On 28 February 2023, following a preliminary ruling requested by the UK First-tier Tribunal (Tax Chamber), the European Court of Justice (“ECJ”) decided on case C-695/20 concerning the applicability of Article 9bis of the regulation No. 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax, as amended by regulation No. 1042/2013 (the “Regulation”).
More specifically, the main issue related to the validity of Article 9bis of the Regulation in light of (notably) Article 28 of the Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended (the “VAT Directive”).
Background
In the matter at hand, a company registered for VAT purposes in the UK (the “Company”) operates on the internet a platform offered to users that are divided into two categories: the “creators” and the “fans” (the “Platform”). The Company provides not only the Platform but also the device enabling financial transactions to be carried out and, in addition, sets the general terms and conditions for the use of the Platform. The Company levies a 20% commission on any sum paid by a fan to a creator. A 20% VAT is applied by the Company on its commission.
Pursuant to a tax audit performed by the UK VAT authorities, the Company received VAT assessments imposing VAT on the entire amount paid by the fan and not only on the 20%-commission. The legal basis relied upon by the UK VAT authorities is the Article 9bis of the Regulation, which provides that, “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”.
Questions referred to the ECJ
The UK First-tier Tribunal asked the following question to the ECJ:
- Is Article 9bis of the Regulation invalid on the basis that it goes beyond the implementing power or duty on the Council established by Article 397 of the VAT Directive as far as it supplements and/or amends Article 28 of that Directive?
As a reminder, Article 28 of the VAT Directive provides that: “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”.
ECJ decision
To reach its conclusion, the ECJ proceeded in three steps. First, it concluded that the provisions of Article 9bis of the Regulation comply with the essential general aims of the VAT Directive and, in particular, those of Article 28 thereof. Secondly, the ECJ confirmed the necessity of Article 9bis of the Regulation for a uniform implementation of Article 28 of the Directive. Finally, it ruled that, by its adoption of Article 9bis of the Regulation, in order to ensure a uniform application in the EU of Article 28 of the VAT Directive, the Council did not exceed the implementing powers conferred on it by Article 397 of that Directive. As a result, the ECJ confirmed the validity of Article 9bis of the Regulation.
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