According to the reasoning of the Court of Justice, collecting societies are required to issue VAT invoices when they recover amounts due from users of the works they manage (organisers of performances, public venues, broadcasters, producers of digital equipment, etc.).
Where remuneration is paid to authors and other holders of copyright in musical works, the latter are in turn required to issue VAT invoices to the collecting society.
Reference has been made to the Court of Justice of the European Union for a preliminary ruling concerning the VAT Directive.
In its analysis, the Court of Justice found that there is a legal relationship between the copyright holders and the organiser of the performances, although the collecting society acts as an intermediary for the copyright holders.
The Court considered the situation in the relevant case, in which there was a non-exclusive licence and a consideration from the organiser of the performances for obtaining that licence. The Court qualified that relationship, in the light of the provisions of the VAT Directive, as a supply of services for consideration.
As regards collecting societies, acting as intermediaries between the organisers of performances and copyright holders, the Court of Justice has ruled that they have the status of “taxable person” within the meaning of the VAT Directive.
In reaching that conclusion, the Court took into account the fact that collecting societies act in their own name, but on behalf of copyright holders, in their dealings with the organisers of performances. Thus, according to the Court, where a taxable person acting in his own name but on behalf of another person takes part in the supply of services, he will be considered, for the purposes of Article 28 of the VAT Directive, to have received and supplied those services himself.
In such a case, the collecting society is obliged to issue invoices in its own name to the final consumer showing the remuneration received from the final consumer, including VAT. Copyright holders are also required to issue invoices to the collecting society including VAT for the service provided on the basis of the remuneration received.