On 12 September 2024, Advocate General Szpunar delivered his Opinion in Case C‑573/22 A, B, Foreningen C v Skatteministeriet (Foreningen C and Others). The case was referred to the Court of Justice of the European Union by the Eastern High Court (Østre Landsret) of Denmark, and concerns addresses the lawfullness of charging value-added tax (VAT )on Denmark’s media licence fee, which was used to finance public radio and television bodies. In his Opinion, he stated that Denmark charging VAT on the media licence fee, and financing some non-radio and non-TV broadcasters with revenue from it, is compliant with the VAT Directive.
Background
The imposition of VAT on the radio and television licence fee in 1967,. According to EU law, this application was justified under a derogation from the common VAT rules, similar to the one considered by the Court in the GIS (C‑249/22) case.
Article 132(1)(q) of the VAT Directive (Directive 2006/112) exempts non-commercial activities of public radio and television bodies. It states:
‘Member States shall exempt the following transactions:…the activities, other than those of a commercial nature, carried out by public radio and television bodies.’
Article 370 of the Directive allows Member States to continue taxing certain transactions listed in Annex X, Part A, including activities of public radio and television bodies.
Article 370 of the Directive states:
‘Member States which, at 1 January 1978, taxed the transactions listed in Annex X, Part A, may continue to tax those transactions.’
Annex X, Part A states:
‘Transactions which Member States may continue to tax…the activities of public radio and television bodies other than those of a commercial nature.’
The case at hand in Foreningen C and Others, however, concerns the issue is whether the conclusions of GIS judgment can be fully applied to the Danish radio and television licence fee, given the changes it has undergone over time.
In Denmark, the radio and television licence fee began to evolve into a broader ‘media licence fee’ in 2006. As of today, the media licence fee covers any device capable of receiving audiovisual content.
The applicants in Foreningen C and Others are seeking reimbursement of VAT paid on the media licence fee from 2007-2017, arguing it did not constitute remuneration for a supply of services. Three arising questions ensued.
Opinion of the Advocate General
First, on whether Article 370 of the Direct allows VAT on a fee that does not constitute remuneration for a supply of service, AG Szpunar stated that the Court’s prior judgment in GIS, which concerns a similar derogation for Austria, applies. For him, Article 370 of the Directive permits VAT on the media licence fee ,despite it not being remuneration for a supply of services.
Second, on whether Article 370 of the Directive applies if the licensing system changes to include devices like smartphones and computers, Advocate General Szpunar stated that the change to include new devices is permissible as it adapts to technological advancements without altering the fundamental nature of the fee. The fee’s purpose remains to finance public radio and television bodies.
Third, on whether Article 370 of the Directive applies if a small portion of the fee finances entities other than public broadcasters, AG Szpunar stated that the use of a small portion of the fee for related entities, such as a private broadcaster with a public service remit and media-related organisations, does not violate Article 370 of the Directive. The provision allows for some flexibility in the use of funds, so long as the primary purpose remains to support public radio and television bodies.
Conclusion
AG Szpunar concluded that Article 370 of the VAR Directive, read in conjunction of Annex X, allows Denmark to charge VAT on the media licence fee, even with changes in the licensing system and partial funding of related entities. For him, this interpretation ensures the effectiveness of the derogation and adapts to technological and organisational developments.
If the Court follows his interpretation of the VAT Directive, the applicants will not get their refund they have sought.
Read the Opinion
The Fifth Chamber of the Court will deliver its judgment in due course. For now, the Opinion of Advocate General Szpunar in Case C‑573/22 A, B, Foreningen C v Skatteministeriet (Foreningen C and Others) can be read here.