ECJ C-101/24 ( XYRALITY) – AG Opinion- VAT Liability for App Store Services

On April 10, 2025, the ECJ issued the AG Opinion in the case C-101/24 (XYRALITY).

Context: Directive 2006/112 – Distribution of electronic services (game applications for mobile devices) via a marketplace for applications – Place of supply of services in the period before 1 January 2015 – Place of establishment of the marketplace for applications or place of establishment of the developer of the applications

Summary

Facts of the Case: XYRALITY GmbH, a German mobile app developer, provided apps through an Irish-operated app store. Users downloaded these apps for free, with optional in-app purchases facilitated through the app store. The case revolves around the correct application of VAT for these transactions prior to new regulations established in 2015.
Legal Issues: The central issue is whether the app store can be considered the supplier of the services (the apps and in-app purchases) for VAT purposes, based on Article 28 of Directive 2006/112/EC. This determination affects where VAT is payable and which entity is responsible for charging and collecting it.
Questions Raised:The Bundesfinanzhof referred three questions to the Court of Justice:
- Should the app store be treated as the supplier of services provided before 2015?
- If so, where is the place of supply of these services determined?
- Is the app developer liable for VAT under Article 203 despite the app store’s role in invoicing?
Advocate General’s Opinion:
- Advocate General Szpunar opined that Article 28 applies to the case, asserting the app store should be treated as the supplier of services. He emphasized that both the app availability and in-app purchases are inseparable services, thus the app store acts in its own name but on behalf of the developer. Consequently, the place of supply is determined by the location of the app store (Ireland), and not Germany.
Conclusions: Szpunar concluded that:
- The app store is deemed to have received services from the developer and supplied them to end users.
- The place of supply for the fictitious service is based on Article 44 (the location of the agent).
- The developer is not liable for VAT under Article 203 since the end users, being non-taxable persons, do not have the right to deduct VAT. Thus, the tax liability rests solely with the app store as the effective supplier.

Articles in the EU VAT Directive

Articles 28, 44, 45 and 203 of the EU VAT Directive 2006/112/EC.

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 44
The place of supply of services to a taxable person acting as such shall be the place where that person has established his business. However, if those services are provided to a fixed establishment of the taxable person located in a place other than the place where he has established his business, the place of supply of those services shall be the place where that fixed establishment is located. In the absence of such place of establishment or fixed establishment, the place of supply of services shall be the place where the taxable person who receives such services has his permanent address or usually resides.

Article 45
The place of supply of services to a non-taxable person shall be the place where the supplier has established his business. However, if those services are provided from a fixed establishment of the supplier located in a place other than the place where he has established his business, the place of supply of those services shall be the place where that fixed establishment is located. In the absence of such place of establishment or fixed establishment, the place of supply of services shall be the place where the supplier has his permanent address or usually resides.

Article 203
VAT shall be payable by any person who enters the VAT on an invoice.

Article 9a of The Implementing Regulation 282/2011

Article 9a

1. For the application of Article 28 of Directive 2006/112/EC, where electronically supplied services are supplied through a telecommunications network, an interface or a portal such as a marketplace for applications, a taxable person taking part in that supply shall be presumed to be acting in his own name but on behalf of the provider of those services unless that provider is explicitly indicated as the supplier by that taxable person and that is reflected in the contractual arrangements between the parties.

In order to regard the provider of electronically supplied services as being explicitly indicated as the supplier of those services by the taxable person, the following conditions shall be met:

- (a) the invoice issued or made available by each taxable person taking part in the supply of the electronically supplied services must identify such services and the supplier thereof;
- (b) the bill or receipt issued or made available to the customer must identify the electronically supplied services and the supplier thereof.

For the purposes of this paragraph, a taxable person who, with regard to a supply of electronically supplied services, authorises the charge to the customer or the delivery of the services, or sets the general terms and conditions of the supply, shall not be permitted to explicitly indicate another person as the supplier of those services.

2. Paragraph 1 shall also apply where telephone services provided through the internet, including voice over internet Protocol (VoIP), are supplied through a telecommunications network, an interface or a portal such as a marketplace for applications and are supplied under the same conditions as set out in that paragraph.

3. This Article shall not apply to a taxable person who only provides for processing of payments in respect of electronically supplied services or of telephone services provided through the internet, including voice over internet Protocol (VoIP), and who does not take part in the supply of those electronically supplied services or telephone services.

