Judgment of the European Court of Justice of 29 November 2018 in case C‑548/17 (Baumgarten sports & more GmbH) regarding the taxation of professional football player agencies.
Facts
Baumgarten sports & more GmbH (‘the company’) provides agency business services in the professional football sector.
When the company successfully places a player with a football club, it receives commission from that club, provided that the player subsequently signs an employment contract and holds a licence issued by the Deutsche Fußball Liga GmbH (German Football League).
That commission is paid to the company in instalments every six months for as long as the player remains under a contract with that club and holds a German Football League licence.
Baumgarten calculated VAT on its turnover on the basis of agreed remuneration.
The German tax authorities argued that Baumgarten should have paid tax on commission payments corresponding to fixed-term player contracts (so for the whole contract, and not just the instalments), and issued an adjusted tax notice to that effect.
Baumgarten disagreed with that method. It argued that the commission payments at issue were not certain and the VAT payable on them was chargeable only when they were actually received.
The German Court asked the following questions to the European Court of Justice:
- Tax payable on the supply of services becomes chargeable when the services are supplied. It asks whether that rule can be interpreted restrictively in order, in essence, to regard the service as not yet supplied when remuneration for that service is not due or is conditional, as is the case in the main proceedings.
- Depending on the answer to the first question, the referring court is also uncertain whether the fact that a taxable person makes an ‘[advance] payment’ to the tax authority is compatible with certain principles of VAT law and the general principles of equality and proportionality.
Questions
Account being taken of the task of tax collector for the tax authority that falls to the taxable person, must Article 63 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax be interpreted restrictively as meaning that the amount receivable in respect of the supply of goods or services
(a) is due or
(b) is at least unconditionally owed?
If the answer to the first question is in the negative: is the taxable person obliged to pre-finance the VAT owed in respect of the supply of goods or services for a period of two years if he is not able to receive (part of) the remuneration for the goods or services supplied by him until two years after the taxable event has occurred?
If the answer to the second question is in the affirmative: account being taken of the powers conferred on them under Article 90(2) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, are the Member States entitled to assume, for the purposes of the tax period in which VAT first becomes chargeable, that there has been an adjustment as provided for in Article 90(1) of that directive in the case where the taxable person is not able to obtain the amount receivable, because it is not due, until two years after the taxable event has occurred?
AG Opinion
None
Decision
The supply of agency services for professional football players by an agent paid in conditional instalments over several years further to the placement, is not subject to VAT at the moment the player is placed.
In other words: Baumgarten correctly charged VAT at the time of the invoicing/payment of the instalments, and it did not have to pay VAT on the full contract at the moment the player started with the club.
Source
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