On February 15, 2017, the ECJ issued its decision in the case C-592/15 (British Film Institute).
Context: Reference for a preliminary ruling — Value added tax — Sixth Directive 77/388/EEC — Article 13A(1)(n) — Exemptions for certain cultural services — No direct effect — Determination of the exempt cultural services — Discretion of the Member States
Article in the EU VAT Directive
Article 13(A)(1)(n) of the Sixth VAT Directive (Article 132(1)(n) of the EU VAT Directive 2006/112/EC)
Article 132
1. Member States shall exempt the following transactions
(n) the supply of certain cultural services, and the supply of goods closely linked thereto, by bodies governed by public law or by other cultural bodies recognised by the Member State concerned;
Facts
- BFI is a non-profit-making body with the task of promoting cinema in the United Kingdom. In the period from 1 January 1990 to 31 May 1996 (‘the period at issue’) BFI paid VAT at the standard rate on rights of admission to showings of films.
- On 30 March 2009 BFI applied to the revenue authorities for reimbursement of the VAT paid during the period at issue, submitting that those rights of admission constituted exempt cultural services under Article 13A(1)(n) of the Sixth Directive. The application was refused.
- The action brought by BFI against that refusal succeeded in the First-tier Tribunal (Tax Chamber) (United Kingdom). In its decision of 5 December 2012, the tribunal held that the exemption provided for in that provision was of direct effect.
- The revenue authorities appealed against that decision to the Upper Tribunal (Tax and Chancery Chamber) (United Kingdom), which dismissed the appeal, finding that the exemption in that provision was sufficiently clear and precise and was therefore of direct effect. The term ‘certain’ in that provision was to be interpreted as meaning that the exemption applied to ‘those’ cultural services supplied by bodies governed by public law or other cultural bodies recognised by the Member State concerned. The revenue authorities were given leave to appeal to the Court of Appeal of England and Wales (Civil Division) (United Kingdom).
- According to the order for reference, if Article 13A(1)(n) of the Sixth Directive were to be interpreted as applying to ‘those’ cultural services supplied by bodies governed by public law or by other cultural bodies recognised by the Member State concerned within the meaning of that provision, that would mean that BFI, which is such a body, could rely directly on that provision to benefit from the exemption for its supplies of rights of admission to showings of films in the period from 1 January 1990 to 31 May 1996. BFI could even continue to rely directly on that provision after 31 May 1996, even though the services it supplies do not fall within the cultural services exempted by United Kingdom legislation from that date.
Questions
1. Are the terms of Article 13A(1)(n) of the Sixth Directive, in particular the words “certain cultural services”, sufficiently clear and precise such that Article 13A(1)(n) is of direct effect so as to exempt the supply of those cultural services by bodies governed by public law or other recognised cultural bodies, such as the supplies made by [BFI] in the present case, in the absence of any domestic implementing legislation?
2. Do the terms of Article 13A(1)(n) of the Sixth Directive, in particular the words “certain cultural services”, permit Member States any discretion in their application by means of implementing legislation and, if so, what discretion?
3. Do the same conclusions as above apply to Article 132(1)(n) of [Directive 2006/112]?
AG Opinion
(1) Article 13A(1)(n) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment, as amended by Council Directive 92/77/EEC of 19 October 1992, must be interpreted as meaning that the concept of ‘the supply of certain cultural services’ leaves it to the Member States to decide which supplies of cultural services may be exempt from value added tax.
It is for the national court to decide, taking account in particular of the nature of the services in question, whether excluding the respondent in the main proceedings from entitlement to exemption from value added tax complies with the principle of fiscal neutrality, and, in particular, whether it entails infringement of the principle of equal treatment in relation to other operators supplying the same services in comparable situations and enjoying exemption from value added tax for those supplies.
(2) Article 13A(1)(n) of Sixth Directive 77/388, as amended by Directive 92/77, may not be relied on directly by a taxable person before the national court where the Member State concerned has failed to transpose that directive into national law by the end of the period prescribed.
Decision
Article 13A(1)(n) of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment, exempting ‘certain cultural services’, must be interpreted as not being of direct effect, so that in the absence of transposition that provision may not be relied on directly by a body governed by public law or other cultural body recognised by the Member State concerned supplying cultural services.
Summary
British Film Institute (BFI) pays standard rate VAT on granting the right of access to film screenings. According to the BFI, however, there are cultural services that fall under art. 13 A paragraph 1 sub n Sixth VAT Directive are exempt. However, the British tax authorities do not agree with this and reject the BFI’s request for a refund of the VAT. The British court is asking preliminary questions in this case.
The European Court of Justice rules that art. 13 A(1)(n) Sixth VAT Directive has no direct effect. According to the EU Court of Justice, BFI, as a recognized cultural institution providing cultural services, cannot directly invoke this exemption, because the UK has not transposed it into national law. The European Court of Justice considers that art. 13 A paragraph 1 sub n Sixth VAT Directive, where it refers to ‘certain cultural services’, does not require that all cultural services be exempted. Member States can therefore exempt ‘certain’ of those services and subject others to VAT.
Source:
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