Flashback on ECJ cases C-327/94 (Dudda) – VAT Classification of Sound-Engineering Services for Artistic Events

On September 26, 1996, the ECJ issued its decision in the case C-327/94 (Dudda).

Context: Tax provisions ° Harmonization of laws ° Turnover taxes ° Common system of value added tax ° Supply of services ° Determination of the place where taxable transactions are effected ° Cultural and artistic activities and ancillary activities ° Ancillary activities ° Definition ° Sound-engineering for artistic events with the supply of the requisite equipment and operating staff ° Included

Summary

Parties and Context: The case involves Jürgen Dudda, who provides sound-engineering services for artistic and entertainment events, and the German tax authority (Finanzamt Bergisch Gladbach) regarding VAT on services provided outside Germany.
Legal Framework: The case centers on the interpretation of Article 9(2)(c) of the Sixth Council Directive 77/388/EEC, which addresses the place of supply for services related to cultural and artistic activities.
Dispute: Dudda contended that his services should not be taxable in Germany since they were performed abroad, arguing that they qualified as “artistic, entertainment or similar services” under the directive.
Court’s Ruling: The European Court of Justice ruled that sound-engineering services are ancillary to the principal artistic or entertainment services and are taxed where they are physically performed, not where the service provider is established.
Key Findings: The Court stated that coordination of sound with visual effects does not change the classification of these services as ancillary; thus, they fall under Article 9(2)(c) of the directive.

Article in the EU VAT Directive

Article 9(2)(c) of the Sixth VAT Directive.

The first indent of Article 9(2)(c) provides that:

“the place of the supply of services relating to:

° cultural, artistic, sporting, scientific, educational, entertainment or similar activities, including the activities of the organizers of such activities, and where appropriate, the supply of ancillary services,

(…)

Facts

Legal Context:

Directive Involved: Sixth Council Directive 77/388/EEC on the harmonization of the laws of the Member States relating to turnover taxes (VAT Directive).
Key Article: Article 9(2)(c) of the Sixth Directive.

Key Issue:

The interpretation of Article 9(2)(c) concerning the place where services are supplied, specifically in relation to sound-engineering services for artistic or entertainment events.

Facts:

Jürgen Dudda’s Business:
- Dudda provides technical acoustic services, particularly sound-engineering for concerts and similar events.
- His business is established in Germany, but most events he services occur outside Germany, including other EU Member States.
- Dudda supplies necessary equipment and personnel, some of which he owns and some he hires from other suppliers.
- He receives a single payment from event organizers for his comprehensive services.
Dispute:
- The German tax authority (Finanzamt Bergisch Gladbach) charged turnover tax on payments Dudda received for events held outside Germany.
- Dudda contested this, arguing that his services should be classified as “artistic, entertainment or similar services” under the UStG (German VAT law), aligning with Article 9(2)(c) of the Sixth Directive. Therefore, these services should not be taxable in Germany as they were physically carried out abroad.
National Court’s View:
- The Finanzgericht Köln was inclined to believe that Dudda’s services might not be classified as “artistic” or “entertainment” under German law but recognized that Article 9(2)(c) of the Sixth Directive might provide a different interpretation.

Questions

(a) Does a person who, at artistic or entertainment events, carries out the sound-engineering of the performance supply a service within the meaning of Article 9(2)(c) of the Sixth VAT Directive where his task consists in

° choosing and operating the equipment used and adjusting it to the particular acoustic conditions and the desired sound effects

and

° also supplying the requisite equipment and the necessary operating staff?

(b) Does it make any difference if he has undertaken in addition to coordinate the sound effects to be produced with his assistance with certain visual effects produced by other persons?”

AG Opinion

A person who, at artistic or entertainment events at a number of different locations, carries out the sound-engineering of the performance, where his services are a necessary prerequisite to the performance, supplies an ancillary service within the meaning of Article 9(2)(c), first indent, of the Sixth Council Directive of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment.

This conclusion applies where the service in question consists in choosing and operating the equipment used and adjusting it to the particular acoustic conditions and the desired sound effects and also supplying the requisite equipment and the necessary operating staff, as well as where it consists, in addition, in coordinating the sound effects to be produced with his assistance with certain visual effects produced by other persons.

Decision

The first indent of Article 9(2)(c) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment must be interpreted as covering the activity of a person who provides sound-engineering for artistic or entertainment events by choosing and operating the equipment used, adjusting it to the particular acoustic conditions and the desired sound effects, and who supplies the requisite equipment and operating staff, where the service which he provides constitutes a prerequisite for the performance of the principal artistic or entertainment service supplied.

2. The fact that the person concerned has undertaken in addition to coordinate the sound effects to be produced with his assistance with certain visual effects produced by other persons cannot affect the answer given to the first question.

Source