AG Opinion in the British Film Institute (BFI) VAT case

Advocate General (AG) Bot has delivered his opinion in this UK referral (Case C‑592/15). This case concerns HMRC’s decision to refuse the British Film Institute’s (BFI) claim for repayment of overpaid VAT accounted for in the period 1990 to 1996 on the sale of tickets for admission to screenings of films.

The First Tier Tribunal had held that admission to a cinema or other venue showing films, supplied by an eligible body, was a cultural service for the purpose of the EU VAT Directive (Directive) and that in the absence of domestic implementing legislation during the claim period, the relevant EU provision had direct effect. Consequently BFI’s supplies were exempt from VAT. The Upper Tribunal subsequently upheld this decision and HMRC appealed to the Court of Appeal.

The Court of Appeal referred the case to the CJEU asking whether the cultural services exemption has direct effect, so as to exempt BFI’s supplies in the absence of any domestic implementing legislation. The referral also asks whether any discretion is given to Member States to discriminate between cultural services in their application of the exemption.

The AG has opined that the Directive must be interpreted as meaning that the concept of ‘the supply of certain cultural services’ leaves it to the Member States to decide which supplies of cultural services may be exempt from VAT. It is for the national court to decide whether the exclusion of certain services from the exemption complies with the principle of fiscal neutrality, in particular whether it infringes the principle of equal treatment in relation to other operators enjoying exemption from VAT.

The AG has also opined that as the Directive, in the context of cultural services, provides no detail regarding which activities may be eligible for VAT exemption, allowing Member States broad discretion in that regard, it cannot be given direct effect. Consequently it may not be relied on directly by a taxable person before the national court, where the Member State concerned has failed to transpose that Directive into national law by the end of the period prescribed.

The Court has since agreed with the AG’s Opinion. Full details on the judgment can be found here.