Comments on ECJ C-101/24 (Xyrality) – Judgment on app stores as VAT commissionaires

CJEU Ruling on VAT for In-App Purchases: The CJEU addressed the VAT implications of in-app purchases made by non-taxable end customers from Xyrality, which initially declared VAT in Germany, but later contended that it acted on behalf of the Irish company X, thus shifting the VAT responsibility.
Application of Article 28 of the VAT Directive: The Court determined that the identification of Xyrality as the supplier in order confirmations does not preclude the application of Article 28 of the VAT Directive, allowing for the possibility of treating X as the supplier if conditions for the commission agent are met.
Place of Supply and VAT Liability: The CJEU ruled that the place of supply for the fictitious supply from Xyrality to X is in Ireland, X’s place of business, and clarified that Article 203 of the VAT Directive, concerning incorrectly invoiced VAT, does not apply in this case, as the services were provided to non-taxable end customers, eliminating the risk of tax revenue loss.

Commissionaire Status: The CJEU ruled that an app store can be treated as a VAT commissionaire under Article 28 of the VAT Directive, despite order confirmations identifying the app developer and showing German VAT. The court emphasized that the overall role of the app store, from the end-consumer’s perspective, is crucial in determining its status as an intermediary. This interpretation extends to transactions prior to 2015, clarifying that Article 9a of the EU VAT Implementing Regulation serves only as a clarification of existing rules rather than a new standard.
Place of Supply: The court determined that the deemed supply from the developer to the app store falls under the ordinary place-of-supply rules established in the VAT Directive. Consequently, the place of supply for the developer’s services to the app store is where the app store is established, in this case, Ireland.
No German VAT Liability: The ruling also stated that there is no German VAT liability for the developer, as the provisions aimed at preventing revenue loss from undue input VAT deduction (Article 203) do not apply when recipients are non-taxable persons. This reinforces that the mere identification of the developer in transaction confirmations does not negate the app store’s role as the deemed supplier.

Source PwC