- The European General Court (EGC) ruled that compensation for unauthorised use of copyrighted works is subject to VAT.
- The EGC contradicted previous German practice, which treated such compensation as non-taxable damages.
- The court found that unauthorised use provides a consumable advantage to the user, qualifying as a taxable supply of services.
- VAT applies regardless of whether the use was authorised or not, and the entire amount, including surcharges, is taxable.
- The decision emphasizes the subjective value of the consideration owed, not its civil law classification as damages or penalties.
Source: kmlz.de
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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