On 17 November 1993, the European Court of Justice issued its decision in the cases C-68/92, C-69/92, C-73/92. All cases dealt with ”advertising expenses”. This can be extremely important with regard to the limitation of the deductibility of VAT, in case for e.g. of entertainment expenses for employees, business relations etc.
The judgments:
- Decision C-68/92 French Republic
The ECJ rules that by excluding, by means of an administrative practice, from the definition of ‘advertising service’ within the meaning of Article 9(2)(e) of the 6th VAT Directive, (a) the sale by an advertising agency to its customer of articles intended to be handed out to consumers, (b) services provided by an advertising agency in connection with various events such as recreational functions …, and (c) the production of advertising aids, even where all those activities either involve conveying an advertising message or are inextricably linked to the conveying of such a message, the French Republic has failed to fulfil its obligations under the Sixth Directive.
- Decision C-69/92 Grand Duchy of Luxembourg
The ECJ rules that, by excluding the sale of movable tangible property in the context of an advertising campaign and services provided in connection with a variety of public-relations events, such as press conferences, seminars, cocktail parties and recreational functions, from the concept of ‘advertising services’ under Article 9(2)(e) of the 6th VAT Directive, even where those transactions either involve conveying an advertising message or are inextricably linked to the conveying of such a message, the Grand Duchy of Luxembourg has failed to fulfil its obligations under that directive and under the EEC Treaty.
- Decision C-73/92 Kingdom of Spain
The ECJ rules that, by instituting and maintaining in force a system of VAT applicable to advertising services which excludes promotional activities from that concept, even where those activities involve conveying a message intended to inform consumers of the existence and qualities of the product or service that is the subject-matter of those activities, with a view to increasing sales of that product or service, the Kingdom of Spain has failed to fulfil its obligations under Article 9(2)(e) of the 6th VAT Directive, and under the EEC Treaty.
Definition of “advertising services”
- The concept of “advertising services” … relating to the place of taxation for certain supplies of services, is a Community concept which must be interpreted uniformly in order to avoid instances of double taxation or non-taxation which may result from concept conflicting interpretations.
- That concept covers a promotional activity, such as the sale of goods at reduced prices, the handing-out to consumers of movable tangible property sold to the recipient by an advertising agency, the supply of services at reduced prices or free of charge, or the organization of a cocktail party or banquet, if that activity involves conveying a message intended to inform the public of the existence and the qualities of the product or service which is the subject-matter of the activity, with a view to increasing the sales of that product or service. The same applies to any activity which forms an inseparable part of an advertising campaign and which thereby contributes to conveying the advertising message, which is the case with regard to the production of aids used for a particular advertisement.
Source Curia C-68/92
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C-68/92
C-69/92
C-73/92
