Flashback on ECJ Cases C-530/09 (Inter-Mark Group) – Place of supply of services in connection with exhibition stands

Design, hiring out and assembly of fair standsOn October 27, 2011, the ECJ issued its decision in the case C-530/09 (Inter-Mark Group). The case relates to the place of supply of design, hiring out and assembly of fair stands.

VAT – Directive 2006/112/EC – Articles 52(a) and 56(1)(b) and (g) – Place of taxable transactions – Place of supply for tax purposes – Design, hiring out and assembly of fair stands

Article in the EU VAT Directive

Articles 52(a), 56(1)(b), 56(1)(g) of Council Directive 2006/112/EC (of the version applicable in 2009, so before the changes implemented on Jan 1, 2010 relating to the place of supply of services

Article 52(a)

The place of supply of the following services shall be the place where the services are physically carried out:

(a) cultural, artistic, sporting, scientific, educational, entertainment or similar activities, including the activities of the organisers of such activities and, where appropriate, ancillary services;

Article 56(b) and (g)

1. The place of supply of the following services to customers established outside the Community, or to taxable persons established in the Community but not in the same country as the supplier, shall be the place where the customer has established his business or has a fixed establishment for which the service is supplied, or, in the absence of such a place, the place where he has his permanent address or usually resides:

(b) advertising services;

(g) the hiring out of movable tangible property, with the exception of all means of transport;

Facts

On 11 February 2009, Inter-Mark requested from the Dyrektor a written interpretation of the provisions of the VAT Law concerning the determination of the place at which services relating to the hiring-out of stands for fairs and exhibitions are supplied and the determination of that place in the case where those services are supplied by a subcontractor. It is apparent from the referring court’s decision that the issue relating to subcontracting is irrelevant in the context of the present reference.
In its request, Inter-Mark described the activity which it proposed to carry out as consisting of the temporary provision of fair and exhibition stands to clients presenting their goods or services during such events. That provision is, in general, preceded by the drawing-up and visualisation of a design. Where necessary, the supply of services also includes transportation of components of the stand and its assembly at the place where the fair or exhibition is being organised. The services relating to the hiring-out of stands are supplied mainly to foreign contracting parties having their place of establishment or residence within the territory of European-Union Member States or within the territory of non-member countries. Inter-Mark does not, however, rule out the possibility that its services may also be supplied to national entities. The stands in question have to be provided to hiring clients both within the territory of Poland and the Member States of the European Union and within the territory of non-member countries. At the end of the contract, the clients who have hired stands must return them to Inter-Mark.
According to Inter-Mark, the fees for the provision of those stands are added to the fees which exhibitors must pay to the organiser of the event concerned for the purpose of taking part in that event. Those fees cover, inter alia, utility, fair-infrastructure and media-service costs. By contrast, each exhibitor is individually responsible for fitting out and constructing its own stand and, to that end, has recourse to the services of Inter-Mark. The admission fees charged to visitors at certain fairs and exhibitions accrue exclusively to the organisers of those events.
In its request, Inter-Mark stated that it takes the view that the services which it supplies are thus advertising services within the meaning of Directive 2006/112. Alternatively, it submits that the services in question may be classified as rental or hire services or other services of a similar nature concerning movable tangible property, with the exception of means of transport.
On 4 May 2009, the Dyrektor, acting on behalf of the Minister Finansów, gave an individual interpretation in which he expressed the view that services such as those at issue in the main proceedings were, in accordance with Article 27(2)(3)(a) of the VAT Law, to be regarded as being supplied in the place where they were physically carried out. In support of his interpretation, the Dyrektor stated that advertising is a form of persuasive communication using techniques and actions to draw attention to a product, service or idea. However, the activities carried on by Inter-Mark did not, in his view, constitute such a form of communication but were rather supplies of services which were ancillary to the organisation of fairs and exhibitions.

Questions

(a) Are the provisions of Article 52(a) of Council Directive 2006/112/EC ¹ to be interpreted as meaning that services consisting in the temporary provision of exhibition and fair stands to clients presenting their goods and services at fairs and exhibitions must be classified as services ancillary to fair and exhibition services referred to in those provisions, that is to say services similar to cultural, artistic, sporting, scientific, educational and entertainment activities, which are taxed at the place where they are physically carried out,

(b) or should it be accepted that they are advertising services taxed at the place where the customer has established his business on a permanent basis or has a fixed establishment for which the service is supplied, or, in the absence of such a place, the place where he has his permanent address or usually resides, in accordance with Article 56(1)(b) of Directive 2006/112,

– on the basis that those services concern the temporary provision of stands to clients presenting their goods and services at fairs and exhibitions which is normally preceded by the drawing up of a design and visualisation of the stand and, possibly, transportation of parts of the stand and its assembly at the place where the fair or exhibition is organised, and the service supplier’s clients exhibiting their goods or services pay separately to the organiser of the relevant event fees for the very possibility of participating in the fair or exhibition which cover utility, fair infrastructure and media service costs and so forth,

each exhibitor is separately responsible for fitting out and constructing his own stand and in that respect uses the services at issue which require interpretation,

organisers charge visitors individually fees for entrance to their fair or exhibition which accrue to the organiser of the event and not to the supplier of the service?

AG Opinion

Article 52(a) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that the supply of services consisting in the temporary provision of fair stands to exhibitors is a service ancillary to the activities of fairs and exhibitions and thus comes within the scope of that provision.

Decision

Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that a supply of services consisting of the design, temporary provision and, where necessary, the transportation and assembly of a fair or exhibition stand for clients presenting their goods or services at fairs and exhibitions is liable to come within the scope of:

– Article 56(1)(b) of that directive, in the case where that stand is designed or used for purposes of advertising;

– Article 52(a) of that directive, in the case where that stand is designed and provided for a specific fair or exhibition on a cultural, artistic, sporting, scientific, educational, entertainment or similar theme, or where that stand corresponds to a model in respect of which the organiser of a specific fair or exhibition has prescribed the form, size, material composition or visual appearance;

– Article 56(1)(g) of that directive, in the case where the temporary provision, for payment, of the constituent material elements of that stand constitutes a determining element of that supply.

Summary

In order to qualify as an advertising service within the meaning of Article 56 (1) (b), it is sufficient that this mode is used to convey a message to inform the public of its existence or the qualities of the products or services offered by the customer in order to increase their sales, or whether the stand is an inseparable part of an advertising campaign and contributes to the passing on of the advertising message. This is especially the case when that stand is the means of conveying a message informing the public about the existence or quality of the products or is used for the organization of promotional activities.

However, if the stand in question does not meet those conditions, it is important for that service to be classified as a coherent service within the meaning of Article 52 (a) of Directive 2006/112 that that stand is provided for a fair or exhibition that takes place – once or repeatedly – at a specific location. Since that provision requires value added tax to be levied at the place where the service is actually provided, its application to the supply of a stand used at numerous fairs or expositions in different countries risks being extremely complex and thus jeopardizing the reliable and correct collection of that tax.

Finally, if the service in question does not come under Article 56 (1) (b) or under Article 52 (a), it may, in those circumstances, be regarded as the rental of movable tangible property within the meaning of Article 56 (1). 1 (g), in particular when the stand is used at several fairs or expositions taking place in different Member States.

It is for the national courts, which alone have competence to assess the facts, to determine, having regard to the circumstances of each particular case, the essential characteristics of the service concerned in order to classify that service from the point of view of Directive 2006 / 112.

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