrawal from its

former much smaller retail alliance Privates Handelshaus Deutschland (PHD), PHD would lose

its market coverage and, hence, its ability to compete with the bigger retail alliances resulting in

an even more concentrated retail market.

(c) Italy

The Italian competition authority applies a rather strict policy towards retail alliances.

This line is confirmed by a very recent case. In September 2014, the Italian competition authority

closed an investigation on Centrale Italiana, a retail alliance established by COOP, DESPAR,

GARTICO, DISCOVERDE and SIGMA.

The authority suspected that the cooperation would lead to restriction of competition in the pur-

chasing market as well as in the retail market because the members of Centrale Italiana had/have

high market share presence in both markets.

The authority recognised in particular the following risks for competition:

In the purchasing market: Decrease in suppliers' capacity to compete. This could lead to a

reduction of the variety and/or the quality of products and the innovation and investment

initiatives.

In the retail market: Risk of the coordination of sales strategies and the decrease in incen-

tives to compete.

Moreover, the authority considered that membership in the retail alliance could lead to an

exchange of information between the members with regard to sensitive commercial data.

This could facilitate collusion.

In order to avoid sanctions from the competition authority, the members of the retail alliance

submitted commitments by which they undertook to immediately dissolve Centrale Italiana and

13

to replace it by limited agreements between some (and not all) of the members. The authority ac-

cepted the commitments and closed the investigation without imposing any sanctions.

(d) The Netherlands

The Dutch competition authority generally takes the view that the creation of retail alliances does

not lead to a restriction of competition.

In a recent decision3 this was even found in a case where the retail alliance had a strong

(or even dominant) position in both the market in which it sold the contract goods or ser-

vices and in the market in which it purchased the contract goods or services. A possible

restriction of competition was deemed justifiable.

A more stringent approach to the creation of retail alliances was taken in 20004 when the

competition authority considered that a joint purchasing agreement between healthcare in-

surers resulted in an appreciable restriction of competition in certain markets, because of

its very strong market position (94.3%) and the lack of options. However, in its recent

guidelines for the healthcare industry ACM has even encouraged joint purchasing agree-

ments for healthcare services.

(e) Switzerland

The Swiss Competition Commission generally takes a favourable approach towards retail allianc-

es, stating that they usually have a positive impact on competition. Generally, the assessment of

retail alliances is in line with the principles set out in the General Part above:

Retail alliances between small and medium-sized companies aiming to achieve discounts

similar to their larger competitors are generally considered pro-competitive.

A retail alliance may violate Swiss competition law if it has a strong position in the pur-

chasing market. In line with the principles set out above, buyer power can be assumed if

the participating retailers purchase a sufficiently large share of the suppliers' total sales so

that prices can be driven down below the competitive level or competing buyers can be

excluded from the market. In the assessment of buyer power (i) the retail alliance's buyer

power and (ii) the suppliers' countervailing power are examined.

In several merger cases in the retail industry, the Swiss Competition Commission pointed out that

joint purchasing would have a negative impact on competition and therefore authorised those

concentrations of undertakings only under certain conditions.

3 In decision on objection ACM, 3 July 2014, case no. 7512, Brink’s Nederland B.V. - Geldservice Nederland B.V. 4 In decision NMa, 13 October 2000, case no. 652 and 145, Inkoopsamenwerkingsovereenkomst ziekenfondsen VGZ, OZ en CZ.

14

2.4 Is there a minimum legal framework required for retail alliances?

The answer is No. Retailers may carry out joint buying activities in very different frameworks:

Through a jointly controlled company

Through a company in which they just hold stakes

By a contractual arrangement or

By even looser forms of cooperation

Competition law rules, in principle, do not distinguish between these different forms of joint buy-

ing agreements.5 It is, therefore, not necessary for retailers to decide on a certain legal setup for a

buying cooperation. As explained above, it only needs to be borne in mind that the establishment

of a retail alliance within the framework of a corporate structure might trigger merger control as-

sessments.

However, the basic assumption that joint buying activities could give rise to efficiency gains im-

plies that the participating retailers work together on the basis of an agreement granting all partic-

ipating retailers access to the benefits of the cooperation.

Where retailers buy corresponding input from the same supplier based on separate negotiations

and just share information on purchasing conditions unilaterally and/or on an ad-hoc basis, effi-

ciency gains are unlikely.

TIP:

If the retail alliance has been established in a corporate structure OR if the cooperation by

competing retailers is limited to sharing information on purchasing conditions, permissibil-

ity should be assessed by lawyers.

3. WHAT ARE THE BORDERLINES FOR RETAIL ALLIANCES IN NEGOTIATIONS

WITH SUPPLIERS?

If the creation of a retail alliance as such is permissible, the retail alliance and its members still

need to observe certain competition law rules in negotiations with suppliers. In this regard, the

suppliers need to be aware of the relevant borderlines to avoid being confronted with anticompeti-

tive conduct.

5 The structural character can play a role in the detailed assessment of joint buying agreements.

15

3.1 Three legal tests

The retail alliances need to observe three borderlines:

3.1.1 Prohibition of anti-competitive agreements or information exchange

The rules on prohibition of anti-competitive agreements or information exchange are fully

harmonised in the EU and therefore apply in all EU countries. Even though the EU Commission

provides guidelines concerning its approach towards horizontal cooperation agreements, the deci-

sion-making of the national competition authority may vary in practice. In particular, competition

authorities of Germany, France and Italy take a stricter stance towards retail alliances. The Swiss

competition authority and Swiss law closely follow the approach by the EU Commission.

3.1.2 Prohibition of abuse of buyer power

The rules on abuse of buyer power have not yet been harmonised and certain EU countries still

apply laws which are more rigorous than EU law and/or the laws of other European countries.

Particularly the laws of Germany and France provide for a more rigorous standard.

Depending on the applicable national law, buyer power may exist if retailers have a dominant

market position and/or if suppliers depend on the retailers in such a way that sufficient and rea-

sonable possibilities of resorting to other undertakings do not exist (concept of dependency).

- Dominance: A retail alliance is generally considered dominant if the participating retailers'

aggregate market share exceeds 40%.

- Dependency: Relevant factors in the assessment of dependency are (i) the general position

of the retailer in all selling and buying markets in general, (ii) the market situation in the

buying market for the products(s) produced by the supplier and (iii) the individual relation-

ship between the supplier and the retailer.

TIP:

The qualification of buyer power based on the concept of dependency requires a detailed

assessment with the support of lawyers.

3.1.3 Prohibition of unfair trading practises

In addition, French and Italian law even go beyond the concept of dominance and dependency

and prohibit distinct unfair trading practices regardless of a retailer's (or the retail alliance's) mar-

ket position (in Italy, only if food products are concerned). Some rules expressly apply to retail

alliances.

Prohibition of anti-

competitive agreements

or information exchange

Prohibition of abuse of

buyer power

Prohibition of unfair

trading practices

16

At European level, Principles of Good Practice have been introduced by the Food Supply

Chain Initiative, which are meant to serve as a framework for doing business that respects the

contractual freedom and ensures competitiveness along the food supply chain. The principles ex-

plicitly aim to avoid unfair commercial conduct in negotiations with retail alliances. If a retail al-

liance or retailer has joined the supply chain initiative, they are contractually obliged towards the

other signatories to comply with the principles.

Further codes of conduct comparable to the Principles of Good Practice have been implemented

at national level:

The UK Groceries Supply Code of Practice (GSCOP)

The Belgian code of conduct for fair relations between suppliers and purchasers in the

agro-food chain

Moreover, in September 2013, the Dutch government started a pilot project in order to address

unfair trading practices by undertakings with buyer power targeting the food industry and follow-

ing the European Supply Chain Initiative.

3.2 Which law is applicable?

Competition law takes an effect-based approach. The competition law rules of a country apply

whenever there are effects of an agreement or behaviour in the respective country. E.g. if an retail

alliance comprises retailers from Belgium and France operating shops in Belgium, France and Ita-

ly and negotiating with a supplier located in Germany, the laws of Belgium, France and Italy ap-

ply.

3.3 Rule of thumb approach

For the purpose of practicality, this memo applies a rule of thumb approach with regard to the

underlying aggregate market share of the retail alliance's participating retailers in the national re-

tail market. Experience shows that retailers' market shares are usually not higher in the purchas-

ing market than in the retail market. Hence, it is adequate to use retailers' market share in the re-

tail market as the underlying benchmark.6

Based on this approach, the following scenarios can be distinguished:

I II III

The retail alliance is com-

posed of retailers with an

aggregate market share of

less than 15% in the na-

tional retail market(s).

The retail alliance is composed

of retailers with an aggregate

market share of between 15%

and 40% in the national retail

market(s).

The retail alliance is composed

of retailers with an aggregate

market share of more than 40%

in the national retail market(s).

6 In exceptional cases, a detailed assessment might be required.

17

3.4 The retail alliance is composed of retailers with an aggregate market share of less than

15 % in the national retail market(s)

3.4.1 General rules

If the retail alliance is composed of retailers with an aggregate market share of less than 15% in

the national retail market(s), the retailers are permitted to cooperate in purchasing and to ex-

change business information which is necessary for the implementation of the retail alliance. Any

additional (exceeding) agreements or exchange of sensitive business information going beyond

joint purchasing may infringe competition law but only if the participating retailers are competi-

tors in the retail market. In addition, it would be prohibited if the participating retailers were to

agree not to enter each other's geographic market.

If the aggregate market share of the retail alliance's members does not exceed 15%, it is generally

unlikely that suppliers will be dependent on the retailers and/or that the retailer will have a domi-

nant position in the purchasing market. Thus, the rules of abuse of dominance or dependency will

usually not apply. In France and Italy (for food products), particular rules apply which prohibit

certain trading practices even if the retailers are not dominant (nor have buyer power). Finally, the

Code of Conduct by the Food Supply Chain Initiative provides for certain rules which govern

trading practices if the retailers are signatories to the initiative.

18

3.4.2 Rules for the specific conduct

The retail alliance is composed of retailers with an aggregate market share of less than 15% in the national retail market(s)

CONDUCT EU BELGIUM FRANCE GERMANY ITALY NETHERLANDS SWITZERLAND

Joint purchasing

(Retail alliance coordi-nates/undertakes joint negotiations of pur-chasing terms and conditions)

Permissible*

The retail alliance may negotiate purchasing prices and conditions.

