BFG, 07.01.2025, RV/7100647/2018
- Facts: The appellant, a parent company providing paid internet services in the adult entertainment sector, faced VAT assessments from the Waldviertel tax office for the years 2012 to 2015. The dispute arose because customers whose accounts were blocked for non-payment were still obligated to pay subscription fees, raising questions about whether these fees constituted taxable services under VAT.
- Issue: The central issue was whether the subscription fees owed during the period of account blockage, due to the customer’s late payment, could be classified as VAT-liable services despite the customers’ inability to access the services during that time.
- Decision: The Federal Fiscal Court dismissed the appeal, affirming that the subscription fees were subject to VAT regardless of the service disruption caused by late payment. The court concluded that the contractual obligations established a direct link between the service provided and the consideration received, thus qualifying the fees for VAT. An appeal on points of law was declared admissible for further clarification on the legal implications of such service disruptions.
ECJ Case References in the Appeal
- MEO Case Reference: The Federal Fiscal Court (BFG) referenced the European Court of Justice (ECJ) ruling in the MEO case (C-295/17), which addressed whether compensation payments due to service deactivation under a contract are subject to VAT. The ECJ concluded that early termination of a contract by the customer does not alter the economic reality of the service provision, affirming that the compensation payments are linked to the service provided and thus subject to VAT.
- Subsequent ECJ Cases: The BFG also cited the Vodafone Portugal case (C-43/19) and UniCredit Leasing case (C-242/18), which reinforced the principles established in the MEO case, confirming that amounts payable for non-compliance with contractual obligations constitute consideration for services provided and are subject to VAT.
- Legal Consistency: The BFG determined that the reasoning from the MEO judgment applies to the present case, indicating that it is irrelevant whether a contract is terminated or merely deactivated due to non-payment; in both scenarios, the fees owed are directly related to the service provided and therefore liable for VAT. The court’s decision was deemed consistent with EU law, as it follows the established framework of the ECJ regarding service provision and VAT liability.
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