On February 28, 2012, the ECJ issued its decision in the case C-119/11 (Commission v France).
Context: State failure – Directive 2006/112/EC – Articles 99 and 110 – Value added tax – Reduced rate – Application of a reduced rate to receipts from admissions to first performances of concerts given in establishments where it is optionally served drinks during the show
Article in the EU VAT Directive
Article 99, 110 in the EU VAT Directive
Article 99
1. The reduced rates shall be fixed as a percentage of the taxable amount, which may not be less than 5 %.
2. Each reduced rate shall be so fixed that the amount of VAT resulting from its application is such that the VAT deductible under Articles 167 to 171 and Articles 173 to 177 can normally be deducted in full.
Article 110
Member States which, at 1 January 1991, were granting exemptions with deductibility of the VAT paid at the preceding stage or applying reduced rates lower than the minimum laid down in Article 99 may continue to grant those exemptions or apply those reduced rates. The exemptions and reduced rates referred to in the first paragraph must be in accordance with Community law and must have been adopted for clearly defined social reasons and for the benefit of the final consumer.
Facts
- By letter of 6 May 2008, the Commission gave formal notice to the French Republic to submit its observations on the conformity of the French legislation providing for the application, since 1 January 2007, of a VAT rate of 2. 10% on receipts from admissions to first performances of concerts given in establishments where drinks are optionally served during the performance, with the obligations arising from Directive 2006/112.
- By letter of 4 July 2008, the French authorities replied that the purpose of this regulation was to promote culture and to simplify the applicable French regulations, and that it was not likely to disrupt the functioning of the internal market .
- On 9 October 2009, the Commission sent a reasoned opinion to the French Republic according to which, by applying, since 1 January 2007, the VAT rate of 2.10% to receipts from admissions to the first performances of concerts given in establishments where drinks are optionally served during the show, that Member State had failed to fulfill its obligations under Directive 2006/112, in particular Articles 99 and 110 thereof, and called on that Member State to take the measures necessary to comply with this notice within two months of its receipt.
- By letter of 21 December 2009, the French authorities replied to that opinion that the French legislation in question was compatible with EU law, stating, once again, that its purpose was to simplify the applicable legislation and adding that it made it possible to avoid a possible distortion of competition between establishments where drinks are not served during the show and those where drinks are optionally served during the show.
- Considering that the arguments of the French authorities were not convincing, the Commission decided to bring the present action.
Questions
The Commission maintains that, although Article 110 of Directive 2006/112 allows Member States which, on 1 January 1991, applied reduced rates lower than the minimum rate of 5% of the tax base, to continue to to apply these rates, it is by reference to the situation existing, in each Member State, on this date, and as a derogatory and transitional regime.
AG Opinion
None
Decision
The Court:
Declares that, by applying, since 1 January 2007, a reduced rate of VAT of 2.10% for admission to the first performances of concerts held in establishments providing optional refreshments during the performance, the French Republic has failed to fulfil its obligations under Articles 99 and 110 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax;
Summary
Application of a reduced rate to tickets for concert premieres in establishments where food and drink are served during performances
By applying a reduced VAT rate of 2.1% since 1 January 2007 to revenues from entrance tickets for concert premieres in establishments where food and drink can be served during the performance, France has failed to fulfill its obligations pursuant to Articles 99 and 110 of the VAT Directive.
Source:
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