The retail alliance may enter into joint purchasing agreements.

The retailers may, in principle, enter into national supply agreements with suppliers subject to an agreement with the retail alliance.

Impermissible*

The retail alliance may not coordinate geographic foot prints of its members (no allocation of geographic markets or outlet locations).

The retail alliance may not coordinate M&A activities (including on minority shareholdings).

The retail alliance may not coordinate resale prices in the retail market, including the coordination of number, time, duration and/or scope of promotions, unless the retailers are clearly not competitors in the same retail market.

Same as in the EU.

Coordination of prod-uct range

(Retail alliance coordi-nates e.g. assort-ment/portfolio deci-sion/listing and de-listing)

Permissible*

The retail alliance may oblige its participating retailers to purchase exclusively through the retail alliance if indispensable for achieving the necessary volume for the realisation of economies of scale.

The retail alliance may oblige its participating retailers to purchase certain minimum volumes (of certain types of products) through the cooperation.

The retail alliance may create a joint private label.

Impermissible*

The retail alliance may not coordinate product portfolios unless the retailers are clearly not competitors in the same retail market.

The retail alliance may not coordinate listings or de-listings at its participating retailers unless the retailers are clearly not competitors in the same retail market.

Same as in the EU.

Joint promotion

(Retail alliance coordi-nates promotional activities by its mem-bers)

Permissible*

The retail alliance may negotiate general budgets for promotional activities and other marketing services performed by retailers (but the retailers must negotiate independently for: what products, how and when they are used).

Impermissible*

The retail alliance may not negotiate promotional plans for its participating retailers, i.e. not concerning the number, the time, the duration and/or the scope of promotion unless the retailers are clearly not competitors in the same retail market.

The retail alliance may not negotiate detailed supplier contributions to individual promotional activities unless the retailers are clearly not competitors in the same retail market.

Same as in the EU.

19

Joint warehousing or other joint operation of logistics facilities

(Retail alliance organ-ises or take over logistics services for its members)

Permissible*

The retail alliance may organise and/or operate joint logistics facilities including warehousing. However, illegal exchange of sensitive business information among participating retailers is to be avoided (see below).

Same as in the EU.

Joint invoicing

(Retail alliance takes over certain booking and/or payment functions for its mem-bers)

Permissible*

The retail alliance may take over certain booking and/or payment functions including delcredere*. However, illegal exchange of sensitive business infor-mation among participating retailers is to be avoided (see below).

Same as in the EU.

Exchange of commer-cially sensitive infor-mation

(Members of retail alliance exchange sensitive information among themselves in negotiations with suppliers or separate-ly)

Permissible*

Within the retail alliance information regarding buying, prices and conditions of the participating retailers may be exchanged if indispensable for the imple-mentation of the joint buying agreement.

Exception 1: Where a European retail alliance has been established only to negotiate certain additional "international" conditions ("European bonus"), there is no justification for sharing information on other prices/conditions separately negotiated by the participating retailers.

Exception 2: In cases where a retailer has recently left one retail alliance and now becomes a member of another retail alliance, the retailer may have to observe a waiting period of at least one year before the changing retailer may disclose the prices and conditions negotiated by the first retail alliance to the new retail alliance or the new retail alliance’s members. In such a case, the changing retailer also may not actively participate in joint negotiations with suppliers.

Impermissible*

Within the retail alliance, additional (exceeding) sensitive business information may not be exchanged.

The participating retailers may not exchange sensitive business information on their behaviour in the retail market (sales prices, promotions, geographic footprint, general business strategy) unless they clearly are not competitors in the same retail market.

Note: In any event, retailers may not exchange information on entering geographic markets.

The participating retailers also may not exchange information on actual volumes purchased from individual suppliers unless retailers clearly are not competitors in the same retail market.

Same as in the EU.

Principles of Good Practice by the Food Supply Chain Initiative

The exchange of information shall be carried out in strict compliance with competition or other applicable law.

Not applicable

* The retail alliance guarantees the performance of payment obligations by its members.

20

Retroactive demands

(Retail alliance re-quests to improve terms and conditions with retroactive effect covering periods for which other terms and conditions have previ-ously been agreed )

Permissible* as the retail alliance is not to be considered dominant.

Permissible* as the retail alliance is not to be considered domi-nant.

Impermissible*

The retail alliance may not negotiate any additional rebates, discounts or other benefits with retro-active effect.

Permissible* as the retail alliance is not to be considered domi-nant or to have buyer power.

Permissible* in general as the retail alliance is not to be considered dominant.

Impermissible*: Con-cerning sale and supply of food products

The retail alliance may not impose retroactive condi-tions.




The retail alliance may not negotiate any non-contractual retroactive unilateral changes in the cost or price of products or services.

Not applicable

Reciprocity of ser-vices/Sine service demands

(Retail alliance re-quests terms and conditions without offering sufficient services by the partici-pating retailers)



Impermissible*

The retail alliance may not request any ad-vantage without a cor-responding service ac-tually provided or with a service manifestly disproportionate to the value of the service.

E.g. request to sponsor promotional activities or to finance an acqui-sition or investments in outlet renovations, if not justified by a com-mon interest and by proportionate service.

The retail alliance may not request an align-ment with business conditions obtained by other retailers without corresponding services.

The retail alliance may not demand benefits from suppliers for un-specified services. If

Permissible* as the retail alliance is not to be considered domi-nant or having buyer power.


Impermissible*: Con-cerning sale and supply of food products:

The retail alliance may not impose con-ditions which are not justified by the busi-ness relationship.

The retail alliance may not make con-tinuation of the busi-ness relations subject to services which have no connection with the objective of the contracts or the business relations.



21

services are not pre-cisely worded, it is act-ing to the detriment of the retail alliance since those services are deemed not to be real services.

The retail alliance may not refer to services which are already cov-ered by national agreements to justify additional rebates or payments.


The retail alliance may not threaten business disruption or termination of business relations to obtain an advantage without objective justification.

The retail alliance may not demand payment for services not rendered or demand payment manifestly not corresponding to the value/cost of the services rendered.

Not applicable

Listing fees Permissible*

The retail alliance may request listing fees.

Permissible*


Impermissible*

The retail alliance may not negotiate listing or access fees without valuable compensation, particular-ly without commitments on a volume of orders.

Permissible*


Permissible*


Permissible*


Permissible*

Same as under EU standard.


The retail alliance may not impose listing fees that are disproportionate to the risk incurred in stocking a new product.

Not applicable

Contracts No specific legal standard. No specific legal standard. However, for tax purposes the agreement should be in writing (See tax section, 2.1.1 and 3. below).

The retail alliance is obliged to sign a "unique agreement" to reflect the selling price resulting from the negotiations.

In addition, the agree-ment should be in writing for tax purposes. (See tax section, 2.1.1 and 3. below).

No specific legal stand-ards However, for tax purposes the agree-ment should be in writing (See tax section, 2.1.1 and 3. below).

Specific rules apply concerning sale and supply of food products where the agreements must be in writing. In addition, the agree-ment should be in writing as regards tax purposes.

(See tax section, 2.1.1 and 3. below).

No specific legal stand-ard. However, for tax purposes the agree-ment should be in writing (See tax section, 2.1.1 and 3. below).

No specific legal stand-ard. However, for tax purposes the agreement should be in writing (See tax section, 2.1.1 and 3. below).

22


The agreement should always be in writing.

The retail alliance may not impose general terms and conditions that contain unfair clauses like disproportionate damages claims.

The retail alliance should not refuse to put essential terms into writing as the agreement should always be in transparent writing.

Not applicable

23

3.5 The retail alliance is composed of retailers with an aggregate market share between 15%

and 40% in the national retail market(s)

3.5.1 General rules

If the retail alliance is composed of retailers with an aggregate market share of between 15% and

40 % in the national retail market(s), the retailers are permitted to cooperate in purchasing and to

exchange information that is necessary for the implementation of the retail alliance, provided the

retailers are not competitors in the national retail market.

In case the retailers are competitors in the national or local retail market, joint purchasing and ex-

change of information that is necessary for the implementation of the retail alliance will only be

permissible if cooperation does not lead to anti-competitive effects as per the criteria set out

above.8 Moreover, any additional (exceeding) agreements or exchange of sensitive business in-

formation going beyond joint purchasing infringes competition law. In addition, it would be pro-

hibited if the participating retailers were to agree not to enter each other’s geographic market.

Even if the retail alliance between retailers in general is admissible and the agreements by and be-

tween the participating retailers and their way of information sharing is permissible (as per the

rules set out above), the individual business conduct by the retail alliance may – depending on the

applicable national law – still be impermissible if the retail alliance has a strong position in the

purchasing market, making the suppliers dependent on the retail alliance.

If the aggregate market share of the retail alliance members is between 15% and 40%, it is possi-

ble that suppliers will be dependent on the retailers in the purchasing market. Thus, the rules of

abuse of buyer power may apply if foreseen by the applicable national law (which is the case with

Germany).

In France and Italy (regarding the sale and supply of food products), particular rules apply which

prohibit certain trading practices even if the retailers are neither dominant nor have buyer power.

Finally, the Code of Conduct by the Food Supply Chain Initiative provides for certain rules which

govern trading practises if retailers are signatories to the initiative.

8 See 2.3

24

3.5.2 Rules for specific conduct

The retail alliance is composed of retailers with an aggregate market share between 15% and 40% on the national retail market(s)


Joint purchasing

(Retail alliance coordi-nates/undertakes joint negotiations of pur-chasing terms and conditions)

Permissible*

If the participating retailers do not compete in the retail markets:

- Joint purchasing is usually permissible.

- Retailers may also enter into national supply agreements with suppliers subject to an agree-ment with the retail alliance.

If the participating retailers are competitors in retail markets:

- The retail alliance may negotiate prices and con-ditions and

- retailers may make national supply agreements with suppliers subject to an agreement with the retail alliance

only if the cooperation does not lead to anti-competitive effects as per the criteria set out in 2.3.3.

Impermissible*

The retail alliance may not coordinate geographic foot prints of its members (no allocation of geo-graphic markets or outlet locations).

The retail alliance may not coordinate M&A activi-ties (including on minority shareholdings).

