Case C‑695/20,

Fenix International Ltd

v

Commissioners for Her Majesty’s Revenue and Customs

Request for a preliminary ruling from the First-tier Tribunal (Tax Chamber)

Judgment of the Court (Grand Chamber), 28 February 2023

Reference for a preliminary ruling – Implementing power of the Council of the European Union – Article 291(2) TFEU – Common system of value added tax (VAT) – Directive 2006/112/EC – Articles 28 and 397 – Taxable person, acting in his or her own name but on behalf of another person – Provider of services by electronic means – Implementing Regulation (EU) No 282/2011 – Article 9a – Presumption – Validity

1. Acts of the institutions – Basic legislation and implementing legislation – Implementing legislation not capable of amending or supplementing the essential elements of the basic legislation – Classification of the essential elements – Consideration of the characteristics and particular features of the field concerned – Provisions laying down the essential elements of the basic legislation – Adoption requiring political choices falling within the responsibilities of the EU legislature – Adoption by means of implementing or delegated acts – Not permissible

   (Art. 291(2) TFEU)

   (see paragraph 41)

2. EU institutions – Exercise of powers – Implementing power conferred on the Council – Limits – Assessment according to the general aims of the legislative act in question and of the necessity or appropriateness of the provisions of the implementing act

   (Art. 291(2) TFEU)

   (see paragraphs 44-50)

3. Harmonisation of fiscal legislation – Common system of value added tax – Taxable transactions – Supply of services effected for consideration – Taxable person acting in his or her own name but on behalf of another person – Concept covering all categories of services – That taxable person presumed to be the supplier of those services

   (Council Regulation No 282/2011, as amended by Regulation No 1042/2013, Art. 9a(1); Council Directive 2006/112, as amended by Directive 2017/2455, Art. 28)

   (see paragraphs 54, 55)

4. Harmonisation of fiscal legislation – Common system of value added tax – Taxable transactions – Supply of services effected for consideration – Taxable person acting in his or her own name but on behalf of another person – Identifying the supplier and the recipient in the transaction – Elements to be taken into consideration – Scope – Contractual terms reflecting the economic and commercial reality of the transactions – Included

   (Council Regulation No 282/2011, as amended by Regulation No 1042/2013, Art. 9(1); Council Directive 2006/112, as amended by Directive 2017/2455, Art. 28)

   (see paragraphs 71-73)

5. Harmonisation of fiscal legislation – Common system of value added tax – Taxable transactions – Supply of services effected for consideration – Article 9a(1) of Implementing Regulation No 282/2011 – Validity – Implementing power of the Council – No infringement

   (Art. 291(1) TFEU; Council Regulation No 282/2011, as amended by Regulation No 1042/2013, Art. 9a(1); Council Directive 2006/112, as amended by Directive 2017/2455, Arts 28 and 397)

   (see paragraphs 74, 78, 81, 89, 91 and operative part)

Résumé

Fenix International Ltd (‘Fenix’), a company registered for value added tax (VAT) purposes in the United Kingdom, operates on the internet a social media platform known as Only Fans. That platform is offered to ‘users’ throughout the world, who are divided into ‘creators’ and ‘fans’. Each creator has a ‘profile’ to which he or she uploads and publishes content, such as photos, videos and messages, which fans can access by making ad hoc payments or by paying a monthly subscription. Fenix sets the minimum amount payable both for subscriptions and for ‘tips’ and the general terms and conditions for use of the platform. In addition, Fenix provides the means of enabling financial transactions to be carried out. Fenix is responsible for collecting and distributing the payments made by fans through a payment services supplier. Fenix levies 20% on any sum paid to a creator and applies VAT at a rate of 20% on the sum which it levies in this way, which appears on the invoices which it issues. All payments appear on the relevant fan’s bank statement as payments made to Fenix.

In VAT assessments for the VAT due for the months of July 2017 to January 2020 and April 2020, taking the view that Fenix had to be deemed to be acting in its own name, ( 1 ) Her Majesty’s Revenue and Customs (‘HMRC’) required that Fenix pay VAT on all of the sums received from a fan and not only on the 20% of the sums which it levied by way of remuneration.

