On Jan 21, 2021, the ECJ issued its decision in the case C-501/19 UCMR/ADA related to Collective management of copyright on musical works.
Article in the EU VAT Directive
In this case, the Romanian court wishes to find out how to treat collective management organisations that in their own name receive payments on behalf of copyright holders. Is there a service by such an organisation to the parties that are organising performances? Or do the copyright holders supply a service directly to these parties? If the collective management organisations is considered to be “in between”, does this mean they should issue invoices to the respective performance organisers, and should the holders of copyright in musical works in turn invoice the collective management organisation?
For our previous post about this case with further background information, please click HERE.
Do the holders of rights in musical works supply services within the meaning of Articles 24(1) and 25(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax 1 (the VAT Directive) to performance organisers from which collective management organisations, on the basis of an authorisation — a non-exclusive licence — receive remuneration, in their own name but on behalf of those right holders, for the public performance of musical works? If the first question is answered in the affirmative, do collective management organisations, when receiving remuneration from performance organisers for the right to perform musical works for a public audience, act as a taxable person within the meaning of Article 28 of the VAT Directive, and are they required to issue invoices including VAT to the respective performance organisers, and, when remuneration is paid to authors and other holders of copyright in musical works, are the latter, in turn, required to issue invoices including VAT to the collective management organisation?
1) Article 2 (1) 1 lit. c) and art. 25 lit. (a) Council Directive 2006/112 / EC of 28 November 2006 on the common system of value added tax should be interpreted as meaning that rightholders in musical works provide services consisting in the transfer of rights in intangible assets to the end-user , in this case, the organizers of performances who are entitled to make these works available to the public, even though the remuneration for the permit is collected by the collective management organization on its own behalf.
2) Article 28 of Directive 2006/112 must be interpreted as meaning that, where a collecting society is involved, on its own behalf but for rightholders in musical works, in the collection of the remuneration due to them in exchange for the authorization to use them to the public. of works, they are considered to provide the service to the collecting society, and the latter provides the same service to the end-user. In this case, the collective management organization shall issue invoices on its behalf to the end-user in which all amounts, including VAT, have been received from him. For the purpose of deducting this tax, rightholders should issue invoices containing VAT for the remuneration service provided to the collecting society.
1. Art. 2, Paragraph 1, Letter c of Council Directive 2006/112 / EC of November 28, 2006 on the common VAT system in the version amended by Council Directive 2010/88 / EU of December 7, 2010 is no longer applicable to interpret that a holder of copyrights to musical works provides a paid service to an organizer of performances as an end user if the latter is collected against payment of remuneration by a designated collecting society – acting in its own name but for the account of the rights holder – that is not exclusive license to reproduce these works to the public.
2. Art. 28 of Directive 2006/112 / EC in the version amended by Directive 2010/88 is to be interpreted as meaning that a collecting society that collects remuneration in its own name, but for the account of the owners of copyrights in musical works, which these in return for are entitled to the permission to publicly reproduce their protected works, act as a “taxpayer” within the meaning of this provision and are therefore to be treated as if they had received this service from the rights holders and then provided them to the end users themselves. In such a case, the collecting society is obliged to issue the end user with invoices in their name, in which the remuneration collected by him, including VAT, is shown. For their part, the rights holders are obliged.