The retail alliance may not coordinate resale prices in the retail market, including the coordination of number, time, duration and/or scope of promo-tions, unless the retailers are clearly not competi-tors in the same retail market.

In general, similar to EU level but France takes a stricter approach to-wards retail alliances.

Further, new draft law (Projet de Loi Macron) is likely to introduce the obligation to notify the creation of retail alli-ances if the participat-ing retailers exceed certain turnover thresholds.

Same as at EU level but the German competi-tion authority an-nounced that it was going to make an in-depth assessment of "new generation" retail alliances.

Same as at EU level but according to recent case law, Italian competition authority takes a strict-er approach concerning retail alliances.

Same as at EU level but Dutch competi-tion authority applies a more liberal stand-ard.

Same as under EU standard but Swiss Competition Commis-sion generally takes a favourable approach towards retail alliances.

Coordination of prod-uct range

(Retail alliance coordi-nates e.g. assortment

Permissible*

If the participating retailers do not compete in the retail markets, coordination of product range and/or creation of joint private label are usually permissi-ble.

If the participating retailers are competitors in the retail market, an implied alignment of the product range is permissible if it does not lead to anti-

Same as in the EU.

25



/portfolio deci-sion/listing and de-listing)

competitive effects as per the criteria set out in 2.3.3.

Approach by national competition authorities might differ as per the general approach applied towards retail alliances (see above re joint purchasing).

Impermissible*

The retail alliance may not coordinate product portfolios unless the retailers are clearly not competitors in the same retail market.

The retail alliance may not coordinate listings or de-listings at its participating retailers unless the retailers are clearly not competitors in the same retail market.

The higher the aggregate market share, the less likely it is that the retail alliance may oblige its participating retailers to purchase exclusively through the retail alliance.

The higher the aggregate market share, the less likely it is that the retail alliance may oblige its participating retailers to purchase certain minimum vol-umes (of certain types of products) through the cooperation.

Joint promotion


Permissible*

If the participating retailers do not compete in the retail markets joint promotion is usually permissible.

If the participating retailers are competitors in retail markets the retail alliance may negotiate general budgets for promotional activities and other mar-keting services performed by retailers only if the cooperation does not lead to anti-competitive effects as per the criteria set out in 2.3.3. Further, if retail-ers are competitors, they must negotiate independently and may not coordinate the products for which, how and when the general budgets for promo-tions will be used.


Impermissible*

The retail alliance may not negotiate promotional plans for its participating retailers, i.e. not concerning number, time, duration and/or scope of promo-tion unless the retailers are clearly not competitors in the same retail market.

The retail alliance may not negotiate detailed supplier contributions to individual promotional activities unless the retailers are clearly not competitors in the same retail market.

Same as in the EU.

26



Joint warehousing or other joint operation of logistic facilities

(Retail alliance organ-ises or takes over logistics services for its members)

Permissible*

If the participating retailers do not compete in the retail markets, joint warehousing etc. is usually permissible.

If the participating retailers are competitors in retail markets, the retail alliance may organise and/or operate joint logistics facilities including warehousing only if the cooperation does not lead to anti-competitive effects as per the criteria set out in 2.3.3.


Impermissible*

Joint warehousing or other joint operation of logistics facilities may not lead to exchange of sensitive business information among participating retailers (see below).

Same as in the EU.

Joint invoicing


Permissible*

The retail alliance may take over certain booking and/or payment functions including delcredere9. However, joint invoicing may not lead to exchange of sensitive business information among participating retailers (see below).

Same as in the EU.



Permissible*

If the participating retailers clearly do not compete in any market (retail and/or purchase), the exchange of sensitive business information is usually per-missible unless it concerns the entry into other markets (which is generally impermissible).

If the participating retailers are competitors in retail markets, information regarding buying prices and conditions of the participating retailers may be exchanged if indispensable for the implementation of a permissible (as per the criteria set out at 2.3.3) joint buying agreement.

- Exception 1: Where a European retail alliance has been established only to negotiate certain additional "international" conditions ("European bonus") there is no justification for sharing information on other prices/conditions separately negotiated by the participating retailers.

- Exception 2: In cases where a retailer has recently left one retail alliance and now become a member of another retail alliance, the retailer may have to observe a waiting period of at least one year before the changing retailer may disclose the prices and conditions negotiated by the first retail alliance to the new retail alliance or the new retail alliance’s members. In such a case the changing retailer may also not actively participate in joint negotiations with suppliers.

Impermissible*

Within the retail alliance, additional (exceeding) sensitive business information which is not indispensable for the implementation of a (permissible) joint buying agreement may not be exchanged.

The participating retailers may not exchange sensitive business information on their behaviour in the retail market (sales prices, promotions, geographic

Same as in the EU.

9 The retail alliance guarantees the performance of payment obligations by its members.

27



footprint, general business strategy) unless they are clearly not competitors in the same retail market.

Note: in any event, retailers may not exchange information on entering geographic markets.

The participating retailers also may not exchange information on actual volumes purchased from individual suppliers unless retailers are clearly not com-petitors in the same retail market.


The exchange of information shall be carried out in strict compliance with competition or other applicable law.

Not applicable

Retroactive demands

(Retail alliance re-quests to improve terms and conditions with retroactive effect covering periods for which other terms and conditions have been agreed on before)

Permissible* as the retail alliance is usually not to be considered dominant (but only if the cooperation as such is permissible as per the criteria set out in 2.3.3.).

Permissible* as the retail alliance is usually not to be considered dominant (but only if the coop-eration as such is permissible as per the criteria set out in 2.3.3.).

Impermissible*

The retail alliance may not negotiate with retroactive effect any additional rebates, discounts or other benefits.

Impermissible*: In case of supplier dependency on retailer

The retail alliance may not request any benefit which is con-sidered a retroactive demand.

E.g. improved re-bates following the enlargement of the retail alliance or the participating retailers ("wedding bonus").

Permissible* in general as the retail alliance is usually not to be con-sidered dominant (but only if the cooperation as such is permissible as per the criteria set out in 2.3.3.).

Impermissible*: Con-cerning sale and supply of food products.

The retail alliance may not impose ret-roactive conditions.





Not applicable

Reciprocity of services /Sine service demands




Impermissible*

The retail alliance may not request any advantage without corresponding ser-vice actually provided or with a service manifestly dispropor-tionate to the value of the service.

E.g. request to spon-sor promotional ac-tivities or to finance

Impermissible*: In case of supplier dependency on retailer.

The retail alliance may not request any benefit without an objective justifica-tion/reason for the benefits demanded.

E.g. "synergy bonus" without any measur-able supplier-side

Permissible* as in general the retail alli-ance is usually not to be considered dominant (but only if the coopera-tion as such is permissi-ble as per the criteria set out in 2.3.3.).

Impermissible*: Con-cerning sale and supply of food products:

The retail alliance may not impose con-

Permissible* as the retail alliance is usually not to be considered domi-nant . (but only if the cooperation as such is permissible as per the criteria set out in 2.3.3.).


28



an acquisition or in-vestments in outlet renovations, if not justified by a com-mon interest and by proportionate ser-vice.

The retail alliance may not request an alignment with busi-ness conditions ob-tained by other re-tailers without corre-sponding services.

The retail alliance may not demand benefits from suppli-ers for unspecified services. If services are not precisely worded, it acts to the detriment of the re-tail alliance since those services are deemed to be no real services.

The retail alliance may not refer to ser-vices which are al-ready covered by na-tional agreements to justify additional re-bates or payments.

synergies.

E.g. as a precondition for entering into ne-gotiations concern-ing new business during contract year.

E.g. the retail alliance requests contribu-tion for outfit im-provements of re-tailer’s stores or cus-tomer loyalty pro-grams.

E.g. requests of "pay-to-play fees".

The retail alliance may not request a benefit for services if the identical service is already covered by national agreement.

Note: rules may change due to outcome of pending court case.

ditions which are not justified by the busi-ness relations.

The retail alliance may not make the continuation of the business relation sub-ject to services which have no connection with the objective of the contracts or rela-tionship.


The retail alliance may not threaten business disruption or termination of the business relationship to obtain an advantage without objective justification.

The retail alliance may not demand payment for services not rendered or demanding payment manifestly not corresponding to the value/cost of the services rendered.

Not applicable

29



Joint listing fees Permissible*

The retail alliance may request listing fees if the cooperation does not lead to anti-competitive effects as per the criteria set out in 2.3.3.

Permissible*

The retail alliance may request listing fees if the coopera-tion does not lead to anti-competitive effects as per the criteria set out in 2.3.3.

Impermissible*

The retail alliance may not negotiate listing or access fees without committing in writing to a proportionate volume or to a service request-ed by the supplier and expressly agreed in writing.

Permissible*


Impermissible: In case of supplier dependency on retailer

The retail alliance may then not request dis-proportionate listing fees.

Note: rules may change due to outcome of pending court case.

Permissible*


Permissible*

The retail alliance may request listing fees if the coopera-tion does not lead to anti-competitive effects as per the criteria set out in 2.3.3.

Permissible*



The retail alliance may not request listing fees that are disproportionate to the risk incurred in stocking a new product.

Not applicable



In addition, the agree-ment should be in writing as regards tax purposes. See tax section, 2.1.1 and 3. below).


Specific rules apply concerning sale and supply of food products where the agreements must be in writing.

In addition, the agree-ment should be in writing as regards tax purposes. (See tax section, 2.1.1 and 3. below).

No specific legal standard. However, for tax purposes the agreement should be in writing (See tax section, 2.1.1 and 3. below).


30







Not applicable

31

3.6 The retail alliance is composed of retailers with an aggregate market share above 40% in

the national retail market(s)

3.6.1 General rules

If the retail alliance is composed of retailers with an aggregate market share of more than 40% in

the national or local retail market(s) and are competitors in a national or local retail market, it is

highly likely that any cooperation in purchasing will not be permissible. Moreover, any additional

(exceeding) agreements or exchange of information going beyond the joint purchasing clearly in-

fringes competition law.

However, if the retailers are not competitors in any retail market, they may still be allowed to co-

operate in purchasing.

In any case, it would be prohibited if the participating retailers were to agree not to enter each

other's geographic market.

