This month’s Chartered Accountants Tax Case Digest takes a look at a CJEU VAT case which examined exactly what type of services for VAT services were being supplied by a Swedish company which provided accountancy and management services and the place of supply of their seminars which were held elsewhere in the EU.

The true crux of the case was to examine how ‘training events’ should be treated for VAT: as generic services, or as admission to educational events?

The CJEU held that the services constituted admission to an event and thus the place of supply was the member state in which the event was taking place.

The decision in this case may mean that businesses and organisations in this space may be required to consider their VAT registration obligations in each of the relevant member states in which they hold events.

Background

This case was a request for a preliminary ruling on the interpretation of Article 53 of Council Directive 2006/112/EC on the common system of value added tax, as amended (‘the VAT Directive’).

The request was made in proceedings between the Skatteverket (the local Swedish tax authorities) and Srf konsulterna AB (‘Srf’) concerning a tax ruling relating to the collection, in Sweden, of VAT on the provision of accounting and management courses located in other Member States from taxable persons who have established their business or have a fixed establishment in Sweden.

Srf is a company established in Sweden which is wholly owned by a professional association for accounting, management and salary consultants. The company provides accounting and management courses in the form of seminars for its members and third parties. Most courses take place in Sweden, but some take place in other Member States. Where the course takes place in other Member States, the course facilitators travel to the Member State in question. The courses are provided only to taxable persons whose business is established or who have a fixed establishment in Sweden.

The training courses are delivered at a conference centre and last 30 hours, spread over five days, with one day’s break in the middle. The syllabus is decided in advance, but adapted depending on the participants, who must have certain skills and professional experience in accountancy and management. Participation in the courses is subject to prior registration, which must be confirmed before the course begins. Payment must be made in advance.

Following a request from Srf, the Revenue Law Commission ruled that those courses, although provided in Member States other than Sweden, are to be regarded as taking place in Sweden meaning therefore that VAT is chargeable in Sweden.

It considered, inter alia, that the expression ‘admission to events’ in Article 53 of the VAT Directive had been included in order to restrict the scope of exceptions and, correspondingly, to extend that of the general rule. The term ‘admission to events’ should be understood as meaning the right to enter a place.

However, the services at issue in the case could not be characterised primarily as the right to enter a place, but rather the right to participate in a specific course. Given that the main objective of the courses at issue were not to confer a right of admission, within the meaning of Article 53 of the VAT Directive, VAT in respect of such courses was chargeable in Sweden under Article 44 of that directive.

The local tax authorities, wishing to obtain confirmation of that ruling brought proceedings before the Supreme Administrative Court in Sweden. Srf also sought confirmation of that ruling, taking the view that the application of the exception provided in Article 53 of the VAT Directive constitutes a disproportionate administrative burden.

In those circumstances, the Supreme Administrative Court decided to stay the proceedings and to refer the following question to the CJEU for a preliminary ruling:

‘Must the expression ‘admission to events’ in Article 53 of the VAT Directive be interpreted as meaning that it covers a service in the form of a five-day course on accountancy which is supplied solely to taxable persons and requires advance registration and payment?’

Decision

The CJEU held that Article 53’s ‘services in respect of admission to events’ did include a service, such as that at issue in the main proceedings. Articles 44 and 45 of the VAT Directive contain a general rule for determining the place where services are deemed to be supplied for tax purposes, while Articles 46 to 59a of that directive provide a number of specific instances of such places.

As follows from the Court’s settled case-law, Articles 44 and 45 of the VAT Directive do not take precedence over Articles 46 to 59a. In every situation, the question which arises is whether that situation is covered by one of the cases mentioned in Articles 46 to 59a of that directive. If not, it falls within the scope of Articles 44 and 45 of that directive.

Article 53 of the VAT Directive must not be regarded as an exception to a general rule which must be narrowly construed. It provides that the place of supply of services in respect of admission to events, including educational events, supplied to a taxable person is the place where those events actually take place.

It follows from Article 32(2)(c) of the Implementing Regulation, read in conjunction with Article 32(1), that the services referred to in Article 53 of the VAT Directive, which concern admission to educational and scientific events, such as conferences and seminars, include the supply of services of which the essential characteristics are the granting of the right of admission to an event in exchange for a ticket or payment.

The Court found that it was apparent from the information provided by the referring court that the courses provided by Srf require the physical presence of those taxable persons and are therefore part of the educational events category referred to in Article 32 of the Implementing Regulation.

As the United Kingdom Government has noted, in essence, in its written observations, admission to seminars given to taxable persons for payment necessarily involves the possibility of attending and participating in those seminars. Therefore, such participation is closely linked to admission to the seminars.

In those circumstances, the distinction drawn by the Revenue Law Commission between the right to enter a place and the right to participate in a specific training course could not be accepted for the purposes of the application of Article 53 of the VAT Directive.

The purpose of the provisions of the VAT Directive which determine the place where services are deemed to be supplied is to avoid, first, conflicts of jurisdiction which may result in double taxation, and, secondly, non-taxation.

Accordingly, the underlying logic of the provisions of the VAT Directive concerning the place where a service is deemed to be supplied is that goods and services should be taxed as far as possible at the place of consumption.

It follows that the place where courses such as those at issue in the main proceedings are deemed to be supplied must be determined on the basis of Article 53 of the VAT Directive, and those courses must, consequently, be subject to VAT in the place where the services are actually supplied, that is in the Member States where those courses are given.

It is true that such an interpretation may, as Srf observes, result in increasing the administrative burden borne by certain traders.

However, as the Advocate General observed, it is settled case-law that the preamble to an EU-law act has no binding legal force and cannot be relied on either as a ground for derogating from the actual provisions of the act in question or for interpreting those provisions in a manner that is clearly contrary to their wording.

Courses such as those at issue in the main proceedings are covered by the services referred to in Article 53 of the VAT Directive and it follows from that article, read in conjunction with Article 32 of the Implementing Regulation, that the place where the supply of services in respect of admission to educational events such as seminars is subject to VAT is the place where they actually take place.

The fact that the courses were subject to advance registration and payment is irrelevant for the purposes of the application of Article 53 of the VAT Directive. There is nothing in the wording of that article to suggest that such criteria could be taken into consideration in determining the place where those services are seemed to be supplied.

In light of the foregoing, the answer to the question referred is that Article 53 of the VAT Directive must be interpreted as meaning that the expression ‘services in respect of admission to events’ in that provision include a service, such as that at issue in the main proceedings, in the form of a five-day course on accountancy and management which is supplied solely to taxable persons and requires advance registration and payment.

The full judgment in this case is available from:- https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A62017CN0647