General Court T-643/24 (Credidam) – Questions – VAT for Copyright Compensation in Romanian Performing Artists

The General Court released the facts and questions in the case T-643/24 (Credidam).

Summary

Case Background: The Romanian Centre for the Administration of Performing Artists’ Rights (CREDIDAM) filed a lawsuit against Cristian General Serv SRL, a tourist guesthouse owner, seeking payment for unauthorized public communication of phonograms and artistic performances, including VAT.
Initial Ruling: The Tribunalul București dismissed CREDIDAM’s claim, stating that the defendant did not engage in any commercial activity during the relevant period and thus did not communicate any protected works to the public.
Appeal and VAT Issue: CREDIDAM appealed the decision, arguing that the defendant did communicate to the public. The Curtea de Apel București considered whether VAT should be included in the compensation for tortious civil liability.
Preliminary Ruling Request: The Curtea de Apel decided to refer questions to the Court of Justice of the European Union (CJEU) regarding whether the communication of protected works without a license constitutes a supply of services subject to VAT under Directive 2006/112/EC.
Legal Considerations: The court seeks clarification on whether the inability of right holders to object to uses under national law and the method of calculating remuneration affect the classification of such communications as taxable services.

Articles in the EU VAT Directive

Article 2
1. The following transactions shall be subject to VAT:
(c) the supply of services for consideration within the territory of a Member State by a taxable person acting as such;

Article 24
1. ‘Supply of services’ shall mean any transaction which does not constitute a supply of goods.

Article 25
A supply of services may consist, inter alia, in one of the following transactions:
(a) the assignment of intangible property, whether or not the subject of a document establishing title;

Article 28
Where a taxable person acting in his own name but on behalf of another person takes part in a supply of services, he shall be deemed to have received and
supplied those services himself.

Article 73
In respect of the supply of goods or services, other than as referred to in Articles 74 to 77, the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply, from the customer or a third party, including subsidies directly linked to the price
of the supply.

Article 79
The taxable amount shall not include the following factors:
(a) price reductions by way of discount for early payment;
(b) price discounts and rebates granted to the customer and obtained by him at the time of the supply;
(c) amounts received by a taxable person from the customer, as repayment of expenditure incurred in the name and on behalf of the customer, and entered in his
books in a suspense account.

Facts & Background

Parties Involved: The case involves the Romanian Centre for the Administration of Performing Artists’ Rights (CREDIDAM), a collective management organization responsible for collecting and distributing remuneration for performing artists’ rights, and Cristian General Serv SRL, a Romanian company that owns a three-star rated tourist guesthouse.
Claim Initiation: CREDIDAM initiated proceedings on November 25, 2022, against Cristian General Serv SRL, seeking compensation for the unauthorized communication of phonograms and artistic performances that occurred in the guesthouse from October 1, 2019, to December 31, 2022. The claim included a demand for three times the remuneration due to performing artists, along with VAT.
Initial Judgment: On April 19, 2023, the Tribunalul București dismissed CREDIDAM’s claim as unfounded. The court found that Cristian General Serv SRL did not conduct any commercial activity during the relevant period, and thus, did not communicate the protected works to the public. The court also noted that a space owned by the defendant had been removed in February 2023.
Appeal Process: CREDIDAM appealed the decision, arguing it had demonstrated that the defendant had indeed communicated to the public. The appeal was registered with the Curtea de Apel București, which raised the issue of whether VAT should apply to the compensation claimed under tortious civil liability.
Referral to CJEU: The Curtea de Apel considered the need for a preliminary ruling from the Court of Justice of the European Union (CJEU) regarding the classification of the compensation as a taxable supply of services under EU VAT law, particularly in light of the defendant’s claims that the amounts were not subject to VAT as per the Romanian Tax Code.

Questions

(1) On a proper construction of Article 2(1)(c), Article 24(1), and Article 25(a) of Directive 2006/112/EC, do holders of related rights carry out a supply of
services for consideration where the user carries out a communication to the public of protected works in the absence of a licence to that effect?
(2) Does the answer to the first question depend on whether, under national law, the holder of such a related right is not able to object to the uses, being entitled
only to the single equitable remuneration, or does it depend on the method of calculation used in determining the amounts due?

Source

Curia

Reference to other ECJ Cases

Case C-37/16 (SAWP): This case involved the economic rights of reproduction in the context of private copying. It discussed the absence of a legal relationship for reciprocal performance in certain transactions.
Case C-501/19 (UCMR-ADA): This case addressed the management activities of collective management organizations and clarified VAT obligations concerning remuneration collected on behalf of rights holders.
Case C-179/23 (CREDIDAM): This recent case also involved issues related to the management of copyright and related rights and included discussions on VAT applicability.