Moreover, if the retail alliance's members' market share exceeds 40% in the national or local retail

market(s), it is likely that the retailers will have a dominant market position. Further, it is very

likely that suppliers will be dependent on the retailers in the purchasing market. Thus, the rules

governing abuse of buyer power would apply (to the extent foreseen by national law). Hence, the

retail alliance is obliged to comply with additional provisions which prohibit abusive exploitation

of that position (insofar as the respective national law applies).

In France and Italy (concerning the sale and supply of food products) particular rules apply which

prohibit certain trading practices even if the retailers are not dominant nor have buyer power.

Finally, the Code of Conduct by the Food Supply Chain Initiative provides for certain rules which

govern trading practices if retailers are signatories to the initiative.

32

3.6.2 Rules for the specific conduct

The retail alliance is composed of retailers with an aggregate market share above 40% on the national retail market(s)


Joint purchasing

(Retail alliance coordi-nates negotiations of purchasing terms and conditions)

Permissible*

If the participating retailers do not compete in the retail markets:

- Joint purchasing may still be permissible.

- If joint purchasing is permissible retailers may then also make national supply agreements with suppliers subject to an agreement with the retail alliance.

Impermissible*

If the participating retailers are competitors in the retail market:

- It is very likely that cooperation will lead to anti-competitive effects as per the criteria set out in 2.3.3. Hence, joint purchasing (which also means cooperation as such) is usually impermissible.

- The retail alliance may not coordinate resale prices in the retail market, including the coordi-nation of number, time, duration and/or scope of promotions.

In any event:

- The retail alliance may not coordinate geograph-ic foot prints of its members (no allocation of geographic markets or outlet locations)).

- The retail alliance may not coordinate M&A ac-tivities (including on minority shareholdings).

In general, similar to EU level but France takes a stricter approach to-wards retail alliances.

Further, new draft law (Projet de Loi Macron) is likely to introduce the obligation to notify the creation of retail alli-ances if the participat-ing retailers exceed certain turnover thresholds.

Same as at EU level but the German competi-tion authority an-nounced that it will profoundly assess „new generation" retail alliances.

Same as at EU level but, according to recent case law, Italian competition authority takes a strict-er approach concerning retail alliances.

Same as at EU level. Same as under EU standard.

Coordination of product range

(Retail alliance coordi-nates e.g. assortment /portfolio decision /listing and delisting)

Permissible*

If the participating retailers do not compete in retail markets, coordination of product range and/or creation of joint private label may still be permissible.

Impermissible*

If participating retailers are competitors in a retail market:

- It is very likely that the cooperation will lead to anti-competitive effects as per the criteria set out in 2.3.3. Hence, the coordination of product range is usually impermissible. Approach by national competition authorities might be even stricter as per the general approach applied towards retail alliances

Same as in the EU.

33



(see before re joint purchasing).

- The retail alliance may not coordinate product portfolios.

- The retail alliance may not coordinate listings or de-listings at its participating retailers.

In general, the retail alliance may not oblige its participating retailers to purchase exclusively through the retail alliance.

In general, the retail alliance may not oblige its participating retailers to purchase certain minimum volumes (of certain types of products) through the cooperation.

Joint promotion


Permissible*

If the participating retailers do not compete in the retail markets, joint promotion may still be permissible.

Impermissible*

If the participating retailers are competitors in retail markets:

- It is very likely that joint promotion will lead to anti-competitive effects as per the criteria set out in 2.3.3. Hence, joint promotion is usually impermissi-ble. Approach by national competition authorities might differ as per the general approach applied towards retail alliances (see before re joint purchas-ing).

- Retailers must negotiate independently and may not coordinate for what products, how and when the general budgets for promotions will be used.

- The retail alliance may not negotiate promotion plans for its participating retailers, i.e. not concerning number, time, duration and/or scope of promo-tion.

- The retail alliance may not negotiate detailed supplier contributions to individual promotional activities.

Same as in the EU.

Joint warehousing or other joint operation of logistic facilities

(Retail alliance organ-izes or takes over logistic services for its members)

Permissible*

If the participating retailers do not compete in the retail markets joint warehousing etc. may still be permissible.

Impermissible*

If the participating retailers are competitors on retail markets:

- It is very likely that joint warehousing leads to anti-competitive effects as per the criteria set out in 2.3.3. Hence, joint warehousing is usually impermis-sible. Approach by national competition authorities might differ as per the general approach applied towards retail alliances (see before re joint pur-chasing).

- Joint warehousing or other joint operation of logistic facilities may not lead to exchange of sensitive business information among participating retailers (see below).

Same as in the EU.

34



Joint invoicing


Permissible*

The retail alliance may take over certain booking and/or payment functions including delcredere10. However, joint invoicing may not lead to exchange of sensitive business information among participating retailers (see below).

Same as in the EU.



Permissible*

If the participating retailers do clearly not compete in any market (retail and/or purchase) exchange of sensitive business information is usually permissible unless it concerns the entry into other markets (which is generally impermissible).

If the participating retailers are competitors on retail markets information regarding buying prices and conditions of the participating retailers may be exchanged if indispensable for the implementation of a (permissible) joint buying agreement.

- Exception 1: Where an European retail alliance has been established to only negotiate certain additional "international" conditions ("European bo-nus") there is no justification for sharing information on other prices/conditions negotiated by the participating retailers separately.

- Exception 2: In cases where a retailer has recently left one retail alliance and has now become a member of another retail alliance, the retailer may have to observe a waiting period of at least one year before the changing retailer may disclose the prices and conditions negotiated by the first retail al-liance to the new retail alliance or the new retail alliance’s members. In such case, the changing retailer may also not actively participate in joint nego-tiations with suppliers.

Impermissible*

Within the retail alliance, additional (exceeding) sensitive business information which is not indispensable for the implementation of a (permissible) joint buying agreement may not be exchanged.

The participating retailers may not exchange sensitive business information on their behaviour in the retail market (sales prices, promotions, geographic footprint, general business strategy) unless they are clearly not competitors in the same retail market.

Note: in any event retailers may not exchange information on entering into geographic markets.

The participating retailers also may not exchange information on actual volumes purchased from individual suppliers unless retailers are clearly not com-petitors in the same retail market.

Same as in the EU.


The exchange of information shall be done in strict compliance with competition or other applicable law.

Not applicable

10 The retail alliance guarantees the performance of payment obligations by its members.

35



Retroactive demands

(Retail alliance re-quests the improve-ment of the terms and conditions with retro-active effect covering periods for which other terms and conditions have been priorly agreed)

Impermissible*

The retail alliance may not request retroactive price adjustments (such as "wed-ding bonus" following the enlargement of the retail alliance and retroactive ad-justment of conditions) or any retroactive benefit from rebates, discounts or agreements for services.

Impermissible*

Same as at EU level.

Impermissible*


In addition specific rules apply irrespective of retailers’ buyer power. The retail alliance may not negotiate with retroactive effect any additional rebates, discounts or other benefits.

Impermissible*


In addition specific rules apply if the supplier is dependent on the retailer:

The retail alliance may then not request any benefit which is considered a retroac-tive demand.

E.g. improved re-bates following the enlargement of the retail alliance or the participating retailers ("wedding bonus").

Impermissible*


In addition specific rules apply concerning sale and supply of food products. The retail alliance may then not impose retroactive conditions.

Impermissible*


Impermissible*




Not applicable

Reciprocity of services /Sine service demands


Impermissible*

The retail alliance may not request additional condi-tions without any provision of additional services.

The retail alliance may not request conditions which impose a significant imbal-ance on the respective rights and obligations of the parties.

Impermissible*


Impermissible*


In addition, specific rules apply irrespective of retailers’ buyer power:

The retail alliance may not request any advantage without corresponding ser-vice actually provided or with a service manifestly dispropor-tionate to the value of the service.

E.g. request to spon-

Impermissible*


In addition, specific rules apply if the suppli-er is dependent on the retailer:

The retail alliance may not negotiate any benefit without an objective justifica-tion or reason.

E.g. "synergy bonus" without any measur-able supplier-side synergies.

E.g. as a precondition

Impermissible*


In addition, specific rules apply concerning the sale and supply of food products:

The retail alliance may not impose con-ditions which are not justified by the busi-ness relation.

The retail alliance may not make the continuation of the business relation sub-ject to services which

Impermissible*


Impermissible*


36



sor promotional ac-tivities or to finance an acquisition or in-vestments in outlet renovations, if not justified by a com-mon interest and by proportionate ser-vice.

The retail alliance may not request an alignment with busi-ness conditions ob-tained by other re-tailers without corre-sponding services.

The retail alliance may not demand benefits from suppli-ers for unspecified services. If services are not precisely worded, it acts to the detriment of the re-tail alliance since those services are deemed not to be real services.

The retail alliance may not refer to ser-vices which are al-ready covered by na-tional agreements to justify additional re-bates or payments.

to enter into negotia-tions concerning new business during the contract year.

E.g. the retail alliance requests contribution for outfit improve-ments of retailer’s stores or customer loyalty programmes.

E.g. requests of "pay-to-play fees"

The retail alliance may not refer to ser-vices which are al-ready covered by na-tional agreement.

have no connection with the objective of the contracts or rela-tionship.

37




The retail alliance may not threaten business disruption or the termination of the business relationship to obtain an advantage without objective justifica-tion.

The retail alliance may not demand payment for services not rendered or demand payment manifestly not corresponding to the value/cost of the services rendered.

Not applicable

Joint listing fees Permissible*

If the participating retailers do not compete in the retail markets joint listing fees may still be permissible.

Impermissible*

If the participating retailers are competitors in the retail market, it is very likely that the cooperation will lead to anti-competitive effects as per the criteria set out in 2.3.3. Hence, joint listing fees are then usually im-permissible.

In any event, the retail alliance may not request listing fees which impose a significant imbalance in the respective rights and obli-gations of the parties.

Same as at EU level. Impermissible*

The retail alliance may not negotiate listing or access fees without committing in writing to a proportionate volume or to a service request-ed by the supplier and expressly agreed in writing.


In addition, specific rules if supplier is dependent on retailer. The retail alliance then may not request dis-proportionate listing fees. Note: this rule may change due to outcome of pending court case.

Same as at EU level. Same as at EU level. Same as under EU standard.


