VAT: British Film Institute (C-592/15) – CJEU Judgment | KPMG Global
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VAT: British Film Institute (C-592/15) – CJEU Judgment

VAT: British Film Institute (C-592/15) – CJEU Judgment

The CJEU has found that Member States have a discretion to determine the scope of the cultural exemption.


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The Court of Justice of the European Union (CJEU) has released its judgment in this case concerning the liability of cinema admissions by the British Film Institute (BFI), a non-departmental public body. The taxpayer essentially argued that its supplies were exempt under Article 13A(1)(n) of the Sixth Directive (now Article 132(1)(m) of the VAT Directive) on the basis that it was an eligible body as defined by UK law, and cinema was cultural. The EU law requires Member States to exempt, ‘certain cultural services and goods closely linked thereto supplied by bodies governed by public law or by other cultural bodies recognised by the Member State concerned.’ The CJEU considers that EU legislation exempting ‘certain cultural services’ gives the Member State a discretion to determine the exempted services, which may be explained by the great diversity of cultural traditions and regional heritage within the EU. 

Both the First-tier Tribunal (FTT) and Upper Tribunal (UT) had found for the taxpayer before the Court of Appeal made the reference to the CJEU. In the absence of relevant case law relating to the cultural exemption, the UT relied on cases concerning the ‘sporting exemption’, which exempts “certain services closely linked to sport”. The UT looked in particular at the CJEU decisions in Commission v Spain, Canterbury Hockey and Mesto Zamberk, finding that the CJEU had consistently held that the wording of the sporting exemption did not allow Member States to select which services to exempt and which to tax. The UT held the term ‘certain’ should be interpreted uniformly between the cultural and sporting exemptions and does not give discretion to a Member State. This means that the term ‘certain’ limits the suppliers and not the supplies.

The CJEU, however, noted that the taxpayer’s interpretation would mean that all cultural services by eligible bodies would be exempt. The CJEU observed that such a widening would be contrary to established case law that requires Article 13A(1)(n) to be interpreted strictly. The CJEU also noted the history of the legislation. The failure to agree an exhaustive list of cultural services and the use of the phrase certain services was again considered to support that it is for Member States to decide which specific services to exempt. Agreeing with the AG, the Court added that this may be explained by the diversity of cultural traditions and regional heritage within the EU. In response to the taxpayer’s argument on uniform application of the exemption, the Court considered that such uniform application of the exemptions in Article 13A(1) is not absolute. 

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