Compensation for Unauthorized Use of Works Is Subject to VAT, Including Increased Statutory Fees

• The EU Court ruled that royalties and additional compensation for unauthorized use of works are subject to VAT.
• Even if works are used without a license, the resulting payment is considered a taxable service under the VAT Directive.
• The entire amount owed, including any increased (triple) rates set by national law, is included in the VAT base and is not considered compensation outside VAT.
• The illegal nature of the use does not exclude the transaction from VAT, affirming the principle of VAT neutrality between legal and illegal transactions.
• The ruling confirms a broad interpretation of taxable services under VAT, impacting how unauthorized use of protected works is taxed.

Source: mddp.pl

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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