The retail alliance may not impose listing fees that are disproportionate to the risk incurred in stocking a new product.

Not applicable



In addition, the agree-


Specific rules apply concerning sale and supply of food products where the agreements must be in writing.

In addition, the agree-ment should be in

No specific legal standard. However, for tax purposes the agreement should be in writing (See tax section, 2.1.1 and 3. below).


38



ment should be in writing as regards tax purposes. (See tax section, 2.1.1 and 3. below).

writing as regards tax purposes. (See tax section, 2.1.1 and 3. below).





Not applicable

***

39

PART B – TAX LAW

1. INTRODUCTION

1.1 International law vs. national

With the exception of VAT, tax law rules in the European Union and neighbouring countries such

as Switzerland are not harmonized. A number of general tax aspects are nevertheless similar for

all jurisdictions covered by this memo (Belgium, France, Germany, Italy, the Netherlands and

Switzerland) unless otherwise stated. These general tax aspects, essentially focussing on direct

tax (deduction of expenses) and VAT are covered in Chapter 2. The general tax principles appli-

cable for all jurisdictions are systematically explained, followed by the national peculiarities, if

any. A table summarising all tax aspects for all jurisdictions together with the applicable sanc-

tions is added in Chapter 3. The application of these tax aspects is explained through the Scenari-

os described in Chapter 4.

1.2 Tax law issues regarding retail alliances

Whereas the Competition part of the present memo focuses on conduct of the retail alliance

and/or its members, the Tax part rather explains the tax impact for the suppliers of their interac-

tion with the retail alliances or their members.

Main concerns are the tax deduction of payments made directly or indirectly to retail alliances;

when payments are made through a related entity, transfer pricing rules apply. VAT concerns re-

late to loss of recovery on input VAT and to challenge of deduction. Adjustments made by local

tax administrations may lead to double taxation, significant penalties and could lead to criminal

procedures.

It should be noted that the tax impact described hereafter for the suppliers is limited to those

agreements on the basis of which service or product flows occur between the suppliers and the re-

tail alliance or its members (retailers). Some agreements concluded by the suppliers with retail al-

liances merely include that the retail alliance negotiates improved purchase terms, without includ-

ing the purchase of additional products or the provision of additional services (promotions etc).

Such agreements fall outside the tax impact described hereafter.

2. GENERAL TAX ASPECTS OF SERVICE FLOWS

2.1 Underlying agreement

2.1.1 General principles for all jurisdictions

Various parties can participate to the service part of the agreements negotiated by retail alliances.

On the retailer side, there is the retail alliance and its members. Whereas all can provide services,

some can only act as intermediary, in an agent capacity. Their role as service provider and/or

agent may define different direct tax and VAT regimes in terms of deductibility for the suppliers.

On the supplier side, the parent supplier company and/or the local suppliers can participate direct-

ly or indirectly to the service part of the agreement. The parent supplier company can at times be

40

considered as a direct service recipient, or as an agent to its local affiliates, in which case it will

be considered as a service provider for VAT purposes to the local supplier companies.

The contractual relations between the parties should always be documented, i.e. laid down in a

written agreement. Such an agreement may be concluded at the level of the relevant parent com-

pany, and may apply to all of its subsidiaries.

For both direct tax and VAT purposes it is of course required that the services agreed upon and

subsequently invoiced are effectively performed. If not, in both cases, the deductibility of the ser-

vices costs and VAT will not be accepted. The services fees and VAT will be added back to the

supplier’ taxable income.

Depending on the individual contract the services which are provided to the suppliers (either to

the local subsidiary or the parent company) by the retail alliance or by the individual retailers

could cover the following (hereinafter the "Services”):

Promotional, marketing, advertising, product placing and mediation services

Listings allowing a supplier to sell and supply its products to retailers.

NOTE:

It should be noted that under certain circumstances requests by the retail alliance are not

permissible under the applicable competition laws (see Chapter 3 of PART A – Competi-

tion law). For direct tax purposes, the tax deduction of fees paid for such anti-competitive

Services can be refused by the relevant tax authorities IF and to the extent the agreement of

such anti-competitive requests is void under civil law. On the other hand, with regard to

VAT, a supplier might be held liable by the relevant VAT authorities to pay the VAT due

on the service fee, even if such service is anti-competitive.

E.g., in case a retail alliance provides and invoices listing services to a supplier, the fees

paid by the supplier will not be tax deductible for the supplier IF such listing service is

considered anti-competitive and IF, as a result, the underlying agreement is void under civil

law. On the other hand, even when that listing service is considered anti-competitive, the

VAT paid by the supplier on the listing fees remains due.

2.1.2 National peculiarities

All jurisdictions have adopted these general principles.

2.2 Direct tax – Tax deductibility


Each jurisdiction provides specific conditions which must be satisfied for each remuneration paid

by an entity to be tax deductible. In general, the following professional expenses are tax deducti-

ble under the following conditions:

The expenses have to be incurred during the taxable period (which generally coincides

41

with the financial year),

the reality and the amount of the expenses must be justified by the financial accounts and

by sufficient legal documentation (i.e. invoices, agreements, vouchers, etc.), and

the entity bearing the expenses must benefit from these expenses.

The tax authorities of each jurisdiction will at least require the entity applying for the tax deduc-

tion to be able to demonstrate that the services were received and that the expenses were in fact

incurred by that entity. Hence, the tax deductibility of expenses that are not documented or that

lack a genuine business motive, which may appear as “hidden contribution”, could be disallowed

by the tax authorities. This would result in non-deductibility as well as tax penalties.

For the purposes of tax deductibility, a company that pays fees for services and therefore bears

expenses should benefit from these services. If the company has paid fees for services provided to

the benefit of its affiliates, the company should therefore re-invoice these service fees to its affili-

ates. Re-invoicing must always be done taking into account normal market conditions (e.g. at a

similar price or a price that does not widely differ from prices charged by other market partici-

pants under similar conditions – respecting the "at arm's length" principle). If it does not re-

invoice correctly, this could result in non-deductibility as well as tax penalties.

For example, when a supplier pays a fee for certain marketing services to a retailer, but the mar-

keting services specifically concerned the local market of one particular local branch of the sup-

plier, the marketing fee should be proportionally re-invoiced to the local branch of the supplier.

Furthermore, most jurisdictions provide limitations of tax deductibility for payments made to cer-

tain low-tax jurisdictions. If the entity does not comply with these conditions, the tax deductibility

can be rejected by the tax authorities. Moreover, sanctions such as penalties and late payment in-

terest may be due.

Specific sanctions provided by each jurisdiction are explained in Chapter 3. In the event of tax

fraud (fraudulent intention), the offender may be charged with a criminal offence.


All jurisdictions have adopted principles similar to these general principles. Each jurisdiction,

however, provides sanctions in case its resident entities do not comply with these principles (see

Chapter 3).

2.3 Withholding tax

The internal legislation of some jurisdictions (Belgium, France and Switzerland) provides that

payments for services to a non-resident entity are subject to withholding tax, generally eliminated

by applicable tax treaties. On the other hand, if no double tax treaty is applicable, payments made

to foreign entities may be subject to withholding tax ("WHT").

For example, Belgian internal law provides that WHT applies to service fee payments made by

Belgian entities to beneficiary entities established abroad. If, however, the beneficiary entity is es-

tablished in a country with which Belgium has concluded a double tax treaty (such as Germany,

France, Italy, the Netherlands, Switzerland and many others), such double tax treaty will general-

ly provide that the service fees are taxable only in the country of the beneficiary, so that the WHT

42

provided by Belgian internal legislation will not apply. On the other hand, if the Belgian entity

pays service fees to an entity established in a country with which Belgium has not concluded a

double tax treaty, the WHT provided for by Belgian internal legislation will fully apply.

In France, if the retail alliance (or the retail alliance members) is not liable for any corporate in-

come tax in the country where it is located, then the financial tax authorities may refuse the appli-

cation of the relevant tax treaty with France and claim a domestic withholding tax of 33.1/3% on

the amount paid to the retail alliance (even if the expense itself is considered as deductible).

The application of WHT is explained in detail in Chapter 3.

TIP:

In order for a supplier to be able to verify that a provider of services to which remunera-

tions are paid does not have an establishment in a low-tax jurisdiction (tax haven), a certifi-

cate of residence issued by the local tax authorities of the jurisdiction of the provider should

be requested from the provider.

2.4 Transfer pricing


Transfer pricing refers to the terms and conditions surrounding transactions within a multi-

national company. It concerns the prices charged between associated enterprises established in

different countries for their inter-company transactions. Thus when payments to a retail alliance

are channelled through the parent supplier company, transfer pricing regulations come into play.

Specific transfer pricing regulations may apply in each jurisdiction. However, each jurisdiction

generally complies with the Transfer Pricing Guidelines issued by the OECD.11

Transfer pricing regulation aims to tax individual group members of a multi-national enterprise

("related entities") on the basis that they act at arm's length in their dealings with each other. Ba-

sically, this implies that transactions between related entities should be concluded as if they

would have been concluded with a third, independent party. The transaction, therefore, needs to

comply with normal market conditions ("at arm's length").

If the tax authorities believe that a transaction between related entities does not comply with the

at arm's length principle, they will adjust the taxable base of the entity established within its juris-

diction. Moreover, penalties and late payment interest may be due (see Chapter 3).

In order to avoid such tax adjustments and penalties, it is essential that all transactions between

related entities are sufficiently documented applying OECD abiding transfer pricing documenta-

tion, explaining how the transfer price was determined, allowing the tax authorities to verify that

these transactions comply with the at arm's length principle. All conditions of the transactions are

to be carefully defined within the underlying agreement.

11 http://ec.europa.eu/taxation_customs/taxation/company_tax/transfer_pricing/forum/index_en.htm#tpprofiles Guidelines for all EU countries

https://eguides.cmslegal.com/pdf/transferpricing.pdf: details on documentation requested for a set of 30 countries

http://ec.europa.eu/taxation_customs/taxation/company_tax/transfer_pricing/forum/index_en.htm#tpprofiles

https://eguides.cmslegal.com/pdf/transferpricing.pdf

43

Furthermore, when transactions are re-invoiced to related entities, it will generally be required to

add a mark-up to the remuneration invoiced: the related entities should pay a reasonable remuner-

ation to the supplier parent company for negotiation services performed and centralised handling

of retail alliance’s services. It is strongly recommended for the supplier parent company that an

underlying agreement clearly providing the charge-back of such costs is available.