Fenix appealed before the referring court, ( 2 ) challenging the validity of the legal basis for the tax assessments, ( 3 ) and their respective amounts. In support of its appeal, Fenix maintained that, by adopting the contested provision, the Council exceeded the implementing powers exclusively conferred on it by the VAT Directive. ( 4 ) The contested provision goes beyond Article 28 of that directive, ( 5 ) of which it was intended to constitute an implementing measure, by providing that an agent who takes part in a supply of services by electronic means is to be deemed to have received and supplied those services, even though the identity of the provider is known. It fundamentally alters the liability of the agent in the field of VAT by transferring the tax burden on platforms operated on the internet, since it proves impossible, in practice, to rebut the presumption it laid down.

The question having been raised by the referring court of whether the contested provision is invalid ( 6 ) in so far as it had been submitted that the Council exceeded its implementing powers under the FEU Treaty and the VAT Directive, the Court, sitting as the Grand Chamber, holds in its judgment that the examination of that question has disclosed no factor of such a kind as to affect the validity of that provision.

Findings of the Court

As a preliminary point, the Court notes, in the first place, that although it is for the Member States to implement legally binding Union acts, ( 7 ) implementing powers may, in duly justified specific cases and in the cases specifically provided for in the EU Treaty, be conferred on the Council under Article 291(2) TFEU. As regards the VAT Directive, the Council, acting unanimously on a proposal from the Commission, is to adopt the measures necessary to implement that directive. That enabling power of the Council is explained and justified, first, by the necessity for measures implementing that directive to be uniform and, second, by the intention that the right to adopt such implementing measures be reserved to the Council on account of the impact, sometimes significant, that such measures could have on the budgets of Member States. The contested decision is one of the measures adopted by the Council under that enabling power, intended to ensure the uniform application of Article 28 of that directive.

In the second place, as regards the limits of the implementing powers referred to in Article 291(2) TFEU, the Court notes that the adoption of the essential rules of a matter is reserved to the EU legislature, the provisions laying down the essential elements of the basic legislation cannot be delegated or appear in implementing acts, but must be adopted in compliance with the applicable legislative procedure, namely, as regards the VAT Directive, the special procedure established in Article 113 TFEU. ( 8 )

The Court adds that those considerations relating to the limits of the Commission’s implementing powers, in accordance with its case-law, are also valid where, pursuant to Article 291(2) TFEU, such powers are conferred on the Council. First, in referring both to the Commission and to the Council, that provision draws no distinction as to the nature and scope of the implementing powers on the basis of the institution on which they are conferred. Second, it follows from the scheme of Articles 290 and 291 TFEU that the Council’s exercise of implementing powers cannot be governed by conditions different from those imposed on the Commission when it is called upon to exercise its implementing powers.

Therefore, the implementing powers conferred on the Council entail the power to adopt measures which are necessary or appropriate for the uniform implementation of the provisions of the legislative act on the basis of which they are adopted and which merely specify the content of that act, in compliance with the essential general aims pursued by that act, without amending or supplementing it, in its essential or non-essential elements. In particular, it must be held that an implementing measure merely specifies the provisions of the legislative act concerned where it is intended solely, in general or in certain specific cases, to clarify the scope of those provisions or to determine the detailed rules for their application, provided, however, that in so doing, that measure avoids any contradiction with the objectives of those provisions and does not in any way alter the normative content of that act or its scope of application.

Therefore, in order to determine whether, in the contested provision, the Council complied with the limits of the implementing powers conferred on it, the Court ascertains whether that provision merely clarifies the content of Article 28 of the VAT Directive which it implements, which entails examining whether it respects the essential general objectives of that directive and whether it is necessary or appropriate for the uniform implementation of Article 28 and whether it supplements nor amends it in any way.

