Brussels, 29/02/2012 (Agence Europe) - On Tuesday 28 February 2012, the European Court of Justice found France guilty of reapplying from 1 January 2007 onwards 2.1% VAT on income generated by the first performances of concerts where food and drink are available on an optional basis, despite the ban on applying VAT of under 5% (introducing a 5.5% VAT rate) in June 1997.
In this ruling in Case C-119/11, the Court recognises the validity of the European Commission's argument (which appealed against the French VAT rate). The Commission says that VAT Directive 2006/112/EC allows member states that applied VAT of less than the minimum 5% on 1 January 1991 to continue to apply these rates as a temporary exemption to the rules, but explains that the same directive does not allow member states that have applied the normal rate of VAT to reintroduce the lower rate at a later date.
France reduced the scope of application of the exemption under the VAT directive (the 5% VAT rate), excluding the income involved in this case by levying 5.5% VAT on 1 January 1997. On 1 January 2007, it started levying 2.10% VAT for the same income, which is below the minimum level laid down in Article 99 of EU Directive 2006/112. The Court of Justice therefore found France guilty of infringing the EU VAT rules, stating that France's arguments about promoting culture and simplifying the VAT system did not justify applying the reduced rate of VAT. (FG/transl.fl)