TIP:

If not already available, the law departments of the parent supplier companies should draft

service agreements for all applicable service flows, in which the services provided and the

contractual relationships (including remuneration conditions) are clearly defined in accord-

ance with the at arm's length principle.


In Belgium special rules apply to Belgian entities that are the recipients of a non-arm's length

benefit (Belgian tax legislation refers to the concept of "abnormal or benevolent benefit re-

ceived"): the amount of non-arm's length benefits received generally constitutes a minimum taxa-

ble basis for the Belgian recipient thereof. This minimum taxable basis cannot be set off against

current year tax losses or expenses, tax losses carried forward or any other tax deductions.

For example, a company with tax losses exceeding its income would, in principle, not be taxed

since its income is fully compensated by its losses. If, however, the tax authorities demonstrate

that it has received an abnormal or benevolent benefit, such benefit may not be compensated by

the available tax losses, resulting in income tax becoming effectively due. The Belgian sanctions

for non-compliance are explained in Chapter 3.

2.5 VAT - General principles for all jurisdictions

A common system of VAT applies within the EU to the provision of goods and services. This

means that, although the EU Member States can provide specific legislation, the general princi-

ples of the application of VAT are the same in all countries of the EU. These general principles

are laid down in Directive 2006/112/EC (hereafter referred to as "the EU VAT Directive").

Moreover, similar principles apply in Switzerland. However, although the same principles apply

throughout the EU and Switzerland, each jurisdiction provides its own sanctions for non-

compliance. These sanctions are explained in Chapter 3.

2.5.1 Assumption: All parties are entities subject to VAT

For the purposes of this memo, it is assumed that all transactions (i.e. provisions of goods or ser-

vices) carried out in the EU by a taxable entity acting as such are subject to VAT.

2.5.2 VAT deduction

An entity subject to VAT is allowed to deduct the VAT it paid on fees for services if the services

are used for its business activities.

For the purposes of VAT deductibility, a company that pays VAT on such fees should benefit

from these services in order to be able to deduct the VAT paid. If the company has paid fees for

services to the benefit of its affiliates, the company should therefore re-invoice these fees to its af-

44

filiates. Re-invoicing must always be done taking into account normal market conditions ("at-

arm's-length").

For example, when a supplier company pays VAT on a fee for marketing services to a retailer,

but the marketing services specifically concerned the local market of one particular local branch

of the supplier, the marketing fee should be re-invoiced to this local branch proportionally.

2.5.3 Qualification of the services

In the EU, the services provided by a retail alliance and/or its members are considered intellectual

services and are to be categorised under the general definition of "supply of services" as provided

by the EU VAT Directive: "any transaction which does not constitute a supply of goods".

Hence, qualitative services such as promotional, marketing, advertising, product placement,

mediation and/or listing services as provided by retail alliance and/or its members to suppliers

qualify as "supply of services", whereas quantitative services, such as the mere achieving of a

growth target leading to a right to a bonus/fee or the mere granting of a discount, do NOT quali-

fy as a "supply of services".

According to Swiss VAT legislation, the services also qualify as services subject to VAT.

It is important to note that if the services are not effectively rendered or if the local VAT authori-

ties challenge the existence or qualification of the services, the local VAT authorities will tend to

requalify these services as a pure discount granted by the suppliers to the retailers.

Such requalification may result in:

Loss of deductibility of input VAT at the level of the service provider that has deducted

VAT which does not correspond to any services effectively provided by him to a compa-

ny;

A VAT reassessment at the level of the company that has wrongly deducted the VAT

corresponding to the discount granted by the supplier while no credit note has been issued

by the supplier. The requirement for issuing a credit note is to be examined on a case-by-

case basis, since this is not always demanded by the VAT authorities.

Possible application of penalties and late payment interest.

(See Chapter 3 for further details per jurisdiction.)

If a provider acts in its own name but on behalf of a third party, the service is deemed to have

been provided to and by the same provider acting as an undisclosed agent for services. Such un-

disclosed agency creates a service chain for VAT purposes. It treats the provider simultaneously

as a service recipient and as a service provider.

For example, when a parent supplier company receives services from a retailer on behalf of the

supplier's related entities, it will be considered the recipient of these services. With regard to its

related entities on behalf of which the services were received, the parent supplier company will be

considered a provider of the services. This implies two separate "supplies" subject to VAT: a first

provision of services between the retailer and the parent supplier company, and simultaneously a

45

second provision of services by the parent supplier company to its related entities. Both supplies

are invoiced separately.

The retailer first invoices the parent supplier company; accordingly, the supplier parent company

must then invoice the services which were actually provided by the retailer as if it had provided

the services to its related entities itself. A similar regime, including to above-described service

chain created by the undisclosed agency, applies in Switzerland.

2.5.4 Distinction between services and discounts

It may not always be clear whether a scenario involves services or discounts and, if so, to what

extent it does. Certain countries have addressed the issue in particular.

(a) National peculiarities: Germany

In Germany, it is the view of the German tax authorities that payments rendered by a supplier to a

retailer for advertising measures is usually a discount (and not a payment for services) if and to

the extent that there is (de facto) no advertising obligation, that the retailer carries out the adver-

tising because it has an interest in the advertising measure being successful and that the payment

is not distinct from but is closely related to the supply of goods. It is conceivable that the German

tax authorities would hold this view with regard to similar services. If and to the extent a review

of the underlying agreement led to the result that a certain payment must be considered a discount

for VAT purposes (instead of remuneration paid in exchange for a service) and if this payment

was not agreed on between the supplier and the recipient of the service, it could become neces-

sary to liaise with the tax authorities in order to determine the VAT effects such a payment might

have; other available sources (such as administrative circulars or tax court decisions) might not

provide sufficient guidance.

(b) National peculiarities: Italy

In Italy, in addition to the general VAT regime as provided by the VAT Directive, the Italian

Revenue Agency has published Guidelines on 7 February 2008 dealing with the VAT treatment

of promotional services and commercial discounts.

According to these Guidelines, promotional activities – that usually involve the supplier of the

goods/services and the retailer – may be divided into two main categories: (i) promotional ser-

vices and (ii) commercial discounts/rebates. Promotional services are generally rendered by the

retailer to the supplier of the goods/services in order to support the sales of the products, while

discounts/rebates are usually granted by the supplier to the retailer subject to certain conditions or

even unconditionally.

Along with promotional activities, market practice shows the existence of centralised services

which are rendered – outside the commercial relationship between the supplier and the retailer –

by the entity that represents a group of buyers (such as retail alliances) to the suppliers.

Promotional services may be identified when the retailer, at the request of the supplier of the

goods/services, undertakes to carry out certain marketing activities concerning the goods/services

purchased from the supplier. Such obligation, together with a description of the type of activities

that need to be performed, should result from an agreement between the supplier of the

goods/services and the retailer. Alternatively, the supplier of the goods/services may enter into an

46

agreement with the entity representing a group of buyers (such as a retail alliance). Such an

agreement is essential for the deduction of VAT.

The remuneration for promotional services should be fair and adequate with respect to the appli-

cable commercial practice and the nature/quantity of the services actually rendered, so as to avoid

it being regarded as a free contribution or a gift given by the supplier to the retailer. In the latter

case, the supplier will not be entitled to deduct the cost and the related VAT.

2.5.5 VAT rates

The general VAT rates applicable to the services, as determined by the VAT legislation of each of

the jurisdictions, are the following:

Belgium Germany France Italy Netherlands Switzerland

21% 19% 20% 22% 21% 8%

2.5.6 Place of supply

The place of VAT-taxation is determined by the location where the services are provided. This

place of supply depends not only on the qualification of the services provided but also on the sta-

tus of the recipient receiving the services. The EU VAT Directive provides so-called localisation

rules to determine the place of supply for services.

For example, if the services are deemed to take place in Belgium, Belgian VAT legislation (Bel-

gian VAT rate, Belgian invoicing rules, etc) apply to the services.

According to the general localisation rule for services:

The supply of services between taxable entities, both being businesses acting in their

business capacity, (Business to Business - B2B) is in principle taxed in the recipient's

place of establishment.

The supply of services to non-taxable entities (Business to Consumer - B2C) established

in the EU are taxed at the provider's place of establishment.

The place of taxation of the services is, therefore, the country in which the recipient of the ser-

vices is established. For example, services provided by a Belgian retailer to a German supplier are

subject to VAT in Germany. Hence, the supplier benefitting from the services provided by the re-

tail alliance or the retailers will apply the VAT of the country in which it is established.

The general B2B localisation rule implies that:

If services are provided by a retailer established in a Member State of the EU to a supplier

established in the same Member State, the place of supply of the services will be the

Member State concerned. The retailer will charge VAT to the supplier and will collect the

VAT on behalf of the VAT authorities. The VAT paid ("input VAT”) by the supplier will

be deductible.

47

- For example, a German retailer performs services for a German supplier. The place

of supply is Germany. The retailer will issue an invoice with German VAT to the

supplier. The supplier will pay the VAT to the retailer; this input VAT is deductible

for the supplier. The retailer will subsequently pay the VAT due to the German

VAT authorities by means of its periodical VAT return.


established in a different Member State, the place of supply of the service will be the

Member State in which the supplier is established. The retailer will not charge VAT to the

supplier.

- For example, a German retailer performs services for a Belgian supplier. The place

of supply of the service will be Belgium. The German retailer will issue an invoice

without VAT to the Belgian supplier. The Belgian VAT paid (input VAT) is de-

ductible for the supplier.


established in a country outside the EU, the place of supply of the service will be outside

the EU. The supplier will need to comply with indirect tax legislation of its own jurisdic-

tion, if any.

- For example, a German retailer performs services for a Swiss supplier. The place of

supply of the services is Switzerland. The Swiss supplier will, however, be liable to

pay Swiss VAT due to the Swiss VAT authorities by means of its periodical VAT

return in Switzerland.

If services are provided by a retailer established outside the EU to a supplier established

in a Member State of the EU, the place of supply will be the Member State concerned.

- For example, a Swiss retailer performs services for an Italian supplier. The place of

supply of the services is Italy.

