C-108/00

'Whereas the determination of the place Community provisions where taxable transactions are effected has been the subject of conflicts concerning jurisdiction as between Member States, in particular as regards supplies of goods for 2. Under Article 2 of the Sixth Directive, a assembly and the supply of services; supply of goods or services effected for whereas although the place where a supply consideration by a taxable person acting as of services is effected should in principle be such is to be subject to VAT. According to defined as the place where the person supplying the services has his principal place of business, that place should be 1 — Original language: English. defined as being in the country of the 2 — Sixth Council Directive 77/388/EEC of 17 May 1977 on the person to whom the services are supplied, harmonisation of the laws of the Member States relating to in particular in the case of certain services turnover taxes — Common system of value added tax: uniform basis of assessment, OJ 1977 L 145, p. 1. supplied between taxable persons where

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OPINION OF MR JACOBS — CASE C-108/00

the cost of the services is included in the — advertising services, price of the goods'.

4. In pursuit of the objective indicated by that recital, Article 9(1) of the Directive provides that:

— the services of agents who act in the 'The place where a service is supplied shall name and for the account of another, when be deemed to be the place where the they procure for their principal the services supplier has established his business or referred to in this point (e)'. has a fixed establishment from which the service is supplied or, in the absence of such a place of business or fixed establishment, the place where he has his permanent address or usually resides.'

'III. Advertising services are supplied directly to a taxable advertiser.

The place where such services is supplied is deemed not to be France, even if the According to the seventh recital of the Sixth supplier is established in France, where Directive defining the place of taxation of the recipient is established outside the advertising services as the place where the European Community or is liable to value person to whom the services are supplied added tax in another Member State of the has his principal place of business is European Community.' justified by the fact that the cost of those services, supplied between taxable persons, is included in the price of the goods. In so far as the person to whom the services are supplied customarily sells the goods or 7. The French tax authorities' interpreta- supplies the services advertised in the State tion of Article 259B has developed over where he has his business headquarters, time. The interpretation was initially set and charges the corresponding VAT to the out in an administrative instruction of final consumer, the VAT based on the 14 December 1983 published in the Bulle- advertising service should itself be paid by tin Officiel des Impôts (hereinafter: BOI) that person to that State (paragraph 15 of 3 A-28-83. That instruction was replaced the judgment of the Court of Justice of the by an instruction of 25 July 1995 published European Communities in Case C-68/92 in BOI 3-A-97 following the judgment in Commission v France [1993] ECR I-5881). Commission v France. 3In that case, the Court of Justice had ruled that the inter- pretation of the notion of 'advertising services' contained in the instruction of

10. Following a number of disputes between members of SPI and the French tax authorities, SPI challenged the Instruc- tion before the Conseil d'État, claiming that it is contrary to Article 259B of the 8. The effect of the final paragraph of General Tax Code and Article 9(2)(e) of the Article 259B is that French suppliers of Sixth Directive in so far as it excludes from advertising services are not obliged to the scope of those Articles the supply of charge VAT where they supply and invoice advertising films through advertising agen- their services to a recipient established cies. outside the Community or to a taxable recipient in another Member State. The effect of the above-quoted passage in the Instruction is that that derogation in Arti- cle 259B, which reflects Article 9(2)(e) of the Sixth Directive, applies only where services are provided by the supplier 11. Considering that the proceedings raised directly to a taxable advertiser. ('Adverti- a question of interpretation of Community ser' refers here, and in the text below, to a law, the Conseil d'Etat has asked the Court recipient of services which have as their of Justice pursuant to Article 234 EC: purpose the promotion of the products or services sold by that person.) The deroga- tion thus applies to services supplied directly by an advertising agency or by another supplier to the advertiser. It does not however apply, as limited by the 'whether advertising services as mentioned Instruction, to advertising services supplied in Article 9(2) (e) of Directive 77/388/EEC by a supplier established in France, not of 17 May 1977 are to be understood, as directly to the advertiser, but indirectly regards operations for the purpose of through an advertising agency, wherever promoting the sale of goods or services, the advertiser and the advertising agency only as services supplied directly and are situated. invoiced by the supplier of services to a