Facts

The parties are in dispute about the VAT taxation of so–called ‘in–application purchases’ effected during the years from 2012 to 2014 (the years at issue), in
which Article 9a of Implementing Regulation No 282/2011 had not yet entered into force.
The applicant and defendant in the appeal (‘ the applicant’), a taxable person established in the Federal Republic of Germany, develops and distributes game
applications for mobile devices. For distribution purposes, it uses, inter alia, an internet–based digital distribution platform for software (referred to as a ‘marketplace for applications’). The marketplace for applications was operated by Ireland–based X until 31 December 2014. During the years at issue, end customers who used mobile devices with a specific operating system were able to download the applicant’s game applications solely via the marketplace for applications.
During that period X entered into standardised agreements, governing the distribution of products via the marketplace for applications, with developers such as the applicant. Those agreements stipulated that the sellers of the products offered through the marketplace for applications were their developers. X was to display the products on behalf of the developers and make them available for the end customers to download and purchase. X was to receive a commission in return for providing those services. The payment transaction was to be processed via the marketplace for applications.
During the years at issue, various downloadable game applications were available to the end customers in the marketplace for applications. The vast majority of those games did not originate from X but rather from the designers themselves. When presented in the marketplace for applications, the name of the developer was also displayed for each game. During the years at issue, the applicant appeared in the marketplace for applications and its company name, legal form and address were displayed.
Although the game applications developed by the applicant could be downloaded free of charge from the marketplace for applications, it was necessary for the end customer to purchase improvements or other benefits (in–application purchases) in order to advance in the game or obtain other benefits. The end customers were able to select the desired improvements or benefits in the applicant’s game application and have them activated for a fee.
The in–application purchases were processed via the marketplace for applications by means of a method of payment saved there by the end customer. The applicant was not named as the supplier in the course of the purchase transaction. Only X’s logo and certain links were visible. Upon completion of the purchase process, the end customer received an order confirmation from X by email. That email contained the logo of the marketplace for applications and a statement thatpurchase was transacted with the relevant developer (in this case, the applicant) in the marketplace for applications.
The applicant initially regarded itself as the supplier to the end customers. It therefore declared German VAT for end customers based in the European Union, on the ground that the place of supply was, pursuant to Article 3a(1) of the UStG and Article 45 of Directive 2006/112, its place of establishment, and paid the German VAT to the defendant and to the appellant in the appeal on a point of law, namely the Finanzamt (Tax Office) (‘the FA’).
On 29 January 2016, the applicant submitted corrected VAT returns for the years at issue. It was now of the opinion that this was a case in which services were commissioned (Paragraph 3(11) of the UStG, Article 28 of Directive 2006/112). It had provided its services to X, and X had provided the services to the end customers. Under Paragraph 3a(2) of the UStG and Article 44 of Directive 2006/112, the place of supply of its services to X was in Ireland.
The FA took the view that X was merely to be regarded as an intermediary. It is true that the respective purchase process took place via the marketplace for applications. However, the end customers were made aware of the terms of use at each individual step of the in–application purchase. X had thus clearly informed the end customers in the course of each purchase that the transactions were being executed on behalf a third party and that X was merely collecting the amount owed. The FA therefore issued VAT assessments in which the corrections made by the applicant had not been not taken into account.
The Finanzgericht (Finance Court) (‘the FG’) upheld the action brought by the applicant. It considered that the appellant’s transactions were not taxable in Germany because the recipient of its services was X. According to Paragraph 3a(2) of the UStG and Article 44 of Directive 2006/112, the place of supply was in Ireland.
The FA’s appeal on a point of law (Revision) to the referring court is directed against the judgment of the Finanzgericht (Fiscal Court).

Questions

Under circumstances such as those in the main proceedings, in which a German taxable person (developer) supplied, before 1 January 2015, a service by electronic means to non–taxable persons (end customers) established within the territory of the European Union, via a marketplace for applications operated by an Irish taxable person, is Article 28 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax to be applied, with the result that the Irish taxable person is treated as if it had received those services from the developer and supplied them to the end customers, because the marketplace for applications did not name the developer as the supplier of the service and show German VAT until it did so in the order confirmations issued to the end customers?
If the first question referred is answered in the affirmative: Is the place of supply of the fictitious service supplied by the developer to the marketplace for applications under Article 28 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax in Ireland, by virtue of Article 44 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, or in the Federal Republic of Germany, by virtue of Article 45 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax?
If, by virtue of the answers to the first and second questions referred for a preliminary ruling, the developer has not supplied any services in the Federal Republic of Germany: Is the developer subject to a tax liability for German VAT under Article 203 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, on the ground that the marketplace for applications, acting in accordance with an agreement, named the developer as the supplier of the service and showed German VAT in the order confirmations it sent by email to the end customers, even though the end customers are not entitled to deduct input VAT

AG Opinion

(1) Article 28 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2008/8/EC of 12 February 2008,

is to be interpreted as applying to the situation of the supply, prior to 1 January 2015, by electronic means, of services consisting in making available computer programs (mobile applications) and additional services through a portal (app store), with the result that a taxable person operating an app store is treated as if it had received those services from an application developer and supplied them to end users.

(2) Article 28 of Directive 2006/112, as amended by Directive 2008/8,

is to be interpreted as meaning that the place of supply of a fictitious service supplied by another person to a taxable person who takes part, under the conditions set forth in Article 28 thereof, in the supply of services to non-taxable persons resident in a Member State, is to be determined on the basis of Article 44 of that directive.

(3) Article 203 of Directive 2006/112, as amended by Directive 2008/8,

is to be interpreted as meaning that another person on whose behalf a taxable person taking part in the supply of services under the conditions set forth in Article 28 of that directive acts is not liable to pay VAT on the ground that the taxable person has designated that other person, with his consent, as the supplier of services and stated the amount of VAT in the purchase confirmations transmitted electronically to non-taxable end users.

Reference to other ECJ Cases

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