If services are provided by a retailer established outside the EU to a supplier also estab-

lished outside the EU, the VAT Directive does not apply.

- For example, a Swiss retailer performs services for a Swiss supplier, and all the

transactions are done and are declared in Switzerland.

It should be noted that these place of supply rules are not relevant for direct tax purposes.

2.5.7 Invoicing

Entities subject to VAT that perform services are legally required to invoice these services in ac-

cordance with the VAT legislation applicable in the jurisdiction in which the services are per-

formed. Failure to comply with these invoicing rules may result in non-deductibility of input

VAT and other adverse VAT consequences (see Chapter 3).

For a taxable entity established in the EU, the EU VAT Directive provides that at least the fol-

lowing elements are to be included in the invoice:

48

date of issue;

a sequential number, based on one or more series, which uniquely identifies the invoice;

the name, the address of its administrative or business seat and the VAT identification

number of the provider;

the name, the address of its administrative or business seat and the VAT identification

number of the recipient;

the quantity and the extent and nature of the services rendered;

any discounts applied;

the date on which the supply of services was made or completed or the date on which any

prepayment was made, in so far as that date can be determined and differs from the date

of issue of the invoice;

the taxable amount per rate or exemption, the unit price exclusive of VAT and any dis-

counts or rebates if they are not included in the unit price;

the VAT rate applied and the total amount of VAT due expressed in the national currency

of the EU Member State where the Service is performed;

when VAT is to be accounted by the recipient established in another country than the

provider, two alternative mentions need to be included:

- when the recipient is established outside the provider's country but within the EU:

"reverse charge – Article 44 of the VAT Directive", or its translation in an official

language of the provider's jurisdiction, indicating that the VAT is due by the recipi-

ent, by application of the reverse-charge mechanism;

- when the recipient is established outside the EU: "Article 44 of the VAT-Directive",

indicating that no VAT is to be mentioned on the invoice.

Each jurisdiction may further provide specific invoicing rules with regard to the form (e.g. elec-

tronically, by e-mail), content (e.g. specific wording), and timing of invoices. In general, howev-

er, these rules are identical to the rules provided by the EU VAT Directive.

Invoices drafted in compliance with VAT legislation will also be relevant for purposes of direct

taxation.

49

TIP:

Each invoice must show the correct VAT number of the recipient and the content described

above.

Suppliers as recipients of services provided by retailers should carefully verify that an in-

voice received complies with the invoicing rules. If not, a corrected invoice is to be re-

quested from the retailer.

Most jurisdictions provide that, under certain conditions, invoices may be issued electroni-

cally (e.g. by e-mail).

(a) National peculiarities: France

In France, besides the above-mentioned general invoicing rules, the following elements are to be

included in the invoice, as provided by the French Commercial Code:

The date on which payment is due;

The specific discounts granted for early payment (even if there are none);

The interest rate of the penalties due on the day following the due date indicated on the

invoice;

The amount of the mandatory minimum fixed indemnity payable by the debtor to cover

recovery costs in the event of belated payment (currently fixed at €40).

Infringements of these rules give rise to joint liability of the seller and of the purchaser who ac-

cepted a non-compliant invoice.

(b) National peculiarities: Italy

In Italy, besides the above-mentioned general invoicing rules, the following elements are to be in-

cluded in the invoice:

A reference to the agreement in which the following details should be provided:

the criteria for the computation of the remuneration for the promotional services;

the timing of the promotions;

the sale points (or the type of sale points) in which the promotional activities have been car-

ried out (or indication that the promotion involves all the sale points);

the period of promotion, the promoted goods/services or their category.

If the agreement provides for payments in advance and a balance payment to be determined at

the end of the promotional period, the invoices should also indicate whether they refer to a pay-

ment in advance or to the balance payment. In the latter case, the invoice should indicate (also

by reference to the agreement or to documents attached to the invoice) the criteria followed by

the parties to determine the balance due. Moreover, if the invoice is issued on a periodical basis,

it is required to specify that amounts invoiced are part of a transaction.

If the agreement provides for payments in advance and a balance payment to be determined at

50

the end of the promotional period, the invoices should also indicate whether they refer to a pay-

ment in advance or to the balance payment. In the latter case, the invoice should indicate (also

by reference to the agreement or to documents attached to the invoice) the criteria followed by

the parties to determine the balance due. Moreover, if the invoice is issued on a periodical basis,

it is required to specify that amounts invoiced are part of a whole transaction.

For each invoice for promotional services, the following documents should be provided to the

tax authorities in the event of a tax audit:

the agreement between the supplier of the goods/services and the retailer providing the de-

tails of the promotional activities;

any documentary evidence suitable to demonstrate that the services have actually been ren-

dered including details on the type of promotional activity, the promotional period, the pro-

moted goods/services and the sale points where the promotional activity has been carried

out.

With reference to centralized services, the Guidelines of 7 February 2008 further specify that

they should result from an agreement between the entity representing the group of buyers (such

as retail alliances) and the suppliers of goods/services or the retailers.

The invoice should include, in addition to the information ordinarily required by the Italian VAT

Code, a reference to the agreement between the parties.

The following documents should be provided to the tax authorities in the event of a tax audit:

the agreement;

any documentary evidence suitable to demonstrate that the services have actually been ren-

dered including details on the type of activity performed.

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3. TABLE – GENERAL AND COUNTRY-SPECIFIC TAX PRINCIPLES

GENERAL TAX PRINCIPLES FOR

ALL JURISDIC-TIONS ("GTP")

BELGIUM FRANCE GERMANY ITALY NETHERLANDS SWITZERLAND

UNDERLYING AGREEMENT

Underlying agreement for services between supplier and retail alliance or retailer

For direct tax purposes, a service agreement between parent supplier company/local suppliers and retail alliance/retailer is required. Deduction will nevertheless be refused by the tax authorities in case the services are qualified as non-competitive and therefore illegal.

Such an agreement for services is also required for VAT purposes. VAT will even be due if services are considered to be illegal.

In case services are received at the level of the parent supplier company ("PSC"), an underlying agreeme

nt for services between PSC with local suppliers ("LS")

The agreement between the PSC and the LS may be in the form of:

a service agree-ment;

or

an undisclosed agency agreement, the PSC being the undisclosed agent.

The contractual relations between the parties should always be documented, i.e. laid down in a written agreement. Such an agreement may be concluded at the level of the relevant parent company, and may apply to all of its subsidiaries.

DIRECT TAX - DEDUCTIBILITY

Deductibility of expenses

The expenses have to be incurred during the taxable period, and

the reality and the amount of the expenses must be justified by the financial accounts and by sufficient legal documentation (i.e. invoices, agreements, vouchers, etc.), and

the entity bearing the expenses must benefit from these expenses.

Sanctions

Non deductibility Non-deductibility of expenses, meaning an increase of the taxable base.

Administrative penalties

Penalties ranging from €50 to €1,250 per error or omis-sion;

Tax increase ranging from 10% to 200% of the tax due.

Specific tax of 3% on hidden distributions.

Penalties ranging from €5 – €50,000.

Penalties ranging from 100% to 200% of the tax related.

Penalties ranging from 25% to 50% of the correction, together with a default sur-charge up to €5,278.

Entities bearing ex-penses for the benefit of affiliate companies are subject to a hidden profit distribution tax of 35%.

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Late payment interest 7% per year. 4.8% per year. 6% per year. 4% per year. At least 8% per year. 4% per year.

Criminal penalties

Penalties ranging from €1,500 to €3,000,000 and imprisonment ranging from 8 days to 2 years.

Criminal penalties up to €500,000 and im-prisonment up to 5 years.

Penalties ranging from €5 to €10,800,000 and imprisonment rang-ing from 1 month to 10 years;

Alternative to crimi-nal penalties under certain conditions: ranging from 10% to 20% of the relevant tax.

Penalties under certain conditions: imprison-ment ranging from 1 to 3 years.

Penalties up to €81,000 or 100% of the tax evaded, and im-prisonment of up to 6 years.

Penalties for tax eva-sion ranging from CHF800,000 or 200% of the unjustified tax advantage if higher, to CHF1,200,000 or, if higher, 300% of the unjustified tax ad-vantage together with imprisonment for 2 years.

WITHHOLDING TAX (“WHT”) ON PAYMENT OF SERVICE FEES

Principle Some jurisdictions provide a WHT on service fees to a foreign entity.

Yes, at the rate of 16.50%.

Yes, at the rate of 33.33%.

No. No. No. Yes, at the rate of 35%, on fees paid to benefi-ciaries other than subsidiary entities.

If the WHT is not collected from the recipient of the ser-vice, the rate is grossed-up to 53.8%.

Double tax treaty applicable The application of such WHT may be eliminated by the applicable double tax treaty.

Yes, if Belgium has concluded a double tax treaty with the country where the beneficiary is established, or in case the beneficiary can demonstrate that the fee is effectively taxed in the country where it is established.

Yes, if France has concluded a double tax treaty with the country where the beneficiary is established.

N/A N/A N/A Yes, if Switzerland has concluded a double tax treaty with the country where the beneficiary is established.

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DIRECT TAX – PAYMENTS MADE TO RETAIL ALLIANCE (OR OTHER BENEFICIARIES) ESTABLISHED IN TAX HAVENS OR LOW-TAX JURISDICTIONS

Definition Some jurisdictions provide limitations on tax deduction of payments made to entities established in tax havens or low-tax jurisdictions.

A list of countries considered to be tax havens is published every year (none of the jurisdictions treated in the cur-rent memo figures on this list);

Yearly reporting obligation if total payments per year exceed €100,000.

An entity is considered to be established in a tax haven when the rate of income tax is lower than 50% of the equivalent French CIT.

Swiss entities benefit-ing from either special rulings or low tax rates in certain cantons would qualify.

N/A No definition of tax havens; tax havens are listed in specific law decrees. Switzerland and Liechtenstein are actually listed as tax havens, but are ex-pected to be removed from the list in the near future.

No other European country is listed.

N/A N/A

Sanctions - If not duly reported, payments made to entities established in tax havens are non-deductible as professional ex-penses;

Risk of 16.50% WHT calculated on the gross amount of the payment, in case the beneficiary fails to demonstrate that the fee is effectively taxed in the country where it is estab-lished.