14. The answer to the question referred by the Conseil d'État must take into account the fact that Article 9(2)(e) constitutes a rule of conflict of laws which determines the place of taxation of advertising services and, consequently, delimits the powers of 12. Written observations have been lodged the Member States. It follows, according to by SPI, the French Government and the the Court's case-law, that '"advertising Commission. SPI, the French Government services" is a Community concept which and the Commission were also represented must be interpreted uniformly in order to at the hearing held on 9 November 2000. avoid instances of double taxation or non- taxation which may result from conflicting interpretations'. 4It also follows that there is, contrary to the French Government's assertions, no need for a restrictive inter- pretation of Article 9(2). Thus, the Court has consistently held that 'Article 9(1) in no way takes precedence over Article 9(2). In every situation, the question which arises is whether [a transaction] is covered by one of 13. SPI and the Commission call on the the instances mentioned in Article 9(2); if Court to answer the referring court's ques- not, it falls within the scope of Arti- tion in the negative. They argue that the cle 9(1).' 5 French Government's interpretation is con- trary to the wording and purpose of Article 9(2)(e), and that it leads to anom- alous results in practice. The Commission claims furthermore that the French Gov- ernment's interpretation is contrary to the principle of neutrality of VAT. The French Government defends its interpretation of Article 9(2)(e) of the Sixth Directive and 15. Article 9(2)(e) refers to 'advertising asks the Court to answer the question services' which are performed 'for custo- referred in the affirmative. It asserts that mers established outside the Community Article 9(2), as an exception to the general or... in the Community but not in the same rule in Article 9(1), must be interpreted strictly, that services performed by film companies for advertising agencies differ in 4 — Commission v France, cited in note 3, paragraph 14 of the judgment. See also the Opinion of Advocate General nature from services supplied directly to Gutmann, paragraph 10 citing Case 283/84 Trans Tirreno Express v Ufficio Provinciale IVA [1986] ECR 231. advertisers and that its interpretation there- 5 — Case C-327/94 Dudda v Finanzamt Bergisch Gladbach fore complies with the principle of neutral- [1996] ECR I-4595, paragraph 21 of the judgment; Case C-167/95 Linthorst, Pouwels and Scheres v Inspecteur der ity of VAT. Belastingsdienst [1997] ECR I-1195, paragraph 11.

country as the supplier'. In order to give the are two taxable transactions. The first referring court an answer which will enable transaction is the supply of services by the it to decide the case in the main proceed- film producer to the advertiser. In that ings, it is therefore necessary to identify transaction, the customer is the advertiser. who is the customer and to clarify the It is the advertiser who orders the services meaning of 'advertising services'. through the advertising agency, who makes use of them to promote his products and who pays for them. 6 The advertising agency acts merely as an intermediary between the supplier and the advertiser, and the agency can therefore not be con- sidered to be the customer. It follows, as in the situation mentioned above, that Arti- Customers cle 9(2)(e) applies — on the condition that the services provided can properly be considered to be 'advertising services' — where the film producer is established in 16. It is necessary, in order to identify who France and the advertiser is established is the customer (preneur) of advertising outside the Community or in another services, to distinguish between the follow- Member State. The place of establishment ing situations. of the advertising agency is irrelevant in this regard. The second transaction is the supply by the advertising agency of a service consisting of its acting as intermedi- ary between the film producer and the 17. The first situation is where a supplier, advertiser. Here, again, the customer is the such as a film producer, agrees, without the advertiser. The place of supply of that intervention of an advertising agency, to transaction is determined by Article 9(2)(e) supply services and to invoice an advertiser and, in particular, its last indent which for the services provided. In that situation, refers to 'the services of agents who act in there is a single taxable transaction and the the name and for the account of another, customer is the advertiser. Article 9(2)(e) when they procure for their principal the therefore applies — on the condition that services referred to in this point (e)'. the services provided can properly be considered as 'advertising services' — where the film producer is established in France and the advertiser is established outside the Community or in another Member State.

