ECJ C-573/22 (Foreningen C and Others) – Judgment – VAT on Public Broadcasting Activities

On December 19, 2024, the ECJ issued the judgment in the case C-573/22 (Foreningen C and Others).

Context: Reference for a preliminary ruling – Common system of value added tax – Directive 2006/112/EC – Article 370 and point 2 of Part A of Annex X – Derogation – Scope – Activities of public radio and television bodies financed by a compulsory fee paid by owners of equipment for the reception of radio and television broadcasts

Summary

Case Background: The Court of Justice of the European Union addressed a preliminary ruling concerning Denmark’s application of VAT to a media licence fee imposed on owners of devices capable of receiving audiovisual broadcasts, specifically whether such taxation aligns with EU VAT Directive 2006/112/EC.
Key Legal Provisions: The judgment focused on the interpretation of Article 370 of the VAT Directive, which allows Member States that taxed certain transactions before 1978 to continue doing so, as well as Article 2(1)(c), which defines the supply of services for consideration subject to VAT.
Court’s Findings: The Court concluded that Denmark is permitted to tax the media licence fee, even if it does not constitute a “supply of services for consideration” under Article 2(1)(c), thereby allowing the continuation of VAT on public broadcasting activities financed by compulsory fees.
Amendments to Legislation: The ruling clarified that changes in Danish law, such as expanding the fee to devices beyond traditional radios and televisions, do not negate the applicability of Article 370, provided the fundamental nature of the fee remains linked to public broadcasting.
Use of Fee Proceeds: The Court ruled that allowing a portion of the media licence fee to fund non-public broadcasting entities does not preclude VAT application, as long as the primary purpose of the fee is still to finance public broadcasting activities.

Article in the EU VAT Directive

Article 370 in the EU VAT Directive 2006/112/EC, read in conjunction with point 2 of Annex X, Part A to Directive 2006/112/EC

Article 370 (Standstill provision)
Member States which, at 1 January 1978, taxed the transactions listed in Annex X, Part A, may continue to tax those transactions.

Facts

During the relevant period in the present case, 2007–2017, VAT was charged on the Danish media licence fee. The applicants have brought an action before the referring court seeking a refund of the VAT charged.
The Danish media licence fee was to be paid in the case of possession of a device subject to a licence fee, which means a device capable of receiving and playing audiovisual programmes or services broadcast to the public. Until 2013, a radio licence fee also had to be paid on radio equipment which could only receive and play radio programmes broadcast to the public.
A media licence fee had to be paid regardless of whether the equipment was used and, if so, of what it was used for. A media licence fee also had to be paid regardless of whether, because of the antenna’s position or other circumstances, the programmes of the institutions financed by the licence could actually be received or not. Conversely, the possibility of receiving the programmes of the institutions financed by the licence was not dependent on the payment of a media licence fee.
The licence fee has been subject to VAT since the first Danish VAT Act of 1967. When the Sixth Directive entered into force on 1 January 1978, only television and radio sets formed the group of devices subject to a licence fee. Between 2007 and 2017, the devices subject to a licence fee were all devices capable of receiving and playing audiovisual programmes or services broadcast to the public, such as television, smartphones, PCs, etc.
When the Sixth Directive entered into force, all licence fee resources were used to finance the public institution DR (Danish Broadcasting Corporation). Between 2007 and 2017, licence fee resources were used to finance DR, the regional companies of TV 2 and, through the Ministry of Culture, other media and filmrelated purposes.