In that regard, the Court finds, first of all, that the contested provision complies with the essential general aims of the VAT Directive and of Article 28 thereof. The objective of the contested provision is to ensure the uniform application of the current VAT system as regards, inter alia, the taxation of electronically supplied services to a non-taxable person, ( 9 ) and of the presumption, provided for in Article 28 of the VAT Directive, according to which a taxable person who, in the context of a supply of services, acts as an intermediary in his or her own name but on behalf of another person, is deemed to be the supplier of those services.

Next, the Court rules that the contested provision is appropriate, or even necessary, for the uniform implementation of the VAT Directive in the light of the importance of ensuring legal certainty for service providers and to avoid double taxation or non-taxation which would have resulted from divergent implementation arrangements between Member States.

Lastly, the Court examines whether the contested provision complies with the prohibition on supplementing or amending the elements of Article 28 of the VAT Directive. In that regard, it finds that it is in no way apparent from the VAT Directive that the EU legislature refrained from ensuring, if necessary, by conferring implementing powers on the Council pursuant to that directive, a uniform application of the conditions referred to in Article 28 of the directive, in particular the condition that, in order to be regarded as the supplier of a service, the taxable person taking part in that supply must act in his or her own name but on behalf of another person. More specifically, the contested provision cannot be regarded as supplementing or amending the elements of Article 28 of the VAT Directive, nor in particular the presumption set out in that article, but is a mere clarification of its elements in the specific context of the supply of electronically supplied services through a telecommunications network, an interface or a portal such as a marketplace for applications. In particular, that provision takes full account of the economic and commercial reality of the transactions as a fundamental criterion for the application of the common system of VAT. The Court therefore holds that, by adopting the contested provision, for the purposes of ensuring that Article 28 of the VAT Directive is implemented under uniform conditions throughout the European Union, the Council did not exceed the implementing powers conferred on it by the VAT Directive, pursuant to Article 291(2) TFEU.

( 1 ) Under the first subparagraph of Article 9a(1) of Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax (OJ 2011 L 77, p. 1), as amended by Council Implementing Regulation (EU) No 1042/2013 of 7 October 2013 (OJ 2013 L 284, p. 1), a taxable person taking part in the supply of electronically supplied services through a telecommunications network, an interface or a portal such as a marketplace for applications, is to be ‘presumed to be acting in his own name but on behalf of the provider of those services unless that provider is explicitly indicated as the supplier by that taxable person and that is reflected in the contractual arrangements between the parties’. The second subparagraph of that provision requires two conditions to be satisfied ‘in order to regard the provider of electronically supplied services as being explicitly indicated as the supplier of those services by the taxable person’. Lastly, according to the third subparagraph of that provision, ‘a taxable person who, with regard to a supply of electronically supplied services, authorises the charge to the customer or the delivery of the services, or sets the general terms and conditions of the supply, shall not be permitted to explicitly indicate another person as the supplier of those services.’

( 2 ) The First-tier Tribunal (Tax Chamber), United Kingdom.

( 3 ) Namely, Article 9a(1) of Council Implementing Regulation (EU) No 282/2011 (‘the contested provision’).

( 4 ) Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1) (‘the VAT Directive’). Article 397 of that directive provides that ‘the Council, acting unanimously on a proposal from the Commission, shall adopt the measures necessary to implement this Directive.’

( 5 ) Article 28 of the VAT Directive provides that where a taxable person acting in his own name but on behalf of another person takes part in a supply of services, he shall be deemed to have received and supplied those services himself.

( 6 ) The Court has jurisdiction to give preliminary rulings on requests from courts and tribunals of the United Kingdom made before the end of the transition period as laid down in the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (OJ 2020 L 29, p. 7), namely 31 December 2020.

( 7 ) Article 291(1) TFEU.

( 8 ) Article 113 TFEU provides that ‘the Council shall, acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament and the Economic and Social Committee, adopt provisions for the harmonisation of legislation concerning turnover taxes, excise duties and other forms of indirect taxation to the extent that such harmonisation is necessary to ensure the establishment and the functioning of the internal market and to avoid distortion of competition.’

( 9 ) Which are, from 1 January 2015, taxable in the Member State where the customer is established, has his or her permanent address or usually resides, regardless of where the taxable person supplying those services is established.