On May 14, 2008, the ECJ issued its Order in the joined cases C-231/07 (Tiercé Ladbroke) & C-232/07 (Derby SA).
Context: Procedural Regulation — Article 104(3), first subparagraph — Sixth VAT Directive — Article 13(B)(d), point 3 — Exemptions — Concepts of ‘deposits of funds’ and ‘payments’ — Refusal of exemption”
Article in the EU VAT Directive
Article 13B(d)(3) of the Sixth VAT Directive (Article 135(1)(d) of the EU VAT Directive 2006/112/EC).
Article 135
1. Member States shall exempt the following transactions:
(d) transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection;
Facts
C-231/07
- Tiercé Ladbroke and Derby engage in the business of placing bets on horse races and other sporting events and are, therefore, subject to VAT. These are mainly bets on horse races run abroad and incidentally bets on horse races run in Belgium.
- The stakes of those bets are raised, in the cases at issue in the main proceedings, by local agencies, known as ‘buralistes’, located throughout the territory of the Kingdom of Belgium. These local agencies are not part of the staff of Tiercé Ladbroke and Derby and provide their services independently. In addition to collecting funds, tobacconists contract bets on behalf of Tiercé Ladbroke and Derby, reserve the right to refuse to contract a bet with such or such bettor, on behalf of Tiercé Ladbroke and Derby, and are responsible for pay the winnings.
- During the period in dispute, i.e. from 1987 until 1 stMay 1996, these tobacconists were acting as agents for Tiercé Ladbroke and Derby. They thus paid them the stakes collected and received remuneration for their intervention. The activity of these tobacconists was subject to VAT, with the particularity that the VAT applied to remuneration was paid to the State not by the tobacconists, but globally and monthly by Tiercé Ladbroke and Derby themselves, under authorization from the central VAT administration of 7 April 1987. Tiercé Ladbroke and Derby could not, however, deduct the VAT applied to the tobacconists’ services insofar as they bore it in the context of their activities exempt from taking paris, in accordance with national legislation.
- Believing that no VAT was due on the services of tobacconists, Tiercé Ladbroke and Derby issued a summons before the Court of First Instance of Brussels in order to obtain reimbursement of the VAT paid on the services of tobacconists since the year 1987 until April 30, 1996.
- By judgments of 28 February 2003, the Brussels Court of First Instance dismissed their claims.
- Tiercé Ladbroke and Derby then appealed against these judgments, arguing, inter alia, that the tobacconists’ services correspond to services exempt from VAT under Article 44, paragraph 3, 8°, of the Belgian tax code on added value. That provision, which is based on Article 13(B)(d)(3) of the Sixth Directive, exempts ‘payment and collection transactions’ from payment of VAT.
Questions
The provision of services rendered by an agent, acting on behalf of a principal engaged in the activity of taking bets on horse races and other sporting events, consisting in that this agent accepts bets on behalf of the principal , registers the bets, confirms to the customer, by handing over the ticket, that the bet is concluded, collects the funds, pays the winnings, assumes sole responsibility, vis-à-vis the principal, for the management of the funds collected as well as theft and/or loss of money and receives remuneration in the form of a commission from his principal as remuneration for this activity, is he exempt from VAT by application of article 13, B, [under] d), [point] 3, of the Sixth Directive which exempts transactions, including negotiations,concerning deposits of funds […] [and] payments […]?
AG Opinion
None
Decision
The terms ‘transactions, including negotiations concerning deposits of funds [and] payments’ used in Article 13 B (d) (3) of Sixth Council Directive 77/388 / EEC , of May 17, 1977, on the harmonization of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform base, must be interpreted in the sense that they do not relate to the provision of services provided by an agent, acting on behalf of a principal carrying out a betting activity on horse races and other sporting events, consisting in that this agent accepts bets on behalf of the principal, registers the bets, confirms to the customer, by handing over the ticket, that the bet is concluded, collects the funds, pays the winnings,assumes sole responsibility, vis-à-vis the principal, for the management of the funds collected as well as the theft and / or loss of money and receives remuneration in the form of a commission from his principal in remuneration of this activity.
Personal comments/VATupdate
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