Questions

1. Is Article 370, read in conjunction with point 2 of Annex X, Part A, of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, to be interpreted as permitting the Member States concerned to impose VAT on a statutory media licence fee to finance the non- commercial activities of public radio and television bodies, notwithstanding the absence of a “supply of services for consideration” within the meaning of Article 2(1) of that Directive?
If question 1 is answered in the affirmative, the Court of Justice is asked to answer the following questions referred for a preliminary ruling:
2. Is Article 370, read in conjunction with point 2 of Annex X, Part A, of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, to be interpreted as meaning that a Member State’s option to impose VAT on a statutory media licence fee as specified in question 1 may be maintained if, after the entry into force, on 1 January 1978, of Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes (Sixth Directive), the Member State has altered the licensing system from charging a licence fee for possessing radio and television equipment to charging a licence fee for possessing any device which can receive audiovisual programmes and services directly, including smartphones, computers, etc.?
3. Is Article 370, read in conjunction with point 2 of Annex X, Part A, of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, to be interpreted as meaning that a Member State’s option to impose VAT on a statutory media licence fee as specified in question 1 may be maintained if, after the entry into force, on 1 January 1978, of Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes (Sixth Directive), the Member State has altered the licensing system so that a smaller proportion of the licence fee resources will, at the discretion of the Minister for Culture, be used to finance (i) radio and television bodies which receive public subsidies but are not themselves public, and (ii) media and film organisations which contribute to but do not themselves carry out radio and television activities?

AG Opinion

(1) Article 370 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, read in conjunction with point 2 of Part A of Annex X to that directive,

must be interpreted as being applicable to the taxation of the activities of public radio and television bodies financed by a statutory fee paid by owners of devices capable of receiving programmes broadcast by those bodies in a situation where, after 1 January 1978, the licensing system was altered so that the fee is levied not only in connection with the ownership of a radio or television set, as was originally the case, but also in connection with the ownership of any other device that can be used to receive those programmes, such as smartphones, computers, and so forth, even if this potentially increases the number of entities obliged to pay that fee.

(2) Article 370 of Directive 2006/112, read in conjunction with point 2 of Part A of Annex X to that directive,

Decision

1. Article 2(1)(c) and Article 370 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, read in conjunction with point 2 of Part A of Annex X to that directive,

must be interpreted as not precluding a Member State which, on 1 January 1978, imposed value added tax on public broadcasting activities financed by a compulsory statutory fee paid by any owner of equipment capable of receiving broadcasting programmes from continuing to tax those activities, irrespective of whether those activities are covered by the concept of ‘supply of services for consideration’ within the meaning of Article 2(1)(c) of that directive.

2. Article 370 of Directive 2006/112, read in conjunction with point 2 of Part A of Annex X to that directive,

must be interpreted as not precluding a Member State which, on 1 January 1978, imposed value added tax on public broadcasting activities financed by a compulsory statutory fee paid by any person who owned a radio or television set, from continuing to tax those activities where the legislation relating to that fee was amended after that date so that that fee is levied for the possession of any device capable of receiving broadcasting programmes, including a smartphone or computer.

3. Article 370 of Directive 2006/112, read in conjunction with point 2 of Part A of Annex X to that directive,

must be interpreted as not precluding a Member State which, on 1 January 1978, imposed value added tax on public broadcasting activities financed by a compulsory statutory fee, from continuing to tax those activities where the legislation on that fee was amended after that date so as to allow a small part of the revenue from that fee to be used to finance, first, broadcasters which, despite not being public bodies, carry out public broadcasting activities and, second, media or film undertakings which are public bodies or have been set up by public broadcasting bodies and which contribute to broadcasting activities, without carrying out those activities themselves.

Summary Decision

Continued Taxation Permitted: Articles 2(1)(c) and 370 of Council Directive 2006/112/EC allow a Member State to continue taxing public broadcasting activities financed by compulsory fees, even if these activities don’t fall under ‘supply of services for consideration’ as of 1 January 1978.
Amended Fee Rules: Article 370 permits taxation if the compulsory fee rules are amended to cover any device capable of receiving broadcast programs, including smartphones and computers, as long as the country was taxing these activities on 1 January 1978.
Allocation of Fee Revenue: A Member State can continue to tax public broadcasting activities financed by compulsory fees even if a small part of the revenue is allocated to non-public broadcasters or media entities that support broadcasting activities, provided the taxation was in place on 1 January 1978.

Source

Curia

Similar ECJ cases

Case C-11/15, Český rozhlas: This case was cited for guidance regarding the nature of the media licence fee and its classification under EU VAT law.
Case C-249/22, GIS: The judgment also referred to this case for principles related to the taxation of public broadcasting activities and the interpretation of Article 370 of the VAT Directive.

Reference to the case in the other EU MS

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