Reversal of burden of proof for tax deduc-tion.

N/A Tax deductibility is not allowed, unless it can be demonstrated that the beneficiary carries on real business activi-ty or the relevant transaction had a real business purpose and actually took place.

N/A. N/A

TRANSFER PRICING

Definition and specific rules Dealings between related entities, e.g. between PSC and LS,

Similar to the GTP.

Non-arm’s length benefits received by

Specific transfer pricing rules, similar to the GTP.

Specific transfer pricing rules, similar to the GTP.

Similar to the GTP. Similar to the GTP. No specific transfer pricing rules.

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need to be at arm’s length, meaning that the dealings must be concluded as if they would have been concluded between independent, third parties, under normal market conditions. These dealings need to be sufficiently documented, allow-ing the tax authorities to duly audit the arm’s length charac-ter.

Belgian entities are qualified as ‘abnor-mal or benevolent benefits’, which constitute a minimal taxable basis for that entity.

Sanctions

In case the tax au-thorities demonstrate that dealing between related entities is not at arm's length, they may adjust the taxa-ble base of the entity established in their jurisdiction.

Same penalties apply as in the case chal-lenge on tax deducti-bility (see 2.b).

Carried forward tax losses cannot be set off against non-arm’s length benefits re-ceived.

No specific sanctions other than the sanctions under 2.b.

VAT

General rate - 21% 20% 19% 22% 21% 8%

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VAT deduction

Principle An entity, e.g. an SPC or LS, subject to VAT is allowed to deduct VAT it paid on service fees in case these services are used for its own business activi-ties. If an SPC pays service fees to a retail alliance for the benefit of its affiliates, the SPC may deduct the VAT paid to the retail alliance, but must also re-invoice these service fees proportionally to its affiliates. The VAT paid by the affiliates to the SPC is subsequently deductible by the affiliates.

Although Switzerland is not a member of the EU, its VAT regime is largely aligned with the EU VAT regime.

Sanctions Loss of deductibility of input VAT;

VAT reassessment.

Similar to the GTP.

Qualification of services The following services provided by retail alliance are categorised as provision of (intellectual) services: qualitative services such as promotional, marketing, advertising, product placement, mediation and listing services.

These do NOT qualify as provision of (intellectual) services: quantitative services such as growth targets giving rise to fees or bonuses and discounts.

Services invoiced by the retail alliance to suppliers, or by a SPC to a LS must be effectively rendered.

Similar to the GTP.

Distinction between services and dis-counts - Administra-tive guide-lines

Principle The distinction be-tween services and discounts (quantita-tive services) is not always easily made, and is to be deter-mined on a case-by-case basis.

Similar to the GTP. Similar to the GTP. The German tax au-thorities usually con-sider payments made by a supplier to a retailer for advertising measures a discount (and not a payment for services) if and to the extent that there is (de facto) no advertising obligation, that the retailer carries out the advertising because it has an interest in the advertising measure being successful and that the granting of the subsidy is not distinct from but closely relat-ed to the supply of goods.

The Italian tax authori-ties make a distinction between promotional services and the mere granting of discounts or rebates. Promotion-al services may exist when the retailer, at the request of the supplier of the goods/services, under-takes the obligation to perform certain mar-keting activities con-cerning the goods/services pur-chased from the sup-plier.

Similar to the GTP. Similar to the GTP.

Sanctions Loss of deductibility of input VAT;

VAT reassessment.

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Place of supply The place of VAT-taxation of the services between entities subject to VAT is the country in which the entity receiving the services is established. For example, services provided by a Belgian retail alliance or retailer to a German supplier are subject to VAT in Germany. (The place of supply for VAT is not relevant for direct tax purposes.)

Similar to the GTP.

Invoicing Principle Invoices issued must include all elements listed sub 2.4.7.

No further specific mentions.

Specific elements are to be included (cf. sub 2.4.7(a)).


Specific elements are to be included (cf. sub 2.4.7(b)).


Similar to the GTP.

Sanctions VAT reassessment.

Administrative penalties

Penalties ranging from €50 to €5,000 per error or omis-sion;

Penalties ranging from 10% to 200% of the VAT due.

Penalties of €15 per error or omission;

Administrative penalties of 50% of the invoiced amount for fictitious invoic-ing.

Penalties ranging from €5 to €50,000.

Penalties ranging from 100% to 200% of related VAT.

Administrative penal-ties up to €5,278 per error or omission.

No specific penalties.

Late payment interest

7% per year. 4.8% per year. 6% per year. 4% per year. At least 4% per year. 4% per year.

Criminal penalties Criminal penalties ranging from €1,500 to €3,000,000 and im-prisonment ranging from 8 days to 2 years.

Penalties up to €375,000 for legal entities or 50% of the amount which was not or not properly in-voiced. Legal entities may also be banned from participating in public tenders for up to 5 years.

Penalties ranging from €5 to €10,800,000 and imprisonment rang-ing from 1 month to 10 years;

Alternative to crimi-nal penalties under certain conditions: 10%-20% of the rel-evant tax.

Penalty under certain conditions: imprison-ment ranging from 1 to 3 years.

Penalty for tax evasion ranging from CHF 800,000 or 200% of the unjustified tax ad-vantage if higher, to CHF 1,200,000 or, if higher, 300% of the unjustified tax ad-vantage together with imprisonment for up to two years.

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4. SPECIFIC SCENARIOS

In this chapter the applicable tax rules are explained for typical scenarios.

4.1 Scenario I: Retail alliance/retail alliance members invoice SPC – SPC re-invoices LS

The retail alliance, by negotiating on behalf of parent retailer companies (retail alliance mem-

bers), provides promotional and marketing services to suppliers that represent their local subsidi-

aries (local retailers) established/based in various EU or non-EU countries (Switzerland). In gen-

eral, representatives of the retail companies participate in the negotiations held at the HQ of the

retail alliance with a retail alliance representative.

Suppliers invited to the negotiation by the retail alliance are generally established in different EU

and non-EU countries. Participants in the negotiation with the retail alliance are either the suppli-

ers' European parent company (represented by an international key account manager) or its local

subsidiaries (local suppliers), represented by national key account managers, or both.

In this scenario, the retail alliance negotiates the details of additional "services" such as listing

fees, which are then applied in the context of the agreements between a supplier company and

each of the retail alliance member companies.

Legally (see 2.1 and 2.4.3), the retail alliance is considered as providing these additional services

to the supplier parent company, on behalf of its retail members, not to the local suppliers. The re-

tail alliance charges a fee for its services to the supplier parent company. The supplier parent

company will re-invoice it proportionally to one or more of its local suppliers.

If the services are performed and invoiced by the retail alliance members instead of the retail alli-

ance itself, the tax impact for the suppliers remains the same.

The members of the retail alliance will re-invoice the retail alliance for the costs of the services

which will be provided locally by the local retailers.

Tax impact: applicable for all jurisdictions:

Scenario I implies the following relevant service flows:

The retail alliance or its members provide services to the supplier parent company

("SPC").

Direct tax:

The remuneration paid by the SPC will be fully tax deductible for the SPC; (see direct

tax deductibility conditions), provided that the remuneration paid complies with the at

arm's length principle.

VAT:

The input VAT is deductible by the SPC provided the services have taken place and

the remuneration paid complies with the at arm's length principle.

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The supplier parent company ("SPC") must re-invoice remuneration paid for the ser-

vices to the local supplier ("LS"), in proportion to the benefit that the LS receives un-

der the services.

Direct tax:

The remuneration paid by the LS to the SPC will be fully tax deductible by the LS

(see direct tax deductibility conditions), provided that the remuneration re-invoiced

complies with the at arm's length principle. At the level of the SPC, the remuneration

received is subject to (corporate) income tax.

If the SPC and the LS are related entities, adequate (OECD abiding) transfer pricing

documentation must be available.

VAT:

The input VAT is deductible by the LS provided that the services have taken place and


Invoicing rules:

- If the SPC is EU-based, the invoice needs to comply with the invoicing rules as

provided by the VAT Directive.

- If the SPC is not EU-based, it needs to comply with the legislation of its own ju-

risdiction.

4.2 Scenario II: LR invoices LS

The local retailer subsidiaries (affiliates of retail alliance members) directly invoice the local sup-

plier for the services carried out by them.

Tax impact: applicable to all jurisdictions:

Scenario II implies the following service flows:

The local retailer ("LR") provides services to the local supplier ("LS")

Direct tax:

The remuneration paid by the LS will be fully tax deductible by the LS (see direct tax

deductibility conditions), provided that the remuneration paid complies with the at

arm's length principle.

VAT:

The input VAT is deductible by the LS provided that the services have taken place and


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4.3 Place of supply for the services

The place of supply for the services provided by the retail alliance, its members, and/or the local

retailers to the supplier parent companies and/or the local suppliers, as well as the services in-

voiced by the supplier parent companies to the local suppliers are shown in the table hereinafter.

Service recipient estab-lished in EU

Service recipient established outside EU

Service recipient established in the same EU Member State as the service provider

Service provider estab-lished in EU

Country of service recipient – EU VAT due by service recipi-ent (reverse charge) – No VAT on invoice.

Country of service recipi-ent – No EU VAT applica-ble – No VAT on invoice.

EU Member State where both the service provider and the service recipient are established - EU VAT due by service provider – EU VAT on invoice.

Service provider estab-lished outside EU

Country of service recipient – EU VAT due by service recipi-ent (reverse charge) – No VAT on invoice.

Outside EU - No EU VAT applicable.

N/A

Service provider estab-lished in the same EU Member State as the service recipient

N/A N/A EU Member State where both the service provider and the service recipient are established - EU VAT due by service provider – EU VAT on invoice.

***

* Please note that the finding of permissibility in the context of competition law does not anticipate the outcome con-

cerning the deductibility of service fees under the relevant tax regime as set out in the tax part below. Nonetheless, if

and to the extent the underlying agreement is void under civil law due to infringement of competition law, the tax

deduction of fees paid for such anti-competitive services may be refused by the relevant tax authorities (for more

detail please see below: tax part, Error! Reference source not found.).

Documents

NEGOTIATIONS WITH RETAIL ALLIANCES - AIM - … · Retail alliances are cooperation by and between retailers that negotiate ... plus the recently announced alliance between Carrefour