The Council of the European Union did not amend the VAT Directive (2006/112) by clarifying that the operator of an online platform is presumed to be the supplier of the services provided and therefore liable to VAT, the Court of Justice of the EU (CJEU) ruled in a judgment delivered on Tuesday 28 February (Case C-695/20).
UK-based Fenix International operates the Only Fans social network, which allows ‘fans’ around the world to buy content from ‘creators’. Fenix applies only 20% VAT to the 20% commission charged on monies paid to a creator.
Fenix is challenging the UK tax authorities' position that it should pay VAT on the full amount received from a ‘fan’, arguing that the UK company is acting on its own behalf. The UK authorities base this on the EU Council Implementing Regulation (1042/2013) clarifying the VAT Directive. As the dispute arose before the end of the post-Brexit transitional period, the CJEU has jurisdiction to answer it.
The VAT Directive establishes that a taxable person who, in the context of a supply of services, acts as an intermediary in his own name but on behalf of another person, is presumed to be the supplier of those services. In its Implementing Regulation, the EU Council states that a taxable person who engages in the electronic provision of services via an online platform is “presumed to be acting in his own name but on behalf of the supplier of those services”.
The taxable person who engages in this supply is always presumed to be acting in his own name, but on behalf of the supplier of these services, and is therefore deemed to be the supplier of these services himself when he authorises the invoicing of the customer, the supply of these services or sets the general conditions of this supply.
The Court therefore considers that Fenix is rightly to be regarded as the supplier of services under the VAT Directive. And, in its view, the EU Council Regulation is valid, in that it merely clarifies the EU rules without adding to or changing them.
See the Court's judgment: https://aeur.eu/f/5iu (Original version in French by Mathieu Bion)