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UK/EU - Cultural services VAT exemption - British Film Institute

The CJEU decision in the British Film Institute (BFI) case will disappoint many charities and some non-profit making bodies who were hopeful that the UK’s restrictive definition of “cultural services” was on course to being widened.

BFI made supplies of admission services to film showings and accounted for VAT on this at the standard rate during 1990-1996. In 2009, BFI applied to HMRC for a reimbursement of this VAT paid on admission services to film showings, arguing that the supplies were VAT exempt under the cultural services exemption, but HMRC rejected the claim.

EU VAT legislation states that “certain cultural services” are exempt from VAT when provided by “bodies governed by public law or by other cultural bodies recognised by the member state concerned”. This was only transposed into UK law with effect from 1996. BFI sought clarity on whether it could rely on EU VAT law in the absence of UK VAT law.

The CJEU followed the decision of the Advocate General, ruling that EU VAT law was not of direct effect, meaning it could not be relied upon by BFI in the absence of domestic law. The terms were not sufficiently clear or precise to have direct effect, so the supply of admission services to film showings did not qualify for the exemption. Moreover, the term “certain cultural services” provided Member States with an element of discretion in determining which cultural services could be exempt; the aim of this was to allow Member States to consider the diversity of cultural traditions and regional heritage within the EU.

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