A reverse premium is a payment by a landlord to a prospective tenant to induce the tenant to enter into a lease.

Generally, a tenant is not regarded as making any supply in return for a reverse premium, provided that the lease is on ordinary commercial terms.

In C & E Commrs v Mirror Group plc (Case C-409/98) [2002] BVC 16, the ECJ held at para. 26, p. 30 that:

‘a tenant who undertakes, even in return for payment from the landlord, solely to become a tenant and to pay the rent does not, so far as that action is concerned, make a supply of services to the landlord.’

This would not always be the position, however, and the ECJ went on to hold at para. 27, p. 30 that:

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