20. That situation occurs where, under an agreement between an advertising agency and a supplier (such as a film producer), the 22. However, under section III of the latter supplies and invoices its services to Instruction, a supply of services from a the agency which in turn supplies and supplier in France to an advertising agency invoices them to an advertiser. The Court established outside the Community or in of Justice has not been presented with another Member State is not subject to detailed arguments concerning who is to Article 259B of the General Tax Code, and be considered to be the customer in that suppliers must therefore collect French VAT situation. At the hearing, the French Gov- on those supplies. In order to determine ernment and the Commission appeared to whether that is compatible with the Sixth take the view that the — indirect — sup- Directive, it is necessary to interpret the ply of services from the film producer to the notion of 'advertising services' in Arti- advertiser must be considered a single cle 9(2)(e). transaction in which the customer is the advertiser.

24. I find that argument unconvincing as a general proposition.

26. Thus, while there may be situations in which the services provided by a film producer to an advertising agency cannot be considered to be 'advertising services' within the meaning of Article 9(2)(e), that 25. The Court of Justice held in Commis- provision is not restricted to services which sion v France that in order to determine are supplied and invoiced by a supplier whether a transaction is a supply of adver- directly to a taxable advertiser. tising services, 'it is necessary in each case to take account of all the circumstances surrounding the service in question'. 7 The French Instruction appears to preclude such an assessment of the nature of the services supplied by suppliers, such as film compa- 27. To restrict Article 9(2)(e) to services nies, to advertising agencies. It may be which are supplied directly may, moreover, added that the Court held, also in Commis- be contrary to the purpose of Article 9(2) sion v France, that 'the concept of advertis- of the Sixth Directive. ing necessarily entails the dissemination of a message intended to inform consumers of the existence and the qualities of a product or service, with a view to increasing sales'. 8 Defined in that way, the notion of 'adver- tising services' is clearly capable of includ- 28. It is clear from the seventh recital in the ing services which are supplied indirectly to preamble to the Sixth Directive 10that the an advertiser through an advertising objective of Article 9(2)(e) is to ensure that agency. Moreover, as Advocate General VAT is paid in the country of the person to Gulmann stated in his Opinion in that whom the services are supplied 'where the case, 'it can be assumed that Article 9(2)(e) cost of the services is included in the price must apply at least in those cases where a of the goods'. As the Court has stated: 'The trader resident in one country has made use Community legislature therefore consid- of an advertising agency resident in another ered that, in so far as the person to whom country with a view to organising an the services are supplied customarily sells the goods or supplies the services advertised

31. It may also be recalled that VAT is subject to the principle of neutrality. Under that principle, VAT is to be equal for identical products and services and is to 30. In that regard, it may be recalled that remain constantly proportional to the price VAT is a tax on consumption. Although of goods and services regardless of the VAT is collected by suppliers of goods and number of stages in the commercial chain. services, it should always be borne by the The French Government argues that the end consumer. It is in my view doubtful interpretation of 'advertising services' set whether the way in which the notion of out in the Instruction conforms to that 'advertising services' as interpreted in the principle, because advertising services sup- Instruction complies with that principle. An plied and invoiced directly to a final advertising agency which buys an advertis- advertiser differ in nature from services ing service from a supplier established in consisting in the execution of films supplied France, such as a producer of advertising to an advertising agency. 13 films, pays VAT on the price of that service in France. That VAT will be added by the advertising agency to the price of the 12 — Eighth Council Directive 79/1072/EEC of 6 December 1979 on the harmonisation of the laws of the Member States relating to turnover taxes — Arrangements for the refund of value added tax to taxable persons not estab- 11 — Commission v France, cited in note 3, paragraph 15 of the lished in the territory of the country, OJ 1979 L 331, p. 11. judgment. 13 — Sec paragraph 23 above.

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