On January 18, 2017 the Court of Justice of the European Union (CJEU) judged in Case C‑37/16, Minister Finansów versus Stowarzyszenie Artystów Wykonawców Utworów Muzycznych i Słowno-Muzycznych SAWP (SAWP) (ECLI:EU:C:2017:22).
This request for a preliminary ruling concerns the interpretation of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2010/45/EU of 13 July 2010 (‘the VAT Directive’).
The request has been made in proceedings between the Minister Finansów (Minister for Finance, Poland) and Stowarzyszenie Artystów Wykonawców Utworów Muzycznych i Słowno-Muzycznych SAWP (SAWP) (Society for performers of musical works with or without words (SAWP), established in Warsaw (Poland)) concerning whether the fee on devices for recording or reproducing copyright works or the subject matter of related rights and on media for recording or copying such works or subject matter is subject to value added tax (VAT).
The dispute in the main proceedings and the questions referred for a preliminary ruling
· SAWP requested the Minister for Finance to adopt a position as to whether fees on blank media and recording and reproduction devices paid by producers and importers of such devices and media pursuant to Article 20 of the Law of 4 February 1994 on copyright and related rights are subject to VAT.
· By an individual opinion of 20 August 2012, the Minister for Finance stated that the sums paid to SAWP by producers and importers of blank media and recording and reproduction devices constitute a payment for the use of the copyright or related rights that are connected with the sale of equipment for copying and recording works and that, therefore, those sums must be regarded as remuneration for the services supplied by the holders of copyright or related rights and must, as such, be subject to VAT.
· SAWP then brought an action before the Wojewódzki Sąd Administracyjny w Warszawie (Regional Administrative Court, Warsaw, Poland) and requested that the individual opinion be annulled.
· By judgment of 12 June 2013, le Wojewódzki Sąd Administracyjny w Warszawie (Regional Administrative Court, Warsaw) held that the action was well founded.
· The Minister for Finance appealed on a point of law to the Naczelny Sąd Administracyjny (Supreme Administrative Court, Poland). That court, stating that there are currently two contradictory judicial precedents in Poland on this issue, decided to stay the proceedings and refer the following questions to the Court of Justice for a preliminary ruling:
‘1. Do authors, performers and other rightholders supply services, within the meaning of Articles 24(1) and 25(a) of the VAT Directive, to producers and importers of audio recorders and other similar devices and of blank media on whom collective management organisations levy on behalf of those authors, performers and other rightholders, but in their own name, fees on those devices and media by virtue of their sale?
2. If the answer to Question 1 is in the affirmative, are collective management organisations, in levying a fee on devices and media by virtue of their sale by producers and importers, acting as taxable persons, within the meaning of Article 28 of the VAT Directive, who are required to document those activities by means of an invoice for the purposes of Article 220(1), point 1, of that directive, issued to producers and importers of audio recorders and other similar devices and of blank media, showing VAT as due by virtue of the fees, and, at the time at which the fees levied on behalf of the authors, performers and other rightholders are distributed to them, are the latter required to document receipt of the fees by means of an invoice indicating the VAT, issued to the collective management organisation levying the fee?’
Judgment
The CJEU judged as follows:
Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive 2010/45/EU of 13 July 2010, must be interpreted as meaning that holders of reproduction rights do not make a supply of services, within the meaning of that directive, to producers and importers of blank media and of recording and reproduction devices on whom organisations collectively managing copyright and related rights levy on behalf of those rightholders, but in their own name, fees in respect of the sale of those devices and media.
From the considerations of the Court
· By its first question, the referring court asks, in essence, whether the VAT Directive must be interpreted as meaning that holders of reproduction rights make a supply of services, within the meaning of that directive, to producers and importers of blank media and of recording and reproduction devices on whom organisations collectively managing copyright and related rights levy on behalf of those rightholders, but in their own name, fees in respect of the sale of those devices and media.
· Article 24(1) of the VAT Directive defines a ‘supply of services’ by way of contrast with ‘a supply of goods’. As set out in that provision, any transaction which does not constitute a supply of goods must be considered to be a supply of services.
· In the present instance, it is common ground that the transaction at issue in the main proceedings does not constitute a supply of goods as referred to in Article 24(1) of the VAT Directive.
· Article 25 of the VAT Directive sets out an indicative list of three different transactions that can be classified as supplies of services, including, in Article 25(a), one consisting in the assignment of intangible property.
· In respect of the applicability of Article 25, the referring court raises the question whether a transaction such as that at issue in the main proceedings can constitute the assignment of intangible property within the meaning of Article 25(a), and therefore be classified as a supply of services.
· It should be recalled that, in accordance with settled case-law, asupply of services is made for consideration, within the meaning of the VAT Directive, only if there is a legal relationship between the provider of the service and the recipient pursuant to which there is reciprocal performance, the remuneration received by the provider of the service constituting the value actually given in return for the service supplied to the recipient (see judgment of 22 June 2016, Český rozhlas, C‑11/15, EU:C:2016:470, paragraph 21 and the case-law cited).
· The Court has held that that is the case if there is a direct link between the service supplied and the consideration received, the sums paid constituting actual consideration for an identifiable service supplied in the context of such a legal relationship(judgment of 18 July 2007, Société thermale d’Eugénie-les-Bains, C‑277/05, EU:C:2007:440, paragraph 19).
· In the present instance, first, it does not appear that there is a legal relationship pursuant to which there is reciprocal performance by, on the one hand, holders of reproduction rights or, as the case may be, the organisation collectively managing such rights and, on the other, producers and importers of blank media and of recording and reproduction devices.
· Indeed, the obligation to pay fees, such as those at issue in the main proceedings, is owed by those producers and importers by virtue of the national legislation which also determines their amount.
· Secondly, the obligation on producers and importers of blank media and of recording and reproduction devices to pay fees cannot be regarded as resulting from the supply of a service for which it constitutes the direct consideration.
· It is apparent from the order for reference that fees such as those at issue in the main proceedings are intended to finance fair compensation for holders of reproduction rights. However, the fair compensation does not constitute the direct consideration for any supply of services, because it is linked to the harm resulting for those rightholders from the reproduction of their protected works without their authorisation (see, to that effect, judgment of 21 October 2010,Padawan, C‑467/08, EU:C:2010:620, paragraph 40).
· Consequently, a transaction such as that at issue in the main proceedings cannot be regarded as being carried out for consideration, for the purposes of Article 2(1)(c) of the VAT Directive.
· It follows from all the foregoing that the answer to the first question is that the VAT Directive must be interpreted as meaning that holders of reproduction rights do not make a supply of services, within the meaning of that directive, to producers and importers of blank media and of recording and reproduction devices on whom organisations collectively managing copyright and related rights levy on behalf of those rightholders, but in their own name, fees in respect of the sale of those devices and media.
· As the second question is asked if the first question is answered in the affirmative, there is no need to answer it.
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