Collective management organisation of musical works is a taxable person for the purposes of the VAT Directive
12-03-2021 Print this page
The holder of copyright in musical works supplies services for consideration within the meaning of the VAT Directive: there is a legal relationship of reciprocal exchange of services and remuneration are actual consideration for the service. Collective management organization is acting as a taxable person within the meaning of Article 28 of the VAT Directive: in this case, collective management is mandatory, exclusive property rights cannot be transferred to the organisation, the organisation is obliged to grant non-exclusive licenses and the permission granted will include amounts received by the organisation in its own name but on behalf of the copyright holders.
UCMR-ADA is the only designated collective management organisation in Romania handling author’s economic rights in musical works. Asociata Culturala 'Suflet de Român' is a cultural association. The association had paid only part of the remuneration claimed by UCMR-ADA in respect of a performance organised on 16 November 2021, which led UCMR-ADA to bring the matter before the courts.
The referring court asks whether a transaction by which holders of copyright in musical works authorise performance organisers to use such works can be classified as a ‘supply of services for consideration’ within the meaning of the VAT Directive and, if so, whether a collective management organisation, in collecting remuneration from users, acts as a taxable person within the meaning of Article 28 of the VAT Directive.
With regard to the first question, the Court of Justice considered that there is a legal relationship pursuant to which there is reciprocal performance in that by authorising the public performance of a musical work, the holder of copyright in that work grants use of that work to a user. That user, in turn, supplies services to that holder by fulfilling its obligation to pay the remuneration. The remuneration paid by the user constitutes the actual consideration for the service supplied in the context of that legal relationship.
With regard to the second question, the Court of Justice is of the opinion that the collective management organisation is acting as a taxable person within the meaning of Article 28 of the VAT Directive. The organization is required to issue invoices in its own name to the end user containing the royalties collected from the latter, including VAT.
IPPT20210121, CJEU, UMCR-ADA v Asociatia Culturala Suflet de Roman
