Comments on ECJ C-179/23: A collective management organization provides a service under the VAT directive

Credidam is an organization for collective management of authors’ and neighboring rights, operating as an association of performing artists. It is involved in collecting and distributing compensations owed to performing artists by users of their artistic services.
To cover its operating costs, it collects a management fee, which is deducted from these compensations.
According to Romanian VAT legislation, the compensation for private copying collected by collective management organizations on behalf of the right holders is not subject to VAT, but the management fee withheld by these organizations on this compensation is subject to VAT.
Credidam argues that this is contrary to the VAT directive as interpreted by the CJEU in the SAWP case, as it also includes the management fees withheld by these organizations on the compensations owed to the right holders.
According to the CJEU, a collective management organization provides a service under the VAT directive when it collects, distributes, and pays compensations owed by end users to the right holders, and withholds a management fee from these compensations to cover the costs associated with this activity, provided that the compensations received on behalf of the right holders do not constitute consideration for services performed by the right holders for the benefit of those users.