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Flashback on ECJ cases C-144/00 (Hoffmann) – The expression ‘other cultural institutions which are recognised’ includes soloists performing individually

On April 3, 2003, the ECJ issued its decision in the case C-144/00 (Hoffmann).

Context: VAT – Sixth Directive – Exemptions for certain activities in the public interest – Body – Meaning – Services performed by a natural person – Cultural services by a soloist.


Article in the EU VAT Directive

Article 13A(1)(n) of the Sixth VAT Directive (Article 132(1)(n) of the EU VAT Directive 2006/112/EC.

Article 132
1. Member States shall exempt the following transactions

(n) the supply of certain cultural services, and the supply of goods closely linked thereto, by bodies governed by public law or by other cultural bodies recognised by the Member State concerned;


Facts

  • Mr Hoffman organised the world tour of three great solo singers established outside Germany who appeared together in a series of concerts. For their two concerts in Germany, he obtained from the competent cultural authorities certificates that his organising activities were equivalent to those mentioned in Paragraph 4(20)(a) of the UStG. The German Government has however stated, in the course of these proceedings, that those certificates were not binding on the tax authorities on the question whether the three soloists each constituted a body within the meaning of that provision.
  • Mr Hoffman did not deduct any VAT from the fees paid to the three soloists and did not pay that tax. He was prosecuted for tax evasion, for those actions among others, before the Landgericht (Regional Court of Justice), Mannheim (Germany). In his defence he maintained that, in view of the certificates which had been issued to him by the cultural authorities, he did not have to pay VAT on the fees of the three soloists.
  • By judgment of 22 December 1998, the Landgericht sentenced Mr Hoffman to a term of imprisonment.
  • That court held that the exemption under Paragraph 4(20)(a) of the UStG did not apply to the services of the three artists appearing as soloists, as the exemption only applied to ‘bodies’, which would exclude individual artists. The Landgericht concluded that, at the concerts in question, the personality of each of the soloists, and not the overall performance, was to the forefront and that the musical arrangement was tailored to the services of each of them. The Landgericht noted also that a separate contract was made with each of the artists, with the result that the services were not those of a duet or a trio.
  • According to the Landgericht, its interpretation of Paragraph 4(20)(a) of the UStG is not contrary to Article 13A(1)(n) of the Sixth Directive. Article 13A(2) of that directive leaves it to Member States to make the tax exemption for cultural services by persons other than public-law bodies subject to certain conditions, among which are the absence of a systematic aim to make a profit and management and administration on an essentially voluntary basis. The Community legislature thus considered that it is above all bodies which are economically weak and particularly serving the public interest which deserve to be exempted from VAT. According to the Landgericht, the Member States are thus free to adopt or not the exemptions made possible by the Sixth Directive and, in any event, the exemptions under Article 13A thereof cannot apply to natural persons.
  • Mr Hoffmann appealed on a point of law to the Bundesgerichtshof against the judgment of the Landgericht, arguing, essentially, that the refusal to apply the tax exemption to soloists constituted discrimination contrary to Community law.
  • In that regard, the Bundesgerichtshof observes that, in Case C-216/97 Gregg [1999] ECR I-4947, the Court held, in respect of Article 13A(1)(b) and (g) of the Sixth Directive, that the terms establishment and organisation’used therein are sufficiently broad to include natural persons as well. It is true that those terms suggest the existence of an individualised entity performing a particular function, but that condition can be satisfied not only by legal persons, but also by one or more natural persons running a business.
  • According to the Bundesgerichtshof, everything suggests that a uniform interpretation must be placed on the term bodies recognised in Article 13A(1)(n) of the Sixth Directive and consequently performances by soloists as natural persons can fall within the scope of the exemption from VAT. In addition, the principle of fiscal neutrality, inherent in the VAT system and cited by the Court in Case C-283/95 Fischer [1998] ECR I-3369, also precludes traders who carry on similar activities from being treated differently as regards taxation.

Questions

(1)    Is Article 13A(1)(n) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1) to be interpreted as meaning that the term other [recognised] cultural bodies used therein also covers a soloist who supplies cultural services?

(2)    If the first question is answered in the affirmative, do restrictions arise from the heading ”… certain activities in the public interest” chosen in Article 13A, for example where performances by soloists serve primarily commercial purposes?


AG Opinion

–    As regards the first question: A soloist may be regarded as a ‘cultural body’ within the meaning of Article 13A(1)(n) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, provided that he appears outwardly as an entity and the service on which VAT is or is not levied is an individualised service. The absolute exclusion of soloists in a national rule does not impair the effectiveness of the Sixth Directive. Such a rule does infringe the principle of fiscal neutrality. Exclusion is therefore contrary to Community law, save where there is special justification.

–    As regards the second question: the term ”public interest” in the title of Article 13A has no independent meaning.


Decision 

1.    Article 13A(1)(n) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, is to be interpreted to the effect that the expression ”other [recognised] cultural bodies” does not exclude soloists performing individually.

2.    The heading of Article 13A of that directive does not, of itself, entail restrictions on the possibilities of exemption provided for by that provision.


Summary

 


Source


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